For many tech workers in the Americas, the Asia-Pacific region is just that—a region. Global electronics companies, of course, have figured out that each country within this vast region is unique. Within the distribution industry, independents such as Smith & Associates set up shop overseas more than a decade ago to expedite trade in electronics.
Smith opened its office in Seoul in 2000. Although electronics behemoths such as Samsung, LG and Hynix are headquartered in Korea, Choon Byun, Smith’s president for Asia-Pacific, said relationships still drive business.
“Touching the customer is impossible from a North America vantage point,” said Byun, who grew up in the U.S. “It is critical to speak the [local] language, meet price expectations and deliver product – we are the ‘last mile’ to the customer.”
Korea is also known as the headquarters of many of the world’s major DRAM players. The DRAM market remains volatile, but a presence in Korea gives distributors an edge, said Minji Hong, managing director, of Smith’s Korea office. “We have Samsung and LG and Hynix and semiconductor manufacturers that sell from other countries – with the presence of these semiconductor companies we can gather a lot of information on this market. We can share this information with our customers and make better deals [for them.] Korea is unique in many of its sourcing opportunities and it is a great place to source as well as sell product.”
The volatility of products such as DRAM also makes relationships all the more crucial in Korea, Byun said. Customers in Korea are extremely price sensitive, he explains, so the distribution market is very competitive. “At the end of the day, if everything I offer – the price, the terms – are the same, the customer will go with who they have a relationship with. With a lot of competition here, there is not a huge discrepancy in prices and when a customer is trying to secure their AVL they will go with vendors they trust.” Visibility and sensitivity to counterfeit components has increased in Asia-Pacific, Byun said, which is another reason customer are cautious about their vendors.
Smith’s local offices have to be able to react quickly to market changes, particularly in commodities such as DRAM. “Part of our global strategy is to give our offices a lot of autonomy,” said Mark Bollinger, vice president of marketing for Smith. “We don’t control the offices from Houston.”
Independents also have more flexibility than authorized distributors in pricing, Byun points out. “They have a certain [price] range they have to work with and we have flexibility in each office to accommodate the customer. That continues to be a competitive advantage for us.”
In the second part of this article, EPS conducts a in-depth Q&A with Byun and Hong.