Tuesday, October 08, 2013: RECOM, which has been operating in India for the last one decade, has captured a good share of the power supply market with superior customer service, high-quality products, impressive performance, highly reliable and innovative technology, shorter delivery times and a good local distribution network. “We always listen and improve our business to stay competitive. Our business model is high-mix/ low-volume production, and we have more than 20,000 types of converters and an extremely wide product range,” says Karsten Bier, CEO, RECOM. In a conversation with Srabani Sen of Electronics Bazaar, he speaks about the importance of the Indian market for RECOM and how it has overcome the challenges it faced while doing business here.
EB: Why is the Indian market important for RECOM?
India has the second largest GDP among the emerging economies with a predicted growth of at least 6 per cent in 2013-14, and 6.7 per cent by the next fiscal year (2014-15). This is potentially attractive to companies such as RECOM. We believe that India will continue to make rapid strides. In the last few years, the quality of engineering has improved tremendously, other than what is happening in the already existing local R&D centres. We see an increased number of global companies investing in India and establishing a higher percentage of global R&D centres in major cities like Bengaluru, Mumbai, Delhi, etc. These companies have benefited from the huge number of professional and skilled engineers available in the market. We have many design-in activities in India. Although India is a highly price-sensitive market, we do see good opportunities for high-end brands with the full power distribution portfolio like RECOM has.
EB: Which sectors do you target in India? And over the years, what changes have you witnessed in the demand for converters?
In general, we target segments like energy, transportation, medical electronics, lighting and machinery. We have also witnessed an increased demand in medical equipment, which RECOM has been supplying for years. There are the high-end industrial segments like energy and transportation that we are particularly interested in, especially the railways. We also see a substantial demand for certified low power converters in the 0.25W to 100W range.
The energy market also seems to be hotting up. The Government of India has recognised the vast potential for energy savings and the benefits of energy efficiency. A scheme called ‘Perform, Achieve and Trade (PAT)’was developed to govern large energy consumers. We see it as an opportunity for our low standby consumption AC/DC power modules that are particularly energy-efficient and consume less than one-tenth the requirements of the EuP (Energy Using Products) directive.
EB: What are your strategies to capture a bigger market share in India?
Our strongest offering as a global market leader is in the sub-100W power range and we offer the largest logistics network. We have a very strong team for local application engineering and customer support, and we offer customers in India our knowhow and support to bring their products to market faster.
EB: What do you do for brand-building in India?
Besides advertising to create brand awareness, we also build credibility for our brand and products by sharing our knowledge and time. At RECOM, we strongly believe in nurturing the future pillars of industry and in sharing our knowledge with the community. We actively share our technological know how by participating in exhibitions and seminars, and through technical magazines.
EB: What challenges do you face in doing business in India?
The Indian market is one of the most competitive markets where we operate. We are constantly facing the price pressure from our customers, and this is the common scenario in other countries as well.
EB: Have you resolved this challenge? And how?
This is a costly challenge to overcome. It is difficult to implement high-volume production for all our converters, which is the only way to bring down prices. Hence, we have selected a number of converter series to be produced in large quantities at lower prices, particularly our best-selling series in the 2W range. This can help us position ourselves better in the market and compete with fellow manufacturers with extremely low prices. We intend to produce our best-selling series in batch sizes of 100,000. We will then be able to offer these products to the global market at prices that are 25 to 35 per cent below current prices. This will be a great saving for our customers.
To better facilitate shorter delivery times, RECOM takes the help of global catalogue distribution companies, such as Element14, RS Components, Digikey and Mouser. Our products can be found in the product lists of virtually all our partners, and sample batches of all standard series can be shipped to any location in the world within 48 hours. With our strong distribution network in India, and our network of stock holding catalogue partners, we are able to support our customers almost anywhere and at any time, in a fast manner.
EB: What are the present trends in the domain of converters in India?
Modular voltage converters continue to gain ground as more and more customers (designer/engineers) want to save their development time and board space. The use of modular solutions definitely reduces time and minimises risk. Hence, the cost to acquire a modular power conversion solution is relatively lower. I would say energyefficient and low power converters in small packages are in demand. It will be interesting to see how our new IGBT-converters, the low cost E-series and LED-drivers will do in the market.
EB: Do you have any plans to invest in manufacturing in India, as the Indian government is currently offering a number of incentives to boost manufacturing in the country?
At the moment, we do not have plans for any manufacturing facility in India but we will definitely keep an eye on this development.
EB: India is a cost-sensitive market. Do your products fulfil the cost requirements of Indian buyers?
I would say yes, 100 per cent. In late 2012, we have invested millions in automation, we have made a business decision to introduce the new E-series to stay competitive in the market and meet the expectations of our cost-sensitive customers. The E-series development project was initially planned for the India and China markets, strategically. In less than a year from the launch of the latest E-series, we have already sold a high volume from this series in the Asia Pacific region.
However, I strongly believe that the key to building our business is to explain the cost of owning a RECOM product to the customers. Our products are subject to stringent quality checks with 3-year warranty on voltage converters and 3 to 5-year warranty on our LED drivers. Being reliable has a price and this is definitely a lower price for the customers than the price to be paid for maintenance and replacements, and most importantly, their brand name.
EB: How do you support your distributors in India?
We communicate and support our distributors on a daily basis with regard to marketing, technical enquiry, logistical and sales support. We visit our distributors regularly and provide on-site technical support during their customer visits. Having a close relationship with our comrades and being in the battlefield together, helps us to understand and identify the growth in the market and spot emerging sources of business. Training is provided to our distributors to ensure that they are wellversed in our existing and new products.
EB: How do you reach out to your customers?
We do it through our partners, advertisements, workshops and through RECOM websites.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine