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September 19, 2005 4:42 pm

BenQ ready to signal its Siemens solution

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When BenQ, the Taiwanese electronics maker with a brand created less than four years ago, announced in early June that it would take over the mobile handset business of Siemens, one of Europe’s most traditional household names, many analysts reacted with scepticism.

The question most frequently asked was: How can two laggards become a leader by just joining together?

Siemens had been losing market share because of its “uncool” handsets. BenQ was failing to sustain a forceful push up the global handset market rankings due to its lack of proprietary technology. Both were losing money.

BenQ has done little to come up with additional information that would have dispelled these doubts. 

The main reason is that it has been busy taking a closer look at what exactly it has acquired and how to make it work.

Now, with less than two weeks to go until the deal takes effect on October 1, BenQ is ready to start giving answers.

Chief marketing officer Jerry Wang is one of the less than ten Taiwanese executives who will help lead BenQ Mobile, the new company with headquarters in Munich.

He identifies Siemens’
conservative, rigid group structure as the main reason why the German company’s handset business is underperforming, and expresses confidence that joining BenQ will change that.

“The business is strangled by standards set in accordance with Siemens’ mostly non-consumer operations,” he says. “Products suffer from over-engineering, a lack of speed in response to market trends, and restrictions put on the brand image by the needs of other group businesses.”

Mr Wang cites a highly publicised product recall last year as typical of these problems.

The German company took back certain mobile phones which were found to have occasional problems with sound quality.

“We would not have made such a big announcement but quietly taken the handsets back,” says Mr Wang. “But Siemens’ product standards are set in line with the requirements of its other operations, such as medical equipment or transportation - businesses where people’s lives depend on quality and safety. This has left the whole system over-standard.”

Another factor weighing down Siemens Mobile is the centralisation of procurement and other functions that BenQ will put into the hands of its new subsidiary rather than concentrating them in Taipei.

“Since procurement is done by the parent, decisions are delayed and not made according to the needs of this particular business,” says Mr Wang.

Last but not least, the Taiwanese executive finds his new colleagues have far too much respect for experts and are not spontaneous enough.

“There are a lot of external design and consulting contracts,” Mr Wang says, adding that ending these will help BenQ realise another sizable portion of the €300m in cost savings it wants to achieve for the combined business.

The biggest long-term challenge, the attempt to meld the two brands into one more successful, is also to be done in-house, says Mr Wang.

The first reality check will come as soon as next month. BenQ is rolling out an internal marketing campaign for the business acquired from Siemens - as it has done for its own employees over the past four years.

“Everybody has to embrace and love the brand,” says Mr Wang.

He believes this is just what Siemens Mobile staff have been waiting for: “These people are capable of running ahead and fighting, but they had their hands and feet bound. We will liberate them.”

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