Quest for Dominance

Quest for dominance

(f00113) -- China's fragmented electronic components distribution market is ripe for consolidation. Who's going to lead the charge?

By Henry T. Cochran
Electronics Supply & Manufacturing
(02/01/2007 9:00 AM EST)


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One of the biggest factors at play in China's electronic component distribution market is that it is a major market where the globally dominant players don't have double-digit share.

Eventually, the market will consolidate, with the main players achieving dominance, but cultural habits aren't broken overnight. Certainly, as China's legal system improves and the R-factor--relationships--declines in importance, change will come. But it will take a while to rationalize China's component distribution market.

In an earlier ESM article ("China distribution: wide open," April 2006), I listed five factors that I believe will drive consolidation. They all have relatively short fuses--measured in years, not decades. It's hard to say, however, which of them will be the catalyst for consolidation.

Perhaps the bigger issue is how much longer the large distributors from North America can wait before ramping their investment in the world's largest component market. I believe the lack of investment (or even entry) into China by most of the top 50 North American franchise distributors is one of the worst management blunders in the history of the industry. Unless this changes rapidly, a decade from now the list of the top 50 global franchise distributors will differ markedly from today's roster.


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