For manufacturers, it is a pending task to produce parts locally. If they localize components that are imported from overseas, they can reduce costs and manage delivery and quality of the products efficiently. Technologies developed in the course of localization will promote the growth of the parts industry and sharpen the competitiveness of the manufacturing sector. A company named SM Switch has made a remarkable achievement in this important area. Let’s meet with company president Wang Young-dae.
The company was established in 1995 in the name of Sungmun Electronics. In 2015, the name was changed to SM Switch, using the first letter S and the middle letter M in Sungmun, to strengthen overseas marketing. It is a specialized electronic and telecom components supplier. Our products include rotary dip switches and LED modules. In the past, parts were mostly imported from Europe, the U.S. and Japan. While working with large companies in Korea, such as Samsung, LG, Hyundai and Hanwha, I thought it would be necessary to produce switches locally because the companies could cut costs and there would be many other benefits.
After graduating from college, Mr. Wang entered the electronic parts industry. He is an expert in the switch industry, boasting rich experience in the management of product quality as well as sales. In 1995, he took up a challenge of producing switches right here in Korea. As an indispensable part in electric and electronic goods, switches are used to open and close electric circuits and change their connections. He believed that switches would be marketable as long as they were produced locally. His company took the first step toward that goal as a sub-contractor for LG Electronics. But it turned out that a long, bumpy road lay ahead.
Large companies put top priority on product quality. And unit costs are also important. We managed to lower the unit costs, but the quality was rather poor in the initial stage, compared to that of advanced nations. I had to ask for technical advice many times and underwent trial and error. It cost a lot to make molds, in particular. If I produced them incorrectly, I had to discard them all and make new ones. It was necessary to create different shapes of molds in line with various types of switches. I also had to install the automated inspection system and relevant facilities. I started the business from scratch but I managed to fulfill the challenging task.
There are various kinds of switches, including push button stitches, rotary switches, knife switches and change-over switches. They vary in design, shape and size. To develop different types of switches, it is necessary to make molds for each type. An automated inspection system should also be set up to see if the switches are turned on or off properly. The company did research on diverse switches, designed circuits and constantly discarded molds that had been made with so much effort. The company’s endeavors finally bore fruit.
Previously, Korea imported push button switches from a famous Japanese switch maker called Nikkai. But we developed this type of switch for the first time in Korea. We got a patent and sold millions of products. In a word, we localized Japanese products. Japanese switches cost 1,000 to 1,500 won per unit, but we lowered the cost to 800 to 1,000 won. When the development was half done, Korea was hit by the Asian financial crisis. Companies like Samsung and LG asked us to deliver our products promptly, as it cost a lot to import ones from overseas due to the drastic depreciation of the local currency. Our products were quickly approved by Korean firms, and we sold a huge amount of switches to local companies, such as Samsung, LG, Hyundai and Hanwha.
In 1997, two years after the company began to develop switches, it was in financial difficulty. By that time, it was about 50 percent into the process of developing push button switches. But it was hard to proceed with the development, due to inadequate funds. The situation changed suddenly, though, due to the Asian financial crisis. Before the crisis, the Korean currency remained at the early- and mid-800 won level against the dollar. But on December 23, 1997, the won-dollar exchange rate soared to 1,962 won. The strong dollar trend raised the import price when converted to Korean won. Large companies in Korea encouraged SM Switch to develop its products quickly. As it secured potential distributors, the company made rapid progress in the development of push button switches and finally succeeded in local production. As the company laid the groundwork for growth, it began to develop rotary dip switches, which are suitable for equipment that requires precise control, like system air-conditioners and automatic control systems. After making a lot of investments in research and development, the company successfully developed the switches in 2005 and applied for a patent. In 2008, it became the first Korean manufacturer to produce MINI rotary dip switches locally. In 2012, the company received the Prime Minister’s prize on “Electronic IT Day.” Currently, it produces hundreds of kinds of goods with outstanding technology. It supplies its products to top-notch electronic and telecom companies both in Korea and overseas, including Samsung SDI, LS Industrial Systems, Hyundai Heavy Industries, Nautilus Hyosung as well as Japanese firms such as Toyota and Fujitsu. SM Switch has formed a strategic partnership with these companies to constantly develop new products. It is challenging foreign markets more aggressively to become an enterprise that will last for 100 years.
Without penetrating foreign markets, we may face difficulties. That’s why we’re putting a great deal of effort into overseas markets. While maintaining close relations with our existing partners, we’ll work with them to find and develop new items, if possible. To become a strong and reliable company that will prosper for 100 years, we’re making a lot of investment in overseas markets and holding various exhibitions as well. But we can’t achieve that goal by sitting idle. We should run fast. We’ll explore various parts of the world and develop new products in cooperation with our partners. In the process, I’m sure 20 or 30 years will pass quickly.
SM Switch began to export its products overseas in 2007, when it shipped its rotary dip switches to Europe. It is looking for more partners who will grow together in the world market. An African saying goes, “If you want to go far, go together.” As the saying indicates, it is necessary for the firm to secure the power of “togetherness” if it wants to pave the way for a company with solid growth and a long history. It is proceeding step by step to become a company with deep roots. As the company’s history develops, the Korean parts industry will surely take firm roots.