Mr. Cochran: SinoHub is the product of an idea that my Co-founder, Lei Xia, who is now SinoHub's President, came up with during a conversation with a friend. This friend was the Director of Purchasing for Nokia in Beijing in early 2000. He said that the company was having tremendous problems with their supply chain for electronic components into China.
As many people are aware, China is the largest manufacturer of electronics in the world by a good stretch at this point. But China does not make many of the electronic components that go into that manufacturing. In fact, 85% of all components that are used in manufacturing in China are imported. So there are problems getting these parts into China. There are problems with customs and VAT - value-added taxes - charged at the border. Or you have to import on a bonded basis, meaning that you've got to keep track of everything coming in very carefully. So Lei started thinking, "Well, if Nokia has this problem with the supply chain, then everybody must have this problem with the supply chain. Why don't we set up a company that can really change the game in terms of China's electronics supply chain and bring it into the Internet age to make it more flexible and easy to use?" Frankly, the electronics supply chain was organized in China by adopting the model that was originally invented in the United States 40 years ago before the Internet. And so Lei contacted me because of my background in software, and we partnered to start SinoHub with the goal of really solving, once and for all, the need for a much better platform to support electronic component supply chain management in China.
Tickers included in this excerpt: SIHI
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.