Supply chain companies are maintaining their razor-sharp focus on Asian markets, looking for continued growth in the year ahead. Distributors in particular are enhancing their presence throughout the region, putting more feet on the street in China and developing business in emerging economies such as Vietnam that many say are poised for exponential growth.

Houston-based independent distributor Smith & Associates is a case in point. With six locations in Asia, Smith has had a presence in the region for about 15 years and has rapidly built business with customers in every segment—from telecommunications to industrial to the booming smart-phone and tablet industries.

Choon Byun is Smith’s president for Asia-Pacific. The 15-year company veteran has spent 14 of those years building Smith’s business in Asia, opening its first location in Hong Kong in the late 1990s. Byun says the push to grow in Asia has never been stronger than it is today as emerging economies throughout the region represent significant growth opportunities down the line, especially in the smart-phone industry. He says Smith has seen steady growth across all local industries it serves in the last 10 years, but points to the region’s telecommunications service as a harbinger of growth for smart phones in particular.

“In China, most of the country doesn’t have 3G service. Once the telecom providers upgrade service to improve the smart-phone experience, I think you’re going to have a big boom in Asia with the smart-phone sector,” Byun explains. “You’re looking at exponential growth there.”

Smith’s experience is not unique, as distributors of all shapes and sizes continue to home in on Asian markets to grow in the year ahead. Texas-based authorized distributor Mouser Electronics made considerable inroads in Asia this year, building its business in China in particular. And like many other smaller companies, Long Island-based Powertech Controls dipped its toes further into Asian waters with new accounts and plans to establish a location in the region, possibly Singapore. Such efforts underscore Asia’s continued importance to the electronic components industry and its significance as a growth vehicle for many North American companies.

“In many respects, the supply chain begins in Asia,” IHS iSuppli senior principal analyst Tom Dinges said in a recent industry outlook presentation in Chicago. Speaking to members of the Electronic Components Industry Association, Dinges pointed to Asia Pacific as having the greatest influence on the global supply chain in the last 20 years. He added that Asia is becoming a more internal market as the standard of living and consumer power grows throughout the region. As a result, he says suppliers in particular should be looking at new ways to support original equipment manufacturers (OEMs) and contract manufacturers that want to build business in the region.

“Forty percent of product [made] in China stays in China,” Dinges said. “The [big] question is what are you doing to support your customers that want to do more business in China?”

Growth Potential

Byun’s outlook on Asia’s smart-phone potential reflects recent analysis from the region. An IHS iSuppli report earlier this year pegged smart-phone growth in China in particular at 141% this year, pointing to an expected 160 million smart-phone shipments to the Chinese market by the end of 2012. That’s up from 67 million in 2011. By 2016, China smart-phone shipments are expected to rise to 333 million.

But Asia’s growth is rooted in more than just smart phones. Byun points to a broader trend that has manufacturers moving production to other countries in the region, causing suppliers to follow suit to better serve those customers locally. Smith has grown from its early locations in China and Korea to include a new location in Singapore, opened in 2011. Going forward, Byun says he sees more opportunity to spread even further as customers move to India and Southeast Asia.

“We’re seeing some companies starting to relocate to places like Vietnam,” Byun adds. “There are a lot of emerging markets in Asia that have the potential upside for an increase in consumers. We’re seeing a lot of big manufacturers starting to build plants and shift some of their production to Southeast Asia because of rising costs in China.”

Powertech Controls is seeing similar opportunities in Asia, a market it began exploring about three years ago. The distributor of electrical and electronic automation controls and components is doing business throughout the region, exporting its products to local manufacturing customers in a wide range of industries, including semiconductors, medical electronics, and pharmaceutical packaging. Company president Annemarie Leigh says growing interest for high-quality American and European products is at the heart of that growth, and she anticipates opening a physical location in Asia to support the business.

Powertech Controls has 38 employees and three U.S. locations—two in New York and one in Massachusetts. The small company’s global growth underscores the importance of Asian markets to the electronics supply chain and highlights the growth opportunities available to companies of all sizes.

“We’re beginning to see more and more interest from Asian customers. We’ve realized that we can really bring them value—we know that, we understand it, and we want to get the word out to more potential customers,” she says, pointing to her company’s solutions for high-reliability engineered products and manufacturing apparatus. “We’re working throughout the region—in India, Malaysia, Indonesia, China, Singapore. We’ve seen business sprinkling in on us over time, and our success rate with pricing and quotes is good, so we see every opportunity to really grow this business.”

For others, delivering a better brand message is key to growth in Asia. Mouser Electronics is a case in point. Mouser began developing its business in Asia about five years ago, but really ramped it up this year, incorporating in China and accepting local currency transactions on its Chinese-language Web sites. The catalog distributor has even put more feet on the street, most notably putting a local marketing team in place. The eight Hong Kong-based employees are focused on building brand awareness among local customers and promoting the value of working with global, authorized distribution partners.

“We need to continue to grow our brand over there,” explains Kevin Hess, Mouser’s vice president of technical marketing. “That’s why we’ve built our marketing team there. That’s very important to us.”