CEO Blog | Jarltech.com

CEO Blog

27/04/2012

Why Asia?

During the last few days, I was asked one question all the time: Why does Jarltech expand to China, Hong Kong and Taiwan?...

During the last few days, I was asked one question all the time: Why does Jarltech expand to China, Hong Kong and Taiwan? After Europe and the Middle East, would it not be America's turn now? What about the USA, where all our competitors have their headquarters?

Simple: we do not dare to. Expanding to China is much easier to handle for us, than the USA would be. In China and Taiwan, we already have employees, we already have been doing business there for over 20 years, successfully, and we have a network.

And as a distributor, we need the support from the vendors. But the vendors in the USA frighten me somewhat. Some American competitors open up an office in Europe, without any business. Then, they demand sales rights from notable corporate groups: "We are the No. 1/2/3 in the US, after all, give us a distribution contract for Europe or we will change our mind about the US." And some vendors actually agreed to this. At that time, we received phone calls telling us this: "Sorry, the whole European office tried to prevent this, but apparently, our American colleagues are prone to easy persuasion." And that is a market I do not want to be a part of... yet. We would never put pressure on a vendor to get sales rights in North America. And we would not be successful either, as the US market is much larger than the European is.

So we prefer going into the Middle East and China, to offer our vendors more presence. The larger areas have not yet been made accessible there. US distributors do not like these areas, besides customers there often do not like American distributors any better. We need to take that detour first to grow big enough. Only then will we be able to enter the USA, where concepts matter less than sales results for the quarterly reports and the stock market. It is unbelievable that peers from American distributors tell me openly that "value-add" is "bullshit" - only sales count at the end of the quarter. Customer benefits are only ever found in PowerPoint dream slides.

24/04/2012

Negotiating in China

You probably have already read the press release: we acquired "Barcode World", an AIDC distributor in China, who is present in ten locations, employs 42 people and...

You probably have already read the press release: we acquired "Barcode World", an AIDC distributor in China, who is present in ten locations, employs 42 people and concentrates on Honeywell and TSC.

I assure you, this was not an easy decision; and it was no easy negotiation either. Barcode World is a great company, but as always in China, they were no pure distributor. The same company also produces scanner itself, under its own brand. For a company, such as Honeywell, for example, it is not easy to support a competing vendor as a distributor. This involves working together on projects. This was the only choice: the former owners concentrate on their product manufacturing, the vendors get a pure distributor to sell to and Jarltech is represented across China at one stroke.

The full story spans several years. I have known this company for ages, and we talked about a take-over many times. Only four weeks ago, talks entered the critical phase and since then, the issue was discussed around the clock, via e-mail and during countless meetings. Chinese people are great businessmen. In over 20 years of experience with China and far more than 200 trips there, I can tell. It is easiest to work without contracts, as a handshake is meaningful. Banks, commercial courts and vendors, however, want written proof; so we did this too. And there is quite a struggle over every cent, every interest rate, every line. Not because the Chinese want it, rather they believe that the German are pedantic and want to define everything down to the last detail. This goes on around the clock. Be it four in the morning, in China or Germany, no matter, everyone worked day and night, including lawyers on either side.

The good thing is: we were in agreement from the start. The mountain of paper with its over 200 signatures is put away in the drawer and the handshake from the first day takes over again. It never happened to me that in China, someone would dig out a contract after two years and insist on a specific clause, that would be more like the American style. There is no way of making it work without both sides having benefits.

I firmly believe that the Chinese mindset will carry them a long way. And I believe that Jarltech will go far in China. Mutual respect is the foundation of any business.

30/03/2012

Jarltech acquires an additional office building

SMB GmbH, the parent company of Jarltech Europe GmbH, has acquired an additional office building for expansion purposes of Jarltech....

SMB GmbH, the parent company of Jarltech Europe GmbH, has acquired an additional office building for expansion purposes of Jarltech. The building offers about 1800 sqm of floor space. Furthermore, SMB buys two further parcels of land adjacent to the three-storey building, allowing for a large number of parking spaces. The available office space will be more than doubled.

