OSAN, GYEONGGI - For South Korea, one of the world’s leading IT powerhouses, its semiconductor industry sporting top-notch technologies is indeed a crucial, profit-making cog that boosts the nation’s pride in its IT prowess.
Back in 2000, a small but strong Korean company jumped into the semiconductor fray after it discovered the worldwide surplus asset trade market’s huge growth potential. Since then, this company has been on the fast track to the top of the global market. SurplusGLOBAL, a South Korea-based supplier of second-hand semiconductor equipment is that company. SurplusGLOBAL’s recipe for success is its large-scale equipment distribution centers and global competitiveness.
Although SurplusGLOBAL has only 34 employees on its payroll, it is projected to hit more than KRW 70 billion in 2013 sales. “Since SurplusGLOBAL draws up plans and takes action, targeting the worldwide market, not solely the domestic market, our business realm is very huge,” said Bruce J.W. Kim, CEO of SurplusGLOBAL. CEO Kim is confident that SurplusGLOBAL already became the top in the global second-hand semiconductor market. With this as the backdrop, CEO Kim sat down with Korea IT Times to share SurplusGLOBAL’s secrets for success in the global market with its differentiated business models, abundant expertise in the trade market, excellent human talent, well-built infrastructures, and global competitiveness.
SurplusGLOBAL’s secret for obtaining differentiated competencies through systemization
SurplusGLOBAL has emerged as a small but strong company with a projected KRW 70 billion in annual sales however, it hasn’t always exactly been smooth sailing. J.W. Kim, well versed in e-commerce, got his first break when he received an investment of KRW 2.3 billion. His first well-financed B2B (business-to-business) business, however, was going nowhere and consequently almost all of his employees ended up submitting resignations. Yet, J.W. Kim did not give up and eventually he was struck with a brilliant idea dealing in inventories (or second-hand equipment) while reading a newspaper.
J.W. Kim managed to make forays into six of the seven industry equipment sectors, including network, semiconductor, LCD equipment, etc. Later, his decision to make his business focus solely on secondary semiconductor equipment catapulted his company to the leading group of the market. When asked about how SurplusGLOBAL acquired business competency in this sector, CEO Kim explained, “The second-hand equipment market was pretty much segmented when I first entered the market, so it was difficult to set up a system. Poorly systemized businesses inevitably run into difficulties in running their overseas branches, managing their workforces, and thrashing out their marketing strategies. But, since SurplusGLOBAL is far ahead of others in its systemization, late comers and other rivaling companies are still playing catch up with us.”
First of all, SurplusGLOBAL’s competitiveness lies with its ability to adapt to changes in the second-hand equipment market. Equipment prices rapidly fluctuate in tandem with changes in global demand and supply. Therefore, making speedy decisions on when to buy equipment and when to sell is all important. Early comers, like GE Capital, Macquarie, and Sumitomo Corporation are specialized in leasing equipment. They did not plan to engage in the electronic, semiconductor equipment leasing business from the beginning, but they entered to do so after they found that it was a lucrative business.
Unfortunately, risk taking accompanies this type of business where as financial companies, by contrast, make it a priority to avert risks. In a situation where there is a need for professional traders capable of meeting the second-hand equipment market’s requirements, SurplusGLOBAL has continued to boost profitability by expediting its decision making and the processes for taking action through perfect management systemization and by also resorting to bulk purchasing and segmentation selling tactics.
Second is SurplusGLOBAL’s solution capabilities, its 14 year old database, contains information on nearly 60,000 customers. With this large database, SurplusGLOBAL is providing its customers with solutions designed to address their specific concerns. Also, while its competitors sell equipment without any repair work done, on just as is where is terms. SurplusGLOBAL sells equipment after it has been repaired and showcased before the customer. On top of that, when equipment needs to be altered, SurplusGLOBAL can also offer alternative solutions and recommend engineering services.
