EMC in Asia

Posted by: Steve Hamm on June 26

One of the trickiest parts of globalization by companies is getting just the right mix of local and corporate management and culture. In a sense, Steve Leonard, president of Asia Pacific and Japan for EMC, is going the conventional route. With few exceptions, local people are in the key management slots in each of the countries under his control. “Our goal is for the markets to see us as local companies—as opposed to being a big US company,” he told me when we met a few days ago. But Leonard isn’t stopping there, and that makes what he’s doing in Asia very interesting to watch. He has set out to form joint ventures with local companies in countries to help him seem even more local. There’s an irony here. In the old days, before liberalization of some of the Asian economies, the governments required foreign corporations to operate via local partners. Companies didn’t like that much. IBM even pulled out of India at one point in protest. So now Leonard is voluntarily doing what some of his Yankee predecessors found odious. “Even though we aren’t required to work this way, we think it’s the best way to operate,” he says.

Leonard arrived at EMC two years ago to turn around a geography that had been under performing. He had previously run the Asian operations of Symantec, and earlier than that worked for EDS for 18 years. He convinced the EMC brass to invest $1.7 billion in building up the company's capabilities in Asia over a five-year period. Step one was hiring engineers in China (They have 1,000 now) and building up the local workforce in India. Step two is creating those local alliances. The first of them is with Digital China. It's a big distribution company that spun out of Legend, the parent of PC maker Lenovo. Leonard hopes that this joint venture will develop into an ecosystem of technology partners, distributors, and resellers of EMC’s storage gear and wide array of corporate software. Now he's hoping to do something similar in Korea and Japan.

A key element of Leonard's expansion strategy is innovating locally. Those 1000 engineers in China aren't there to just do localization and QA for products designed elsewhere. Leonard thinks EMC can build large businesses in China by targeting products at the small-business segment and consumers. One of the first products designed for this market was created by Chinese engineers: a small storage and backup device the size of a shoebox that can contain up to 4 terabytes of data. "In our marketing we say it was developed in China for China," he says.

Leonard is clearly doing something right. Sales in his region grew 24% last year to $1.5 billion. The first quarter was a bit slower, up 18%, but he says the quarter a year ago was so strong that it was tough to beat by much.

His biggest challenges are managing such a broad portfolio of products and recruiting and retaining a talented workforce. He has 5,000 people now. He says it's not uncommon for his best people to get job offers that include pay raises of 50 to 100%. So he has to spend a lot of time talking to his people and making sure they're happy and challenged. Once again, he must be doing the right things. Turnover is less than 10%.

I'm going to keep tabs on Leonard and give updates when he tries new things.

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