–KY Lee, President, Acer
Peripherals, Inc.

Winner of the Republic Of
China’s ‘Outstanding Manager’ Of The Year Award, KY Lee, President, Acer Peripherals Inc
(API), joined Acer Group in 1976. A member of the Board of Directors of Acer Computer
(China), Lee has the credit of making API the #2 company in monitors in the Taiwanese
market. During his tenure as the head of the marketing and sales division of Acer, Lee
developed the first 386DX in the PC arena, beating IBM. An electrical engineer from the
National Taiwan University, Lee did his MBA from International Institute of Management
Development of Switzerland. DATAQUEST caught up with the API President during his recent
visit to India. Excerpts from the interview:

What is Acer’s channel strategy
for the peripherals market in India?
Well, it depends on the product. For every product we apply a different channel strategy
because of the difference in the nature of the business. The service requirements too are
different for different products. So far, we have used national distributors to help us
deliver the products and to meet the service requirements. India is such a big country.
For scanners there are some medium distributors who have joined to help us in supporting
this market. For the component heavy products we have some other quality distributors to
bring in our fold.

What exactly is the role of
Servex division of API in the Indian market?
We see India as a very important emerging market. It is a wide territory. The size of the
country is so vast that we need to build a service infrastructure before we can sell our
product. It’s basically the marketing arm of Acer Peripherals.

How do you see the PC
environment in India?
The PC environment in India is quite unique. There is a high percentage of the local
brands. GIDs and assemblers account for nearly 75% to 80% of the market. There are a lot
of local assemblers who appreciate Acer’s product but they want to market our products
under their own brand.

Acer Peripherals products are
not very popular in India. How do you plan to build your brand equity in the country?
Basically, Acer is known for the quality of its products in PC business. And actually, in
most of the PC systems a large number of the products are made by Acer Peripherals. Also,
we have several channel programs with partners like Godrej and we would like them to give
our customers best service with quality to meet the requirement in the Indian market. So,
quality and service would together help us build the brand equity of our products.

Apart from Godrej, are you also
planning to have some other channel partners?
We don’t know right now. It depends on the product. Or rather, it depends on the nature of
the product. For example, the GSM phone. This product doesn’t fit in with the company’s
[Godrej] product portfolio, so we need to find some other people who can handle the
nationwide distribution of this product. Thus it basically depends on the product. For
instance, Hewlett-Packard is a well known player in this business in the Indian market,
but the company will not make its peripherals distributor its PC partner. Right. The
company will not use the same distributor as its workstations partner. Only a specialized
channel partner can provide the best value to the customer and that’s what we are looking
for.

You said that you see a huge
growth potential in the Indian market, but what do you feel about the saturation of the CD
ROM, scanner and monitors market.
Saturated (Laughs). Why do say saturated? Look at the IT industry in China. India and
China are the two big and populous countries of the world today. The time taken by China
to grow from 1 million units to the current 4.5 million units per year was, say, about two
to three years. So, India also has the potential to grow at the same high speed. The issue
is how open the government policy is, especially the policies relating to ISPs,
non-commercial products as well as imports.

Do you think the IT policy in
India is hindering its growth in the country?
Maybe yes, especially in the ISP arena, where the government’s policy may hamper the
growth of this business. In most of the countries today, especially in the developed
countries, internet is the biggest driving force behind the growth of the PC market.

Are you planning to enter the
ISP business in the country?
No, we are not in that business. And mainly because it is a very local business. There are
a lot of local companies who are getting involved in that. However, we are involved in ISP
business in Taiwan.

Are there any plans of setting
up a manufacturing plant in India?
Well, we have received a lot of suggestions from our local partners. But we have not taken
any decision yet. So far, we have only a service station here.

You said that true competition
is still to become a reality in the Indian market. But we already have Samsung, Vintron
and Microtek fighting it out in the monitors arena; inkjet printer market too has HP,
Epson and Canon. Similarly in dot matrix printers, we have TVSE and Epson.
Competition is everywhere. Just as I had mentioned earlier, computer business in India is
not very clear. The PC market in the country has the potential, including the ISP market.
At this moment, for example, the peripherals business or the components business in India
are the fastest-growing opportunities for the players. However, they are not able to sense
the requirements like the support infrastructure needed, or the support services that
customers usually desire. The market is coming up in a big way. We don’t think that at
this moment the peripheral market in India is saturated. There are a lot of opportunities.

Do you see any parallel between
the Chinese and the Indian market as far as peripherals industry is concerned?
They are quite close to each other and the difference has further blurred lately. The
issue is that China has a much more open policy and is two or three years ahead of India
in terms of opening its policy. So, if the country’s policy becomes more open, the Indian
market too will definitely boom. As you have the most talented people in the world, and
they are also English speaking. You have got the best talent in the world. Why don’t you
use that? They are an asset to the whole world. Your government should push this.