The Soft Pitch

I had the opportunity of being included in a business roundtable with Zhou Wenzhong, Ambassador of the People’s Republic of China to the U.S. There was a nice turnout of business leaders – some of the usual suspects – other large companies with a significant presence in Phoenix like Intel and Honeywell.  But there were also some smaller companies that one might find a bit surprising such as small manufacturing companies exporting construction hardware.  Ambassador Zhou Wenzhong’s main point was that we – the U.S. – have a mutual interest with China: growth and economic success. Of course, political differences exist, but still he spent a fair amount of time presenting his country’s position that we all benefit by working together as “friends.” Couldn’t agree more, and I was reminded of my mom’s old saying that you catch more flies with honey than vinegar. He also explained China’s philosophical commitment to environmentally-friendly policies and urged caution when it comes to protectionist policies.

It’s interesting to see how quickly we can build bridges across borders in the business world, establishing connections all over the world.  For example, Avnet’s business in China is now more than $2 billion annually, we have 24 offices across the country and almost 1700 employees. We’ve been able to grow quickly in part fueled by the growth of the Chinese economy, but also because we adhere to a market-led philosophy: With more than 30 different business units globally, each market Avnet serves has different priorities and requirements, based on their unique business environments. Avnet leverages its global scale and scope to create local value propositions that address customer and supplier expectations in each market. What that boils down to is we give the local management a great deal of autonomy in making decisions and running their businesses in their market. As the world’s largest value-add technology distributor, the strategy seems to be working.

By now its well into the evening in China and our Avnet Technology Solutions team in Asia is gearing up to execute on the announcement made in Beijing earlier today that Avnet is now going after the solutions distribution business in China. This didn’t get the same splash as our announcement two weeks ago of the acquisition of Nippon in Japan, virtually doubling our business in that market.  It didn’t get the same splash only because we’re working to build our solutions business in China, not buy it. Several reasons for this, but foremost being that we want the business to work with the rest of Avnet’s culture and offer customers the same dedication to value.  So, the team is hiring key individuals, leveraging our existing infrastructure (more than 15 facilities including warehouses, an integration center, and Avnet Electronics Marketing offices), nurturing relationships with suppliers (we’ll start from IBM and I’m sure very quickly add others), and reaching out to customers.

The world is in an economic crisis – turmoil – upheaval – shift –  whatever – pick your term. (As an aside, is it just me or are the headlines becoming a self-fulfilling prophesy scaring people and businesses into pulling back, thereby triggering more sluggish sales, which triggers a headline, which promotes more fear, leading to less spending, which triggers a headline…?)  Meanwhile, for those prudent and careful business managers this time represents opportunities to invest.  Do we need to readjust for the short term? Yes and yes we, Avnet, are taking the appropriate steps. Will this downturn last forever? No. So while we’re aligning resources for the short term, we’re still investing for the long term. We’re investing in the right places, with the right resources to be ahead of the market and positioned well for the turn. Asia is a great example. Millions of businesses and people, technologically savvy, and ready for expansion.  We’re ready too.

While Al was tending his wounds from the Cubs loss (so sorry Al), I was visiting a small town in Oregon – Ashland. Home to the Oregon Shakespeare Festival, Ashland has about 20,000 people … and the largest Shakespeare Festival in the country (it runs 10 months and draws thousands).  My daughter was on fall break and since she is a Shakespeare fan, off we went for four days.  We saw four plays and only one, Othello, was presented in the “traditional” Shakespeare style preserving language, costumes and setting.  All the others, including a hilarious production of A Midsummer Night’s Dream that involved a hippie VW bus from the 60’s, were true in spirit but adapted for a fresh approach.  In fact, the production of A Comedy of Errors was so far from the original (think western town + musical), that it was barely recognizable as Shakespeare.

Speaking of barely recognizable (okay, so I know this is a big leap, but transitioning from watching Puck cavort across the stage to sitting in my windowless office is also a big leap), before I left, BusinessWeek published a cover story on how counterfeit components were finding their way into US military applications. When I saw the cover, I thought, “Wow – if they only knew what we were doing.”

What the BusinessWeek story left out was how we and others are working against counterfeiting. As a global distributor, we have the processes in place to prevent that very thing from happening.

We announced in July that we were one of the first distributors to be certified under China’s new “Reliable Electronic Component Suppliers” or (RECS) system. Then, this week our team in Asia announced “Avnet combats counterfeiting concerns for small-to-medium sized manufacturers in China.”  For those of you who follow supply-chain news and study how players in an industry collaborate to drive efficiency or in this case authenticity, you might be interested in how Avnet and others worked together on the Shenzhen International Components Center (ICC) “Transaction Hall” that was announced this week.  As part of this, Avnet launched a sales & service counter in the ICC that allows us to conduct transactions on the spot of small quantities guaranteed to be genuine components.

With all of the bad press about counterfeit parts, bad milk and tainted toys, isn’t it nice to know someone’s got the integrity to do the right thing and guarantee what we’re selling really is what we say we’re selling?

Oh and as far as that “barely recognizable Shakespeare thing”? The really interesting part is that the ideas Shakespeare wrote about 400 years ago still came through in the modern productions. Set in an urban, gang-torn city, Coriolanus still invited scrutiny of one man’s struggle to rationalize his personal beliefs with the political will of others. Personal integrity – it’s still at the heart of things.