The provision of diverse in-depth customer satisfaction solutions, included packaging, repair, and even installation services (albeit only under certain circumstances) can take the credit for SurplusGLOBAL current projection of KRW 70 billion in annual sales. This comes at a time when its competitors saw their sales stalling and the market shrinking by 30-40%.
Third is its pricing strategy. Its rivals estimate purchased equipment’s cycles at about two years and set their target revenues high at 40-50%. However, SurplusGLOBAL, unafraid of a dip in profit margins, has kept equipment prices lower than its competitors by setting equipment cycles at less than two years.
SurplusGLOBAL’s overseas market approaches and sales tactics
SurplusGLOBAL thinks of itself as being among the most globalized Korean companies. Most of its office work, including phone calls, email, and meetings, is carried out in English. In addition, SurplusGLOBAL has been fully taking advantage of online marketing and participation in international exhibitions in order to enhance its appeal to the global market. The most important for them is to move beyond the boundaries of the domestic market and towards the worldwide market. By already setting up three overseas units (SurplusGLOBAL China, SurplusGLOBAL Taiwan, and SurplusGLOBAL USA), it is proactively capitalizing on its global networks and overseas exhibitions.
“Our colleagues working at our overseas units are first-rate semiconductor veterans armed with 10-30 years of work experience. Their business attitudes and expertise have been well received by our global customers. They also take part in semiconductor-related exhibitions like network shows, overseas SEMICON shows, and SEMICON Korea. SurplusGLOBAL is the only company in the world that partakes in all of the 10 semiconductor-related exhibitions,“ said CEO Kim. What’s more, SurplusGLOBAL’s showroom, located in Hwaseong (a city in Gyeonggi Province), is visited daily by approximately 30 buyers, of which 3-4 are from international companies.
SurplusGLOBAL’s future growth engine
SurplusGLOBAL, which became the top of market leaders after shifting its focus to secondary semiconductor equipment is expected to post KRW 150 billion in annual sales of semiconductor equipment. Building on such success, SurplusGLOBAL is currently looking for new growth opportunities for the future with its sights set on medical equipment. The CT and MRI industry is structurally similar to that of semiconductors however, regulations are complex and there are inventory pileups.
Therefore, while continuously propping up its existing businesses, SurplusGLOBAL looks to venture into the second-hand medical equipment market with the goal of expanding this venture on a global scale. Although already six months into the second-hand medical equipment business, SurplusGLOBAL has yet to witness its new venture post big sales figures. Thus, they are now poised to really sink its teeth in with the aim of breaking the KRW 10 billion mark.
Behind SurplusGLOBAL’s successful marketing strategies are its excellent employees, who have thus far proved their worth to the fullest. Sales per employee and the number of overseas business trips per employee are the highest among companies in the domestic market. SurplusGLOBAL’s corporate culture comes across as a breath of fresh air.
Along with employee bedrooms and gyms equipped with shower facilities, SurplusGLOBAL’s office boasts a cafeteria which is always stocked with a variety of refreshments (e.g. non-alcohol wines, coffee, tea, etc.) and serves as a cozy rest place as well as a place for employee brainstorming.
Furthermore, instead of stuffing office rooms with high-walled cubicles, SurplusGLOBAL opted for open space office designs in order to maximize employee communication. SurplusGLOBAL also replaced the vertical, hierarchical organizational culture (typical of Korean companies) with a horizontal one by allowing employees to address one another by their English names. Such an open-minded corporate culture has translated into speedy decision making and the promotion of mutual respect, CEO Kim said.
SurplusGLOBAL has recently established the SurplusGLOBAL Foundation with a goal of supporting children with developmental disabilities. Wanting to do more than launching one-off charitable events (such as charitable fundraising and briquette donation), decided to develop the SurplusGLOBAL Foundation so as to make regular and enduring social contributions for decades to come.
Goal-oriented drastic actions, its unmatched, open-minded organizational culture, and continuing social contributions all are the key elements of SurplusGLOBAL’s global competitiveness. The self-proclaimed ‘most globalized company yet established in the domestic market’ seems destined to continue its success and certainly merits the attention.
