Gadget firm PCH thinks outside the box
Liam Casey, the affable and engaging chief executive of logistics and products development company PCH International, holds up a slim mobile phone cover encased in chunky plastic and cardboard packaging and laughs. Welcome to electronics accessories packaging circa 2005.
Just as phones and electronic devices have become smaller, so, too, has the packaging, with a set of earphones now sold in a box no bigger than a cigarette packet. The changes have had a significant impact on air and ocean freight companies. While the market for iPhones, e-readers and associated accessories has soared, boosting cargo volumes, the smaller size of gadgets and the boxes they come in have led to a reduction in the unit size and cost of shipments.
Casey estimated that slimmer and lighter packaging developed now for that same cellphone had reduced air-freight costs by almost 60 per cent. At least nine times as much product could be shipped in the space previously taken up by the chunky box containing a single phone cover and 90 per cent air.
But packing design forms only one part of PCH's business.
Likening the company to Li & Fung, Casey said: 'Both are supply-chain management companies, but Li & Fung is a supply-chain company with sourcing capabilities and PCH is a supply-chain company with product development capabilities.'
PCH, which was launched in 1996 and has its operational headquarters in Shenzhen, is also focused on the design, manufacture and shipping of products to stores or consumers who order online. A network of suppliers up to 100 kilometres from Shenzhen produces the gadgets, which include earphones popularised by a US rapper, a cellphone credit-card reader and accessories sold by Apple.
While the firm uses integrators such as FedEx and UPS and bought Europe's TNS Distribution last year to deliver products, it also has its own sophisticated technological system, including tracing the progress from factory to final delivery.
Casey said doing its own product design, manufacturing, packaging design and order fulfilment on behalf of electronics firms that generated ideas for gadgets allowed PCH to react more nimbly to changing consumer tastes. He said demand would rise very quickly when a new product went on the market, but would then fall off a cliff as interest faded.
PCH bought Lime Lab, a California-based prototyping and product design company, early this month to bolster its product development work. Casey said the acquisition marked a coming of age for Chinese gizmo developers.
'Before, US people came to China to tell developers what they would do, but now teams from PCH go there to tell them,' he said.
The company is also branching out from electronics into other markets, including luxury goods such as watches and perfumes.
To meet this increase in business, PCH has acquired a 27,000 square metre building in Shenzhen's Futian free-trade zone that will hire an extra 1,500 expatriate and local employees when operational at the end of next month. The complex will more than double PCH's workforce.