The electronics industry’s expansion into China is far from complete. Companies that did not join the mass migration to the low -cost region in its initial phases have kept a close eye on the market. One of those companies is highly-specialized distributor PEI-Genesis Inc., which has decided it’s time to look at China from the inside.
“We are going to be there,” said Steven Fisher, CEO of the Philadelphia-based distributor. “We are in the middle of putting together our strategy and our intent is to be there in the next 3 to 6 months or at the latest a year to 18 months. We are trying to work out the logistics and we will carefully get started. We are being driven there by our customers that have found some fairly sustainable business there, and our suppliers want us there as well as our customers.
“It’s never too late to provide a solid set of value-added services to a market,” he adds. “The market there continues to grow and with every year that goes by China becomes more accessible.”
Fisher’s sentiment is similar to that of Digi-Key Corp. president Mark Larson, who told EPS recently the Thief River Falls, Minn., company has plans to open an office in China. “I think our timing is fine and as the market in China evolves it will align with us,” Larson said. “It doesn’t bother me that we are coming in now rather than two or five years ago.”
PEI-Genesis specializes in connector, cable and power supply assemblies that can be turned around within days. Seventy percent of the products it sells have value-added content. The model is unique in that PEI-Genesis has to carry a broad range of inventory in anticipation of an assembly order. “We have part numbers where we only may buy one or two of the items, Fisher said. “But that’s what we have to do.”
PEI-Genesis’ hands-on approach has worked in the U.S. and in Europe, and the company believes the Asia-Pacific region will respond as well. “Whoever does a good job and provides a valuable service will succeed in China,” Fisher said. He also points out that PEI-Genesis is not moving into China to save money as many manufacturers did in previous years. “We will sell to Chinese OEMs,” Fisher said. “We don’t plan on selling [assemblies from China] back into the U.S. market. The next incarnation of movement into China will be companies that make more sophisticated products for the local economy. We believe there will be plenty of room for a company that does a good job.”
As with previous expansion, PEI-Genesis will start with feet on the ground in China. “We are going to start not with a warehouse but with employees,” Fisher said. He doesn’t rule out a facility in China at some point. “It’s a matter of timing,” Fisher said. “We will have to see how successful we are as we ramp up.”
PEI-Genesis intends to use greenfielding as its mode of expansion and duplicate the success PEI-Genesis has had in other markets. “We are still a family-owned business,” Fisher points out. “We have had the honor and good fortune to be in business for more than 40 years and that is a very powerful weapon. If you feel secure in the values of your company — if you know what your company stands for – we believe it will be the same in Asia. If you treat your employees and customers fairly that is a great value. That doesn’t mean we don’t demand excellence, but it does mean people come first.”
The company also intends to maintain the same kind of corporate values it practices in other regions. In addition to treating employees, customers and suppliers fairly, PEI-Genesis works toward being a responsible local and global citizen. “I think PEI will keep becoming more of global company and a global citizen,” Fisher said. “People want to be part and ethical and successful company. I think a real advantage of being a local or regional company is that you can be much more personal with customers. I think a company of our size can compete with anybody as long as you have a good value proposition. The value side always wins.”
(Editor’s note: This is the first in a series of articles that will profile PEI-Genesis, its management and its strategies.)