Nigel Brown, CEO of Microlease considers how increasing globalisation in the electronics world is leading European firms into new markets and driving the need for flexible test and measurement equipment solutions
The global nature of the electronics industry means that the environment in which electronics companies find themselves is larger and more complex than ever before. In many regions, particularly developing regions with emerging markets, opportunities and growth prospects are greater than in home markets.
However, these new markets can also be uncertain environments, affected by a range of difficult to predict economic, political and natural events.
Test and measurement specialist, Microlease has a strategy to address this internationalisation focusing on two key factors; firstly, a continued investment in the service delivery and logistics infrastructure. Secondly, the company supports its customers by monitoring trends and exploring direct opportunities in new markets.
Many UK and European electronics companies have increased operations in emerging markets across Asia, Africa and the Middle East, as well as Latin America, either as a result of contract manufacturing, an increasingly global supply chain or pursuing new contracts and partnerships.
In the case of telecoms, smartphone devices and data demand are driving the need for infrastructure investment, from 3G networks to data.
According to an ABI Research study, Latin America is one to watch as it out performed other regions in mobile revenue growth for the period Q1 2010 to Q1 2011. The total aggregate service revenue here grew at 17 percent while, in comparison; North America achieved just 8.9 percent growth.
This is being reflected across many other emerging markets, which are expected to be the drivers of growth in global mobile telecoms.
The opportunities to get involved in new markets are great, but often the logistics are challenging and flexibility is needed as projects change.
In some instances, major projects have been subject to the effects of instability or political unrest. The current situation in the Middle East is a great example that has resulted in projects being interrupted or suspended.
When a big project has been planned and investment in equipment is made, the financial outlay required to purchase the equipment outright is substantial. Here, many smart organisations choose to rent instead.
The ability to simply return equipment and stop costs when projects are put on hold greatly reduces the overall financial impact to the company.
Finding new direct markets
Major global events can also accelerate business opportunity, which could range from preparing national infrastructures for major sporting events such as the World Cup or Olympic Games to restarting operations when political stability has returned to a country or in the aftermath of a natural disaster. While political and economic risks will invariably remain, clearly the opportunities are there.
As well as being established in the UK, US and Latin America, Microlease has extended reach into the Far East and over 85 countries worldwide. But it is also investigating further direct growth in other emerging markets.
The BRIC countries (Brazil, Russia, India, China) are among key areas of international growth and are critical for electronics manufacturing in the test equipment industry. The company recently visited Brazil to examine how to enter the market as part of a London Chamber of Commerce Trade Mission. Growth in the country is being fuelled by the imminent arrival of the 2014 World Cup and the 2016 Olympics.
Closer to home, Eastern European markets are also a critical growth area with strong demand for test and measurement equipment, particularly from new EU members Romania, Poland, Hungary, the Czech Republic and Slovakia. Research by Frost and Sullivan notes that significant research and development in Western Europe and the growing manufacturing opportunities in Eastern Europe are set to open up a number of lucrative market opportunities in many areas.
“The shift of manufacturing activity from the developed Western European markets to the East has resulted in a steady demand emanating from this market space,” said Frost & Sullivan Research Analyst Mariano Kimbara. “This is a key factor that has ensured that Europe continues to account for a substantial revenue share of the total test and measurement market.”
The bottom line is that UK and European electronics companies operate in a new global landscape that offers many opportunities. At the same time, there are also risks and uncertainties to be managed, but there are ways of minimising these.
The management of test equipment requirements when embarking on an overseas project is one example. These uncertainties can be managed by deploying solutions, such as rental, which means that organisations have the flexibility to hand the equipment back if things change and re-start immediately when needed.
That kind of flexibility generates a competitive advantage over companies that may have invested all in capital.