CEO Blog | Jarltech.com

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.