Online sourcing site Need2Buy Inc. has signed an agreement with distributor World Peace Industrial Co. Ltd. to develop Need2Buy-Asia, a business-to-business e-commerce marketplace targeting Asia's components industry. WPI will become the third arm of a joint venture established earlier this year between Need2Buy and Japan's Mitsubishi Electric Corp.
Need2Buy expects that adding Taiwan-based WPI to the existing partnership with Mitsubishi will accelerate the launch and development of an online marketplace for component makers, OEMs, distributors, and CEMs in the Asia-Pacific region.
The pact with WPI is the latest of several steps Need2Buy has taken to position itself in three strategic regions -- Asia-Pacific, Europe, and North America -- according to Maury S. Friedman, the company's chairman and chief executive.
Earlier this year, Need2Buy, Westlake Village, Calif., established its European headquarters in Munich, Germany, and a few weeks ago acquired Unimate Electronics GmbH, a component trading and fulfillment company based in Munich.
The acquisition will provide Need2Buy with the operations infrastructure, region-specific expertise, and extensive customer relationships to further drive its expansion in the European market, the company said.
Online marketplaces have become aware they need to establish strategic partnerships in order to create brand awareness and become attuned to different cultures and ways of conducting business.
"In order to execute a global strategy, we need centers worldwide; at the same time, we recognize that regional markets differ," Friedman said. "In the Far East, for example, most business is done through trading companies, whereas in the U.S. it's done through direct manufacturers."
According to Jeff Fieler, an analyst at Bear Stearns & Co. Inc. in New York, "In addition to vertical knowledge and online knowledge, a business overseas needs to know the local rules, regulations, and customs. Finding the right partner is either a big foot in the door to that country or the lack of it can prevent you from actually executing your plan."
But the recent high-tech e-business shakeout has made it more difficult for online trading exchanges to forge strategic partnerships with traditional brick-and-mortar companies, which have become more cautious. Need2Buy believes, however, that its arrangement with Mitsubishi and WPI will lead to success and prove beneficial to all three partners.
"Need2Buy chose to partner with businesses that have a strong local presence to enable the company to quickly adapt to specific characteristics and cultures," Friedman said. "The ability to benefit from [Mitsubishi and WPI's] longstanding relationships with customers and suppliers will give Need2Buy-Asia a huge head start."
WPI distributes a range of electronic components from more than 50 major manufacturers in China, Hong Kong, Korea, Singapore, Southeast Asia, and Taiwan. The company totals about $1 billion in annual sales.
Mitsubishi Electric, Tokyo, plans through its recently launched e-commerce efforts to offer customers new online business strategies.
"We see tremendous opportunity in regionalizing Need2Buy's proven e-commerce solution in Asia as a means to expand buyers' sourcing options, while streamlining the traditionally inefficient processes inherent in the electronics industry," said Hajime Kimura, chief operating officer of Mitsubishi's eCommerce Division.
In addition to participating in Need2Buy-Asia, Mitsubishi was an investor in the online sourcing site's first and second rounds of financing.