Avnet Seeks Global Growth
Stephen Wong, president of Avnet Electronics Marketing Asia, weighs in on the top-ranked distributor’s operations in China.
By Victoria Fraza Kickham, Distribution Editor, [email protected]
The road to economic recovery continues in 2014, as most electronics distributors report improving business conditions in their key end markets. Globalization is an ongoing theme, as many of them work to expand their reach, especially in Asia. Stephen Wong, president of Avnet Electronics Marketing Asia, points to the distributor’s ahead-of-the-curve thinking as a main reason for its success in adapting to China’s changing business climate. He talked about some of those issues in an interview with Global Purchasing earlier this year.
Global Purchasing: Are you seeing customer migration to inland China? And if so, what effect is it having on your business in the region?
Stephen Wong: Yes. This is a very obvious trend. Business migration to inner China is definite and is already happening in a big way.
As manufacturers—big or small—migrated into China, they first established in places most convenient: the coastal cities. After that, over the past 20 years, the cost of doing business in those places has risen tremendously; land price, labor, and other costs have become very expensive. [Those costs are] still lower than in the West, but more compared to inland China—specifically western and northern China.
We invested in this geographic [shift] way ahead of the curve. In fact, today we have more than 50 offices in Asia and we increase that every year. In China alone, we have over 30 locations … We invested not only in Shanghai and Beijing, but we invested in what we call “emerging cities.” We started doing this six or seven years ago, and that starts to pay off as more customers move inland.
So, this movement to inland China is playing into our hands.
Global Purchasing: What are local customers in Asia seeking from their distributor partners?
Wong: In general, the customer is looking for a supplier that is consistent in service and has a reasonable price. Those [customers] that are engaging in manufacturing services are looking for supply chain distributors like us. And for those OEM customers that involve R&D, besides supply chain services, they are looking for design support, which Avnet provides also. Customers also want distributors who see their business as a long-term [commitment]. They want a distributor that cares about them. That is there all the time. That is very important.
Global Purchasing: Do you see a growing interest in purchasing from franchised or authorized distribution in this part of the world—as opposed to brokers and other, similar sources?
Wong: Customers in China are starting to become more and more sensitive [to this, and many are] demanding to purchase products from franchised distributors. The reason is, in the past China’s major advantage was being low cost. Now, they are trying to build an economy based more and more on domestic consumption and R&D . As these things become more important, [manufacturers] want [to ensure the quality of their] product and they insist on getting that product from franchised distributors for that reason.
Global Purchasing: Compared to other regions, how do you expect business in Asia/Pacific to shape up this year?
Wong: For this year, 2014, if you look at it from a macro point of view, the world economy—being led by the United States—is recovering gradually and consistently. China is also under new leadership and is showing traction right now. All these are good things and point to a stable economy. I see brightness. I see great things. At the same time, I am also highly sensitive to changes.
Global Purchasing: How does this affect the way you approach the market?
Wong: We need to work hard in terms of servicing the customers, working with suppliers, and investing our resources, money, and time in the right place. I feel much better [about the economy] than [I did] six months ago. This year will be a good year.