The growth of regional markets is an ongoing story, but the momentum being carried by rising OEMs is changing the balance of power and market focus in the semiconductor and electronics industry. For example, China's new crop of OEMs have, over the last couple of years, quickly risen to compete in the international marketplace. In doing so, they are challenging long-standing OEM leaders and opening the doors to new competitive markets and consumers that will fuel new growth for a while to come. In conjunction with these new competitive challenges, we are seeing changes along the global supply chain based on the types of demands requested of distributors and supply chain service providers.
Asia's next evolution
The wider Asian marketplace is undergoing significant, leapfrog changes. Emerging market growth forecasts have moderated over the past few years, in their place we are seeing a more sustainable and intentional growth strategy for Asia and India. Although no one wants to see double-digit forecasts trimmed, the reality of what is viable growth is more in tune with current strategic growth goals.
Both China and India's governments have refocused attention on nurturing regional and local high-tech industries as well as the infrastructure necessary to support them (see for example PricewaterhouseCooper's (PwC) recent report on emerging market logistics challenges). Importantly, this localized industrial engine is the means for ensuring long-term, sustainable economies and growth in the region, especially for these two pivotal BRIC nations. These new economic reforms and plans translate into real changes from a global supply chain perspective. We are seeing an intentional rise in the preference for local manufacturers and products due to government incentives and a rise in local brand loyalty.
But what do all of these economic changes mean for the semiconductor and electronics supply chain? There are very real and new demands that are dictating how supply chains are now woven together. There is much greater demand of distributors and service providers for not only a local presence, but a real proficiency in local knowledge, local connections, and local sourcing than we've seen previously. Asia's constantly evolving market is demanding that those doing business here have a keen, local industry knowledge and competency in order to support local and regional business.
Addressing local demands
In response to these supply chain demands on distributors, there is an ongoing growth wave in the region as experienced leaders continue to meet clients' needs. In concrete terms, for example, Smith & Associates has been expanding our offices in Shanghai, Shenzhen, Hong Kong, Seoul and our newest office in Bangalore will be opening soon. The local and regional OEMs and manufacturers in Asia and India, especially, are becoming not just regional leaders, but also are moving into internationally competitive positions.
As they do so, they bring along their current, locally-based supply chain preferences which introduces new supply chain network structures and competitors to the global scene. This event marks a real shift in power for the global semiconductor market, one that provides a new growth base for local suppliers. For those who have had a longstanding and deep relationship with these evolving local markets, there is considerable demand to leverage those sourcing opportunities and innovative supply chain solutions. Local knowledge, "boots on the ground," continues to rise as one of the most important tools for emerging market success, safeguarding quality and unique business requirements as new competitors enter the international marketplace.
From a distributor's perspective, beyond the excitement around the growth opportunities and market expansion that we see, the depth of new service demands is welcoming. These demands are especially seen in the sophisticated anti-counterfeiting services as well as supply chain management strategies. To provide a concrete set of examples, Smith have responded to our customers in Asia (and worldwide) with expansions of our anti-counterfeiting laboratories and by increasing the number of top-level quality inspectors in our Hong Kong and US facilities, especially. Anti-counterfeiting solutions continue to be a cornerstone of supply chain concerns, and with new supply chain relationships emerging, the reliance on industry certified and accredited laboratories continues to increase rapidly.
Additionally, the rapid change in supply chain strategies is demanding agile and customized service programs to directly address the unique challenges that companies face. Cost savings, inventory and supply chain management, and the ability to analyze and then implement targeted solutions with a focus on the local business practices and relationships are the hallmarks of the new local and regional growth trends.
Electronica China – platforms for growth
A tangible example of the vibrant, evolving and internationally positioned moment that Asia holds is the upcoming Electronica China 2015 trade fair in Shanghai. Electronica China, now in its 13th year, has truly matured, much as the regional Asian market in which it is located. Electronica China 2015 will be held March 17-19 and will offer a real platform for local and international supply chain professionals to gain visibility, but importantly, to come together and discuss the latest technologies, solutions and opportunities in the industry. Here we expect to see many of these emerging supply chain opportunities, competitors, and strategic growth plans presented by upcoming and leading OEMs.
More than just another trade fair hosted in Asia, Electronica China 2015 marks an important shift with Planet e coming to the show and highlighting the maturity and vitality of Asia's electronics market. Pulling together the breadth of the Asian electronics market and providing a real platform for meeting and collaborating underscores the shift that we see happening as new competition heats up in regional markets. Competition that will drive growth regionally and globally but that demands truly customizable and innovative supply chain solutions, just as we see leaders like Xiaomi and Huawei revolutionizing competition and changing the market landscape. There are many exciting and innovative changes underway in the industry.
Mark Bollinger is Vice President of Marketing for Smith & Associates