Living space being squeezed, independent distributors have to seek diversified operation

Living space being squeezed, independent distributors have to seek diversified operation.

 ----By Zhenzhou Wu, General Manager, Chitron Electronics Co., Ltd.

Let's look at the comparison of a set of data: In American components market, only 5-8% of the components entered into market through the channel of distributors are conducted by independent distributors, with only about 1,000 independent distributors in the whole market. However, tens of years ago, over 15% components are sold by independent distributors, with more than 4,000 independent distributors in the market. The actual situation independent distributors are facing is to survive in difficulties---"Market is becoming smaller, resources are being centralized".

Seen from the market structure, global independent distributors have transferred their profit from product trade to services providing. Chinese native independent distributors, relying on their unique customer channels, still take customer-oriented trade business as their major business.

In 2008, the overall market environment is not optimistic, there exist many lag factors in both global economic situation and China native market. In terminal market, manufacturers impose stronger control on cost and the development of new product is more cautious. In addition, in China, some small-medium enterprises are suffering the payment pressure under the influence of credit deflation. Such environment brings much challenge to independent distributors. Some small independent distributors will be greatly influenced for its small scale, incomplete management system and indistinctive business characteristics.

In the long run, it is difficult for independent distributors to have sustainable development only relying on customer-oriented trade business. Therefore, diversified operation is the only way for independent distributors. In the past year, Chitron made correspondent adjustment in its business, focusing on three businesses: Firstly, to steadily develop customer-oriented trade business; Secondly, to actively develop product-oriented storage business; Thirdly, to gradually increase agency business. At the same time, we also reinforce increment services to improve competitiveness.

The increment services provided by Chitron mainly include two aspects: Firstly, to provide information service. The development of network has been changing the sales mode of components, any network interrupt will result in decrease in sales. At the very beginning of its establishment, Chitron has aimed to develop components distribution business on the basis of information network. The electronic business platform IC-DBM we prepared can offer timely management of the businesses of global subsidiaries, and will realize the globalization of telephone voice system in this April. Meanwhile, we plan to combine customers, suppliers and partners into the components dealing platform which is under construction at the end of this year. Secondly, we will provide services in logistics, storage and quality inspection centering on quality guarantee system. Layout of the operation stands of our current logistics system in China and the world has been completed. Last year, we added Chengdu Subsidiary and Xi'an Subsidiary and cooperated with AIG, realizing full insurance of global freight and storage.

 ESM China reported on April 1st, 2008: Living space being squeezed, independent distributors have to seek diversified operation.



Posted 2009-6-9 13:18 by Lilian
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