Memec: Growing Asia Business 

Asia is a critical market to Memec Group CEO and President David Ashworth. In part it’s personal, as Ashworth spent a dozen years in the region for Memec. But increasingly, it’s also a fast-growing portion of Memec’s business.

“Asia is very near and dear to my heart.

I spent 12 years there going back to 1988,” said Ashworth, who notes that Asia has become 35 percent of the distributor’s total revenue. “If you look at the Asia business, it’s really growing. It’s always growing over there.”

Ashworth noted that Memec’s Asian business continued to grow throughout the three-year downturn in the United States and Europe. Memec had deep enough roots in Asia to make the business worthwhile during the stressful years of 2001 and 2002. “We remained profitable throughout,” said Ashworth.

He attributes part of Memec’s success in Asia to the company’s business model. As a distributor hangs its shingle on design demand, Memec helps its customers with product design.

“We’ve been successful because we help company’s get to market quickly.” Ashworth also noted that Asia is one territory in the world where competition is wide open. “It’s the only place in the world where four or five distributors don’t dominate.” He also noted that Asia is a fragmented market that fits well with Memec’s concentration on a selective, targeted line card.

Memec’s market concentration in Asia is largely focused on consumer products. “The consumer segment is pretty good,” said Ashworth. “That market consists of mobile handsets, PDAs, set-top boxes, satellite TV and DVD players. It’s broadly consumer.”

Ashworth noted that margins are tight in the region, but he said the costs are also relationally lower.

Interestingly, a significant majority of Memec’s Asian business is domestic.

“The real allure of China is its domestic market,” said Ashworth. “Ninety percent of our business is domestic.” Most distributors and their suppliers view Asia’s domestic market as the Holy Grail, since it represents a real new-growth market rather than simply a shift of business from North America and Europe. Ashworth, in a “the grass is always greener” comment, noted there’s some real value in business that shifts to Asia. “If you can track it, you can control its margins.”

And as for the continuing rumors that Memec will go public soon, Ashworth offered an official “no comment.” You can probably expect, however, that the rumor will convert to reality once the distribution and stock markets are both sufficiently robust. Both markets are moving significantly in that direction lately, so don’t be surprised if hear an announcement this year.