Song Jie, general manager of Belkin China, says technology companies should anticipate consumer needs to stimulate market demand. Zou Hong / China Daily

Belkin gives a sneak peek of the road ahead for accessory makers in China

Song Jie is still checking his schedule on an iPhone when he walks through the revolving door of the Swissotel Beijing. For a man who just completed a two-hour international conference call at 7 am, he looks extraordinarily energetic.

As the general manager of Belkin International's China region, which is experiencing a thorough transformation, perhaps Song has to.

In China, Belkin is known for its routers, iPad and iPhone accessories and other Apple peripherals. But the company is also a leading producer of connectivity devices worldwide and is now embarking on a journey that will see it turn from a pure manufacturer to an application solution provider in both hardware and software.

"We see a huge room for growth in application solutions for mobile Internet and wireless devices, which we believe will change the way people live and work," Song says.

Set up in 1983, the Playa Vista, California-based connectivity solution provider has extended its business to more than 25 countries and has more than 1,200 employees worldwide. In 2010, the company recorded $1 billion of sales worldwide and clocked double-digit growth in 2011. The company declined to disclose the exact sales numbers for 2011.

The real growth momentum for the US company came about in 2003 when it started its China operations. Not surprisingly, Apple accessory sales account for nearly 60 percent of Belkin China's business.

Song says that in the past two years, the company has seen its China business more than doubled, with sales from the Apple sector almost tripled. The number of its distributors has also increased from 30 in 2010 to nearly 200 last year.

In December, Belkin set up its first R&D center outside the US in Shenzhen, Guangdong province. Alan Sparks, vice-president of Belkin Asia, had at that time mentioned that China would continue to be an important destination for investment.

Song says that apart from the Apple craze, Chinese consumers also pay more attention to style rather than quality and comfort and tend to change their products, unlike many customers in the West.

With such a huge market at stake, the company has also taken steps to ensure that its products are sufficiently localized to Chinese tastes, without compromising on Western trends. Since last year, the company has been sending a team of designers to China to conduct market studies ahead of major product launches in the US and other markets.

The Shenzhen center recently established a new engineering team to work with its design studios in South Korea and Hong Kong, to produce more customized products for Chinese users.

Song joined Belkin China in May 2010. Prior to that, he was responsible for business development at Intel China and Microsoft China. Though he has more than 20 years of experience in the technology industry, he says that one of the important lessons that he has learned is that technology products should be forward looking. "This is also the core of Belkin strategy."

Song says there are two types of companies: those that serve consumer needs and others that anticipate consumer needs. "Belkin is somewhere in the middle of this in its eventual transition toward the second category," he says.

"Forward looking means that sometimes we have to ignore consumers' short-term needs. Instead, we try to anticipate their needs to stimulate market demand."

There are already many strong competitors in the technology solutions sector like IBM and SAP. But Belkin believes that it has its own market niche built through considerable experience.

"Our confidence in application solutions comes from years of experience in accessories production," he says.

"Unlike companies offering enterprise solutions, we are more concerned about individual user demands at home and within a Wi-Fi environment."

Many of the company's recent products have been launched with this in view. Its typical products include an iPad table stand in the kitchen, which consists of a water-resistant stand and a touch pen to avoid touching the screen with wet hands, and an iPhone case with a handle that helps users take photos of themselves more conveniently.

Song says that by studying consumer needs, the company accumulated first-hand feedback and experience, which has greatly assisted in application development.

In January, the company launched WeMo, a home automation system, which allows household electronics to be controlled using a mobile app on a smartphone or tablet, under the same wi-fi environment. The model will be made available in China soon.

In addition, Belkin China has also made a thorough adjustment in terms of employees and organizational structure to accomplish this transition.

Song says that now only 40 percent of Belkin China's operations are still in the traditional accessory production, while 60 percent are focused on new business.

But there are also some side effects, he says. The transition from a supplier to a retailer has also led to change in customer profiles. "Earlier most of our customers were big retailers like Walmart and Best Buy. But now it is the end-users, thereby prompting us to be more proactive," he says.

"Previously we used to adjust our strategy based on advice and feedback from retailers. But now we have to consider the needs of individual end-users to build up our brand."

During the 2012 International Consumer Electronics Show (CES) in Las Vegas in January, the company unveiled its new logo PIP (People Inspired Products).

The core of the new strategy is that Belkin will aggressively promote its products in major exhibitions like the CES to build brand awareness and cultivate loyalty among end-users.

Besides, the company has also broadened its distribution channels to major online and franchise distributors such as the Apple store, Hisap and Media Markt.

At the same time, it has rationalized its product lines and stopped making several products like computer bags. Song says that it is a natural process as the onus is now more on application solutions rather than products.

"With this transition, we have stepped into a business model of high technology, high risk, high investment and high returns."

In his opinion, it is a course of action that other accessory makers should also think of in the long run.

Song says that there are three development stages for accessory producers. The first stage involves making accessories for certain devices, while the second stage is the mobile Internet, which allows more innovations in interaction between users and devices. The third stage is cloud computing.

"With the emergence of mobile Internet and cloud computing, application solutions will outweigh physical devices in daily lives."

Though only 10 percent of Belkin China's business comes from application solutions, Song says he has a rough timeline for Belkin growth.

"When our business from the software sector reaches 50 percent of the total pie, probably within two to three years, we will launch application products based on the cloud concept."

linjingcd@chinadaily.com.cn

(China Daily 05/18/2012 page15)