One of the things we at EPS are trying to do is shine a spotlight on companies that may not get a lot of press. I’ve spoken to a number of such companies recently and an interesting trend is emerging: these companies are only now seriously evaluating China. These businesses didn’t follow the earlier rush into the region which was typified by the “we are going there because our competitors are” mindset. These companies want to make sure their business model is a fit for China, and vice versa.
Sure, there’s still a lot of opportunity there, as our colleague Bolaji Ojo writes in Forget Re-shoring, China is still it. But these are still relative latecomers to the game. For example Digi-Key Corp., a leading global distributor, services China from its headquarters in Thief River Falls, MN. This centralized model has worked for Digi-Key for decades, but the company hasn’t gotten to where it is today by ignoring trends. Digi-Key president Mark Larson told EPS recently in Digi-Key in China? Yes. Soon, Too that the company was seriously evaluating its presence in China, whether it is personnel, a sales office or even a facility. When we asked if Digi-Key was a bit behind the trend, Larson said it’s never too late to offer distinctive products and services to a market.
Steven Fisher, CEO of specialty distributor PEI-Genesis, told a similar tale. PEI-Genesis has built its business on its ability to turn around custom-built product in two to five days. In the U.S., instant delivery has become so common we don’t even think about it. But many overseas regions are still accustomed to waiting several days or longer for product delivery. The PEI-Genesis model was extremely successful in the EU, Fisher said, in part “because nobody had offered it before.”
PEI-Genesis will also move into China, but at its own pace. Fisher wants to make sure all of the elements that made PEI-Genesis successful in the U.S. and EU are duplicated in China. That’s always started with people, Fisher said, and the rest comes naturally.
What’s also interesting is that neither PEI-Genesis nor Digi-Key is going to China to save costs. They are going because they have customers there and are planning to sell into the China market. If you think about the mass exodus of manufacturing to China over the past few decades, it’s easy to forget China is no longer about cost-savings. It’s about a rapidly growing population of consumers who are beginning to expect high-quality products and great service. Some of these folks may end up working for these relative newcomers to the market. For all of these reasons, it’s never too late for China.