Through the purchase, Jarltech avoids incorporating additional office space into its existing plot, so that more space remains available for a future expansion of the storage areas. The previously approved connecting structure between the two existing warehouses will be built, however. The newly acquired building is located approximately 200 metres from Jarltech and, until recently, was used by the city of Usingen for public housing projects. The building is clearly in need of renovation, and work will begin as soon as possible.

29/03/2012

Business in Spain

When I open the newspaper in the morning, there is usually a new article about some catastrophe in Spain: a high percentage of unemployed young workers, that the...

When I open the newspaper in the morning, there is usually a new article about some catastrophe in Spain: a high percentage of unemployed young workers, that the country is bankrupt, some sort of confrontation with the EU, something about the bank crisis.

I was in Spain several times this year, and it does not look that bad. Wherever you look, you see well-dressed people (nicer than in Frankfurt or London), full restaurants, and a nice bottle of wine on the table during lunch. Plus, the people that I have my appointments with are not depressed, but rather are planning for the future, are looking ahead and are highly ambitious.

Throw into the mix a job market in which it is currently hard to find good people like anywhere else in the world. Our turnover is good, but that is no standard because we have not been in Spain very long. Competitiveness is increasing, at the very least because twice as many people now speak good English compared with ten years ago, in my opinion.

I bet that when Spain comes out of its crisis, a dramatic ascent will follow. As the small and mid-sized businesses have always had it hard with the banks. Since one or the other market participants wanted to sell us their company lately, I have seen a few balance sheets. No bank commitments, because the banks have often gotten out of medium-sized business long ago. This means a whole lot of retained earnings. And because of this, one can survive a sales collapse. We are sticking to our investment in Spain, and we are looking forward to experiencing the fast upward trend.

19/02/2012

Cheap POS Systems and Their Consequences ...

When a manufacturer presents me with a new POS system, I thankfully immediately and intuitively know, after 20 years of experience, how many returns during the...

When a manufacturer presents me with a new POS system, I thankfully immediately and intuitively know, after 20 years of experience, how many returns during the warranty period I can expect. If I have seen the factory in China, Taiwan or anywhere else in Asia, then I know that my guess is accurate. The brand name of the manufacturer does not impress me much. There are also well-known global brands who produce POS systems, of which 30% per year get returned. The record holder is a Far East manufacturer with a rate of 230%, meaning that in the first three years every system was returned more than twice.

That of course is a catastrophe. If we are talking about an end customer with only one POS system, then the retailer can quickly explain that he was simply unlucky, since the devices, and particularly this model, normally are "top". But once the purchaser is part of a chain, then you can forget it.

This is why we are very particular with our POS system selection. Whether it is from HP, NCR or Glancetron: if our product management is not impressed, then we do not buy that product. But Country Managers still come to me: "In country X we need a system for less than Y euros, with Z years of warranty, otherwise we will not sell anything." Of course I can buy a POS system somewhere in the world for 300 euros, with super performance data and a cool design. But then I should also write in the catalog: "This device, which looks great on the outside, comes with only one year's warranty when purchased from us. Because of the servicing which is to be expected, we do not repair the device ourselves, but rather, send it to the manufacturer in the Far East. Please take into account a waiting time of four months. As an alternative we offer our customers a pre-exchange service with a warranty extension, for a mere 300% surcharge."?

It is also interesting that most cases come from central Europe. Thermal overload. In southern Europe every restaurant and every shop is air-conditioned - in Germany or Holland there are only two or three days a year anyway which are hotter than 90 degrees - and that is when the cheap POS systems drop like flies.

I understand the desire to have a more inexpensive market-entry system. But as was the case with the topic of energy consumption (see my blog from 14.2.2012), there must be a little respect for the follow-up costs.

14/02/2012

No Audience for Energy-Saving Devices

It's not really a new trend anymore: manufacturers advertise that their products have low energy consumption....

