Rising through the ranks

Rising through the ranks

Barry Lin, in his final year of college in 1980, was an office boy in a two-man outfit.

His brother's former colleague had just started an electronics distribution company in Taiwan and needed a helper.

"I did everything - book keeping, inventory management, making deliveries on a Vespa scooter," he recalls.

Fast forward three decades, and the company is now a behemoth known as WPG Holdings, which is listed in Taiwan. It is Asia's top electronics distributor by revenue and the world's third largest, with 2011 sales revenues of NT$338 billion (S$14 billion).

Components that were once tied together with rubber bands and stored in a file cabinet are now in neatly-stacked boxes in giant warehouses in Taiwan, Hong Kong, Singapore and Shanghai.

Mr Lin is now managing director of WPG South Asia - which was listed in Singapore in 2001 as Allcom Technologies, but re-acquired by its parent in 2004 and delisted. Today, WPG South Asia is a WPG Holdings subsidiary with over 40 sales offices in the Asia-Pacific region, 250 product lines and recorded S$1 billion of revenue last year.

Says Mr Lin of his journey: "It has been quite interesting and exciting. Not many people have the chance see a company grow from a two-man firm in 1980 to a company of 6,500 people."

According to Mr Lin, key to the company's growth all these years were the services WPG provided to customers. The company acts as an inventory buffer, offers longer payment terms, and provides design services, he says.

WPG distributes electronics components used to make any device that needs electricity, such as mobile phones, computers, sensors, TVs, and home appliances. It buys components from vendors, or suppliers, such as Intel, Samsung and Texas Instruments.

It then sells them to manufacturers such as Flextronics, Foxconn, Jabil, and Venture GES, as well as to smaller manufacturers whose orders would otherwise be too small for suppliers to accommodate.

It is a one-stop shop, enabling customers to obtain a broad range of components instead of having to source from different suppliers.

Margins tend to be slim, in the range of 5-7 per cent and as low as 2-3 per cent for some products.

Thus, WPG provides additional services to customers, stocking two months worth of components for its customers and providing longer payment terms of 45-75 days compared to suppliers who can demand payment within 30 days.

With an inventory holding period of two months and a receivables collection period of two months, and subtracting a month for accounts payable, WPG needs three months of working capital a year - or $250 million on $1 billion of revenue.

Managing cashflow is critical and part of that involves building good relationships with bankers through regular business reviews with them in good times or bad, Mr Lin says.

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