In mid-August, Chen Lu, editor-in-chief of China Exportsemi Web, attended the inauguration ceremony of the Greater Bay Area Alliance of the China Sensor and Internet of Things Industry Alliance, and also attended the 2024 Shenzhen Component Distribution Industry Managers Summit held in Guangming District, Shenzhen. During the summit, six leading figures in the field of electronic components distribution in China had a heated roundtable debate on "the future development prospects of distributors".
Overview:
The roundtable forum of this summit attracted the participation of chairmen and executives of well-known enterprises such as Kaixinda, Best of Best, Smart Core, DST Electronic, and RightIC. The discussion revolved around whether distributors still have room to survive and thrive in the context of the rise of the direct selling model and the evolution of the role of agents. Although everyone has different views, they all agree that the unique role of distributors in China's electronic components industry chain cannot be ignored.
Figure: 2024 Component Distribution Industry Managers Summit Roundtable Discussion, the final destination of agent distribution
Point 1: Distributors still have a broad space for survival
Xu Cheng, chairman of Kaixinda, took the lead in making a speech, proposing the irreplaceability of distributors in the current electronic components industry chain. He pointed out that although the direct sales model represented by Texas Instruments has been successful on a global scale, it has not fully covered all market needs. Especially in the Chinese market, domestic component manufacturers have a deeper understanding of the needs of local customers, which provides distributors with a unique market opportunity.
Xu Cheng also stressed that domestic enterprises have achieved remarkable results through independent sales models in the fields of infrastructure and integrated circuits. He said that although the role of agents may be weakened in the future, distributors will still be able to remain competitive in the industry by providing customized services and closer support to the market.
Viewpoint 2: The unique value of agents cannot be ignored
Wang Yucheng, chairman of Haoshanghao Group, put forward a different view. He believes that agents are not only the "transitional role" of the industrial chain, but also an indispensable part of the entire electronic components industry. Wang Yucheng pointed out that there are a large number of electronic product companies in the world, and it is impossible for the original factory to directly connect with each company, and the agent acts as an important bridge in this process, responsible for supply chain management and customer relationship maintenance.
Wang Yucheng further explained that agents not only play an important role in the sales process, but also play a key role in technical support and market development. Even in the context of the prevalence of the direct sales model, the value of an agent is still irreplaceable.
Perspective 3: The role of distributors and agents is changing
Liu Hongbing, general manager of Smart Core, pointed out in his speech that the roles of distributors and agents are undergoing profound changes. With the ever-changing market environment, distributors not only need to adapt to emerging needs, but also need to improve their technical support capabilities and service levels in order to remain invincible in the highly competitive market.
Liu Hongbing believes that in the future, distributors need to make efforts in technical services and customer relationship management in order to maintain a competitive advantage in the market. He also pointed out that the cooperation between distributors and agents will be closer to jointly promote the development of the industry.
Data Examples & Market Analysis:
According to the China Semiconductor Industry Association, the size of China's semiconductor components market reached 2.3 trillion yuan in 2023, with about 40% of the market share achieved through distribution channels. Despite the dominance of the direct sales model in some high-end segments, distributors still hold an important position in the SME market.
In 2023, about 60% of the sales of domestic component manufacturers will be achieved through distribution channels, which further shows the importance of distributors in helping local companies develop markets and increase market share. In the next five years, distributors are expected to maintain a solid position in China's semiconductor market, with market share expected to remain between 35% and 40%. Although the direct sales model will continue to evolve, the market space for distributors is still broad.
Commentary: The challenges and opportunities ahead for distributors coexist
After listening to the roundtable discussion, Chen Lu, editor-in-chief of China Exportsemi Web, expressed optimism about the future prospects of distributors. He believes that although the rise of the direct sales model poses certain challenges to distributors, the market space for Chinese distributors still exists and has unique value.
Chen Lu emphasized that distributors need to continuously improve their technical capabilities and service levels in the face of challenges, especially in digital transformation. He suggested that distributors should strengthen cooperation with original manufacturers, enhance customer stickiness by providing professional technical support and value-added services, and ensure that their position in the market is not shaken.
In addition, Chen Lu also mentioned that distributors can cooperate with e-commerce platforms to expand online sales channels and innovate business models to find new growth points in the highly competitive market.
Summary:
The roundtable debate at the Shenzhen Components Summit provided valuable insights into the future development of Chinese distributors. Although the rise of the direct sales model poses a considerable challenge to distributors, the unique value and market position of distributors in China's electronic components industry chain cannot be ignored. By continuously improving their technical capabilities and service levels, distributors will be able to continue to play an important role in the market of the future.
As China's electronic components market continues to expand, the roles of distributors will become more diversified, and they will play an increasingly key role in promoting the development of China's semiconductor industry.