It's not really a new trend anymore: manufacturers advertise that their products have low energy consumption. In our case, printers do not use much power, checkouts too, and most of all, every device uses less electricity than those of the competitors. Is this about being environmentally friendly? Not really. In the ADC/POS industry, all devices consume less electricity than they did five years ago, and since that time, the implementation of mobile devices has multiplied. The environmental effect of the battery packs and batteries that cannot be recycled is hardly foreseeable. At the checkout, most printers still use thermal paper, a flattened chemical bomb.

Logically, the topic of "Go Green" in our industry is not about protecting nature or its resources, but rather, saving money. This would be really good if the basic approach would be to sell energy-saving devices. The manufacturers champion the cause: hardly a printer/scanner/touch screen out there that according to advertising does not save a whole lot of euros in energy consumption, which leaves you with so many that you can hardly stack. "Are you saving more than you are spending?" would be a more appropriate slogan here.

But the reality is: our retailers check the shelves for the device with the combination that has the best price, the best performance and a resilient quality. No one, and really no one asks us about follow-up costs during sales talks. And if our retailers do not do that, then this topic is obviously not important to end customers. Pity.

17/01/2012

Top and Flop Trends at the NRF in New York

I am currently on my way back from the National Retail Federation (NRF) show in New York. There are two trends to follow in the checkout area....

I am currently on my way back from the National Retail Federation (NRF) show in New York. There are two trends to follow in the checkout area. The first one is not really new anymore, but tablet PCs (like the iPad or Galaxy) will increasingly serve as the "checkout of the future". Hey, the solutions partly look really funny, plus there are more tablet cradles to see at the show. The question is, do you really need to take your stationary checkout with you "occasionaly"? What happens to it if you drop it? The argument they announced was: with an iPad or a Galaxy, users can simply use the service organisations of the giant companies Apple or Samsung if they experience a problem. But everyone would consider it twice, if he would really want to make an appointment at the Apple store once the checkout has been set up.

Secondly, everything is "Cloud". In the future cashiers will only have scanners and printers. Prices and article descriptions come up to date from the Cloud, plus the tally is taken there. Meaning, no more need for a PC at the checkout. It sounds great when you first hear it: 90% electricity savings and no PC maintenance. But, taking a second look at it: what happens when the Internet freezes? In a store with 20 checkouts it might be possible to invest into more secure connections, and to have fallback lines with various providers. However, if there are only one or two checkouts then these alternatives cost more than the checkouts themselves. Solution: there must be a back-up computer in each store with the latest data. This means the PC is still physically there, even if in the back office of the store. I don't see the breatkthrough here.

We are all looking for new "killer hardware", which every shop owner wants to have in his store. Hardware whose advantages are easily recognisable and also which processes so quickly that everyone instantly wants to throw his old hardware out the window. But I fear for 2012 too: nothing to report.

11/01/2012

Planning horizon :)

Can one understand that all of our manufacturers - and even some of our key accounts - want to "plan" the new business year with us? But why?...

Can one understand that all of our manufacturers - and even some of our key accounts - want to "plan" the new business year with us? But why? The only way I can make sense of this is that manufacturers need to plan their resources: for production, possibly necessary assets, personnel, etc. These all have long lead times. The funny thing is that not one plan for 2012 with any partner is ready yet. The first meetings will take place in January. Wouldn't it make more sense to plan for the coming year before it starts? Last year, we received the last plan for the year in April from our manufacturers. Assuming that personnel and production changes have an average lead time of four to five months, we could have saved ourselves the trouble in the first place. Let us be honest, this is how things work: Nobody really wants a "plan". A manufacturer sets his goals for 2012 at some distant headquarters. This is then split between sales areas, and only when those sales departments actually achieve the goal will they receive their bonus. In fact, at some point, they only need to decide which distributor must achieve which turnover. This is not so much active planning as it is planned economy :) From a distributor's point of view, this is pointless and it doesn't matter when the plan is announced. Simply adjourn the meetings until December, and we will be able to make the plans in such way that we achieve them by a close margin - everyone gets their bonus and there are no more surprises!