Electronics distributors see robust growth in Asia

By Jim Carbone -- Purchasing, 5/1/2008 1:34:00 PM

Most North American electronics distributors are expecting to post at least single-digit growth in 2008, but many say growth will be stronger in Asia.

“Asia now represents 22% of our components business, up from 13% just three years ago,” says Bill Mitchell, chairman and CEO of Arrow Electronics, based in Melville, N.Y. “We expect that growth rate to continue,” he says. Longer term that percentage will grow to the 30-35% range.

In 2007 Arrow sold $2.4 billion of components in Asia, says Mitchell. A lot of those sales were in China where demand continues to be strong. “What we saw last year for the first time was the domestic Chinese economy was bigger that the export economy,” says Mitchell. For components, Mitchell expects component growth for Arrow will be in the low double digits in China while North America and will have low single-digit growth over the next several years.

“We have said consistently that we would outgrow that market organically. We have done that for five years in a row,” says Mitchell.

He adds Arrow will also focus efforts on Eastern Europe. “We have expanded into former eastern bloc countries. That is a small portion of our business right now.” However, Arrow plans to grow its business there and expand into more countries.

“The big prize is Russia. It is the fastest growing large economy in the world,” he says.

Avnet also is seeing strong growth in Asia. In 2007 it did nearly $3 billion of business there. “We have lower market share in Asia than America, but it is higher than it was five years ago,” says Avnet’s CEO, president and chairman Roy Vallee. Asia is just under 30% of Avnet’s overall revenue, the Americas just under 40% and Europe is just over 30%, he says.

He says Avnet will likely gain share in Asia by organic growth and by acquisition.

But it’s not just Arrow and Avnet that have boosted their presence in Asia and Europe.

For instance Digi-Key, based in Thief River Falls, Minn., expects to do about $100 million in sales in China and Europe and expand to India, according to Mark Larson, Digi-Key’s president.

“We are seeing some really nice growth in southeast Asia,” he says. “We are looking at growth in range of 50% for those regions.”

TTI has been consistently growing its European business. “Europe has been phenomenal for us,” says Craig Conrad, senior vice president and chief marketing and planning officer for TTI, based in Fort Worth, Texas. “Ten years ago TTI was doing $10 million in Europe and this year we will do $450 million.”

He says before TTI, there were no passives and connector specialist distributors in Europe and its specialist business model was quickly accepted.

Also see: Arrow Electronics to acquire Asian distributor Achieva
See also: Arrow acquires Indian distributors