With an electronics industry that is the world's fourth largest by product volume*, South Korea is a technology-driven country with a strong focus on – and demand for – design expertise.
“Korea has become a design center for the entire Asia Pacific region, and we support customers’ design needs extremely well,” says YB Yang, vice president, Arrow Korea, in Seoul. “We recently added several field application engineers and we have excellent working relationships with local independent design houses."
In all, nearly 100 Arrow employees serve electronic components manufacturing customers and suppliers in the third largest economy in Asia* – all from offices and warehouses in Seoul and Gumi. The largest customer segments that Arrow Korea serves are consumer electronics, including components for set-top boxes, and communications, including components for networking equipment. Another growth opportunity is in the automotive market as American and European automakers look increasingly to Korean suppliers for sub-assemblies. One of Arrow’s major customers in this segment produces vehicle dashboards, for example. Arrow Korea has pursued another growth opportunity by taking a unique approach – entering the retail business. In Seoul, Arrow has established two highly successful retail shops that sell commodity products to dealers, resellers and traders.
Korea’s projected total available market in 2006 is $23 billion, according to Gartner Dataquest, and the portion of that market that distribution addresses is projected at $2.2 billion. Since the Korean market is highly fragmented, no global distributor dominates or has a large share. However, this fragmentation provides opportunity for growth for the distributors that best serve the needs of their customers – an area in which Arrow Korea has excelled.
Arrow offers customers a broad range of value-added, supply chain solutions, including vendor managed inventory (VMI) programs. Through these programs, Arrow reduces a customer's need to carry and store inventory until it is required for production. This reduces customer costs by increasing inventory turns and preventing out-of-stock situations that could halt production. For example, Arrow maintains in-plant stores (IPS) at some physical customer sites. These in-plant stores are staffed by Arrow personnel, who monitor and manage the customer’s inventory and make components available as needed for production. Customers save money because they don't pay for, insure or get taxed on that inventory until they actually use it.
Value-added solutions have opened doors for Arrow with a number of customers, strengthening business relationships. Yang says, “Here in Korea, customers often prefer to deal directly with suppliers, rather than go through distributors. But once we introduce them to our value-added solutions, a number of those customers accept us as a partner. We enhance their inventory management, and in return, generate additional revenue for Arrow.”
Arrow, as a result of its vast global network, is able to transition any manufacturing business that migrates from Korea to China and other countries in Southeast Asia. “A lot of products are designed in Korea, but the production is moved to China,” says Yang. “Our design experts support customers on the front end. Then, we coordinate with our Arrow counterparts in China and elsewhere in Asia to continue to support that business as it moves from country to country.”
For Yang, Korea is a very dynamic country, especially where the electronics components industry is concerned. “Arrow has the experience, expertise and resources that can handle diverse sources of business and support customers as they grow," adds Yang, "and we believe no other distributor in Korea has what we have.”
* Source: Korea's electronics industry is the world's fourth largest, by product volume, as reported by the Yearbook of World Electronics Data . Korea is the third largest economy in Asia, according to the U.S. State Department.
