Lemel--come on in!
After more than ten years of practice and adjustments, the Synnex operations center in Linkou has been expanded for the third time and logistics centers have been added in Taichung and Kaohsiung. The company handles some 5,000 different items with a delivery fleet of 130 vehicles. Each retail outlet can receive two to three deliveries a day for total of almost 6,000 deliveries in all. This represents one delivery every six minutes. Synnex's fleet is known as "fast and fierce" on the nation's freeways, and to raise drivers' sense of quality and pride the company always refers to them as "logistics service representatives."
Synnex's operating and delivery system, which promises delivery within half a day after receiving an order from anywhere in the country, is the firm's biggest advantage as a market channel. Building on this, it offers "configure-to-order" computer production whereby computers are assembled to customers' specifications, unlike standardized brand computers. These computers are sold under Synnex's own Lemel label. The company has also developed another major service niche--maintenance.
As early as 1990 when Synnex moved into the IT industry with its marketing channel service it contemplated offering a maintenance service, but encountered resistance from retailers. The reason? Retailers had themselves always made money from doing repairs and maintenance for their customers. But Tu didn't give up, because he guessed that PCs would become increasingly popular and products ever more complex and varied. Wouldn't maintenance then involve having a sufficient number of replacement parts on hand, including legacy components, and providing speedy, high-quality maintenance service? It was certainly not something the average retailer was capable of responding to.
The situation developed just as Tu had anticipated. Maintenance for IT products became increasingly important and increasingly difficult. Using its advantage in rapid delivery, in 1997 Synnex unveiled its rapid repair service: "In tonight--out tomorrow." This let consumers avoid the anxiety and frustration of not being able to work if their PCs went on the blink. It also made people think about buying goods bearing the Synnex brand sticker.
Finding the silver lining
The rapid repair service really came into its own after Synnex got into the cell phone business. Their advertisement in 2000 of "cell phone repair in 30 minutes with a two-year warranty" hit the market like a bombshell and consolidated the company's position as cell phone market leader.
It should be mentioned that Synnex's No. 1 position in the cell phone business actually came unexpectedly. Originally the company had focused on IT products exclusively, missing the first wave of the domestic cell phone/mobile communications boom. In 1995, however, when Chunghwa Telecom released the 0932 cell phone numbers, the quantity available fell far short of market expectations. As consumers were not going to buy phones they would not be able to use, the cell phone market collapsed due to oversupply. The distributors for the big manufacturers as well as small and large wholesalers were stuck with full warehouses, going crazy trying to unload their product, and they sought out Synnex with its many outlets. This gave the Synnex an unexpected advantageous entry position in the market and led to a sharp rise in its sales volume.
A similar situation occurred in 1998. This time long-term data management and careful analysis enabled Synnex to "predict" another collapse that was about to be caused by oversupply. When everyone else was busy stockpiling, Synnex went against the common wisdom and warned its business partners to clear out their stock as soon as possible. As a result, they escaped the whole collapse. Not only did the company avoid major damage, but by assisting its partner businesses, it significantly expanded its sphere of influence.
When in Rome
By 1997 Synnex's Taiwan base was secure and it began to expand into the international market. Prior to this its parent company, MiTAC, had already merged with the American company Synnex, which now became the subsidiary's English name. Since 1997 Synnex has moved into the Asia-Pacific region in Hong Kong, mainland China, Australia and Thailand; in 2004 it invested in India's second-largest IT marketing channel, the Redington Group; and, going with the momentum, moved its "battle lines" into the Middle Eastern and African markets, forming Synnex's international presence with its primary base in the Asia-Pacific market and its two "wings" in North America and India. And because its internationalization has proceeded succesfully, it has maintained its brilliant performance despite the huge downturn in the Taiwanese economy these last several years.
As for Synnex's going international, Tu has acquired a huge reservoir of experience to pass on, experience he has gained in his travels around the globe that take up over 25% of his time every year.
First of all, internationalization is expensive. Thus Tu believes only "countries with large populations" are worth getting into. Secondly, when you look for local partners you must find firms that are close to you in business culture and thinking, and observe them for at least a year before making a final decision.
It is especially in the marketing channel industry, a service industry where goods are moved from person to person, that people's feelings and culture play the leading role in success or failure. For this reason Synnex has made it a rule to hire locals to run their operations overseas. If headquarters sent people out, it was in a supporting role. This was done to avoid having "outsiders" giving direction to "insiders."
As for the idea of "when in Rome, do as the Romans do," Tu's secret of success was to "start from the level where they're at." And the "speed" of which Synnex was so proud? Well, there are some regions where the pace of life is quite slow and being on time is considered an intrusion. Customers complain, "What's the idea of sending that stuff so quickly!" At times like those Synnex had to listen to the locals, and with a little cultural communication, gradually help them come up to speed.
Market channel leader
In the process of internationalizing, Synnex has had two great advantages. One is their standard operating procedures, which leave nothing to chance, combined with a really first-class information management system. Partner firms have only to "duplicate" the Synnex model, thus eliminating the fuzziness and inefficiency of a "person-based" management system. Secondly, because of Synnex's amazing success in Taiwan, the many international manufacturers with which they do business are only too happy to introduce the company to overseas distributors.
"With an overseas manufacturer serving as 'matchmaker,' both we and the prospective partners feel at ease, and frequently we click right away," says Tu. For example, Synnex's first step on the road to internationalization was the purchase of its Hong Kong subsidiary, was completed with Intel acting as honest broker.
Looking ahead, Tu, who has always had a deep insight into the future of the industry, has begun to map out the next steps, with the same foresight as he showed when the company changed its Chinese name in 1988. Tu did not want to use the then very popular words "technology" or "information" in the new name, but instead chose "international," a word not looked upon with much favor at the time. In his mind, all that is necessary is to set up a well-functioning channel network and anything can be distributed and sold. Future developments are not limited to science and technology products.
Having established its position as industry leader, what will Synnex "sell" in the future? And what industry revolutions will it spearhead? We are all waiting to see.