Breaking up with ce Consumer, GTE/SND Targets at Asian and Pacific Market
by Zhou Rui
If you have been concerned about the ranking of global independent distributors, which was covered by several mainstream Medias in the North America, you will find that ce SND, ranked first in 2003 and the third in 2004, made no appearance in the top 10 this year. What on earth has happened to this globally known independent distributor? Christopher. R. DeNisco, the Chairman of AstonTec Holdings LLC the holding company that owns the new SND Electronics, LLC and Global Technology Exchange LLC, recently shared his past experiences of this industry and his vision for the future of SND/GTE in an interview with Global Sources.
In the perspective of development history, SND is actually an old independent distributor which was established in 1973, mainly engaging in the distribution of electronic components. Along with the economic growth in the U.S and the rapid development of high-tech, SND thrived and grew from a small regional North American distributor to a Global Company in the market. In the year 2000, SND, with its business revenue reached 275 million US dollars was acquired by ce Consumer, a German Distributor listed in the stock market.
Together with ce Consumer's strong presence in Europe and SND's strong presence in Latin America, the company planned countinued growth and profitability. However, shortly after the acquisition by ce, the electronic distribution industry experienced a terrible plunge in Europe and the America.
In 2005, it became apparent that ce and SND needed to separate in order to survive. By July of 2006 the new SND together with GTE was purchased by AstonTec Holdings.
The word "new" company is not exactly correct Mr. DeNisco said with a smile. Much of the same management that made SND and GTE great companies in the past along with many new and experienced employees are with the company today. When it comes to the Asian market "I am confident that GTE can help us to achieve profitable and sustainable growth in this market." However, SND is not the only distributor who realizes the opportunities in Asian market, other international independent distributors such as Advanced MP, Converge and Smith have actually already been there. At the same time, some local distributors emerged one after another at fast pace. For GTE/SND, who entered Asian market in 2004, what strengths they have to participate in the severe competition?
Initially we started GTE to specifically buy and sell specific memory chips. That model went well, but we have decided the risk to return in this market required us to expand GTE into a broader product line such as SND. With help from SND, GTE has expanded rapidly to semiconductors such linear, logic, discreet and passive components, and great success has been achieved."
At the meantime, SND and GTE were getting closer. As a matter of fact, GTE has become a branch company of SND in Asia in the name of GTE a SND company. Its Chinese name is Meishang Chenfang Tech. Co., Ltd.. "Even though that is a combination of names of two companies, we are gradually integrating them, just like Lenovo and IBM, we will use one name for the company in the future." Chris said.
According to the conversation with Chris, we can summarize the strengths of SND as the following two aspects: one is the strategic cooperation with great clients; the other is the commitments made to quality, cost and service.
Long term strategic cooperation with great clients
In the list of GTE / SND's clients, we can see some well-known companies in the electronic manufacturing industry such as IBM, Apple, HP, Dell, Samsung, Motorola and Nokia. According to Chris, this is one key strength of SND. On the one hand, with the long-term strategic cooperation with these OEM companies, SND is very much familiar with their purchasing habits, supply chain requirements and management culture. When SND provides services for these OEM partners of their EMS suppliers in the upper reach, it will share these information and experiences with them and help them to satisfy the needs of these clients as soon as possible.
On the other hand, there are more and more outsourcings in electronic manufacturing. Many big OEM companies contract out their procurement. With the long term cooperation with big OEM companies, in the process of procurement, SND easily becomes cooperative partners of these EMS companies. "Currently, the leading companies in EMS manufacturing such as Foxconn, Flextronics, Solectron, Celestica and Sanmina-sci are all our clients." Added Chris.
With these EMS companies transferring their manufacturing to China, GTE / SND set their foot on the market in the country, and these EMS companies are the sources of main revenue of GTE/SND. The experiences of cooperating with great clients in this industry help SND to gain the recognition of the local clients who are mainly in the lines of computer and telecom manufacturing. In 2005, GTE /SND's business revenue reached 275 million U.S dollars, among which, the revenue in China's market was 35%. As far as the application area is concerned, the market of computer is the largest application market for SND, and the second largest one is telecommunication and consumer products such as mobile phone.
Commitment to quality, cost and service
The cooperation with the leading companies in the electronic manufacturing industry makes GTE/SND look better, but the buyers are realistic and rational when they are making purchase. The principle GTE/ SND adheres to is that to help clients to buy components needed in proper place. Chris explained further: there are two implications in this sense, one is the reliable products quality and the second is the competitive price and the best service.
Chris believed that quality control is the priority in the independent distribution. " Fake components/parts have flooded in the open market, we must ensure that the components/parts we provided to our clients to buy should be of good quality and authentic."
With regard to the quality control, GTE/ SND mainly adopts the following four approaches: one is supplier control. As matter of fact, GTE/SND enjoys a broad supplying base which has been accredited by ISO. Secondly, SND will test product, if there is any suspicion, SND will advise its clients to test again with some qualified equipment through standardized procedures, and SND will cover the cost. Thirdly, these components/parts can also be tested by a third testing facility outside or SND internal testing department. Fourthly, for those components/parts whose quality can not be guaranteed, SND will reject. "We must ensure the quality of the components/parts to be purchased by our customers. We can not pursue the immediate interests only." said Chris.
In addition, SND has a unique information system, storing huge data of components/parts and the transaction records, including photos, design, production date and features of both original and fake products. "The system allows us to benchmark and distinguish the fake or non-confirming components, this is one of may tools used to ensure quality". Said Chris.
In terms of product quality guarantee, GTE/SND normally provides 30-90 days guarantee for quality. Chris indicated that for those clients with whom we have been cooperating for long time, some readjustments will be made to meet the needs of them. "Sometimes, we can offer more than one year of warranty".
Assisting clients to achieve optimization of purchasing cost is one aspect SND has been stressing. SND helps clients to search the best source for some components/parts in shortage. In addition, SND provides "opportunities purchase" services, supporting the daily purchasing order of clients and help them to get the lowest purchasing price through broad channels so as to reduce the fluctuations of supply chain.
When talking about the next expansion strategy for China's market, Chris indicated that at the initial stage of business development in China, SND will make more input so as to enlarge the clients and business revenue in this market. It is said that GTE/SND has currently opened offices in Shenzhen, Suzhou and Shanghai respectively, and it is planned to establish more offices in China next year to provide more localized service for China's market.
