Despite China’s massive overall trade surplus, until recently, the Chinese automobile industry has remained focused on the burgeoning domestic market. Due in part to tax incentives and public subsidies which boosted short-term demand, between 2008 and 2010, the number of cars sold in China doubled.

That momentum, however, has levelled off. Domestic sales have slowed considerably over the past year due to a combination of expiring incentives, a more difficult licensing process, and increased competition from non-Chinese carmakers such as GM and Honda.

Despite falling domestic demand however, there remains a huge amount of pent up supply. According to an estimate by KPMG, China is equipped to build two-thirds of the world’s new capacity over the next five years. Add this to the existing unutilised capacity of Chinese factories (equivalent in 2011 to 40 per cent of sales), and it is obvious that an enormous glut of cars, automotive parts and accessories exists in China.

This enormous and growing supply presents a unique opportunity for businesses that want to import and market Chinese cars, automotive parts and accessories abroad.

As demand for vehicles within China has dipped, the demand for low- to mid-end cars in overseas markets has grown. China’s top auto export markets are emerging giants Brazil and Russia. Other top export markets include Ukraine, Turkey, Chile and even Australia, which happens to be one of the largest export markets for Great Wall Motors, China’s largest producer of SUVs.

As Chinese manufacturers have done across other industries, Chinese carmakers are using a foothold in emerging markets as a springboard to developed markets. Geely, one of the top ten auto manufacturers in China, was the first Chinese carmaker to showcase at the Detroit Auto Show in 2006 and it recently signed an agreement with Manganese Bronze Holdings, maker of the iconic London taxi, to sell vehicles and spare parts in the U.K. Great Wall Motors began selling in Italy a few months ago and it now has plans to enter the North American market by 2015. BYD, the Chinese automaker partly owned by Warren Buffett’s Berkshire Hathaway, plans to introduce its e6 electric car to the U.S. in the near future.

China’s overcapacity in auto manufacturing offers many untapped opportunities in both emerging and developed markets. KPMG predicts that by 2015, twenty per cent of trucks manufactured in China will be made for export. Even more astonishing is the fact that China’s overcapacity is equivalent in size to the entire German car market.

Businesses outside of China that aim to tap into China’s growing auto export market can take advantage of the Direct Import Program offered by ICS TRUST, which establishes a Hong Kong-based subsidiary that can be used to more easily source and import goods and has distinct and valuable tax advantages. This low-risk and scalable business structure is able to handle corporate, accounting, banking, tax management and trade solutions.

Businesses that take advantage of ICS TRUST’s Direct Import Program will be well-equipped to hitch a ride onto the forward momentum of the Chinese auto industry.