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SMALL BUSINESS | ENTERPRISE ZONE: Lessons and Insight
on Southland Businesses

High-Speed Upgrade

Computer Parts Company Has Loaded Up on Exports

September 10, 1997|DIANE SEO | SPECIAL TO THE TIMES

Who would have thought a decade ago that cables, wires and a slew of other networking contraptions would today be the rage, with consumers from Beijing to Budapest clamoring for American-made parts?

Tom Chung, for one.

In 1983, when the 42-year-old entrepreneur first got involved with connecting computer systems, e-mail had not yet been introduced and people still relied on floppy disks to exchange computer information.

Now Chung runs one of the area's fastest-growing networking export companies, Tri-Net Technology, whose sales this year are expected to be $8 million, up from $900,000 five years ago. The Walnut businessman won this year's Exporter of the Year award from the regional office of the Small Business Administration.

Chung is among hundreds of Taiwanese Americans who have established small to medium-sized computer businesses in the Southland, a trend fueled by the worldwide craze for leading-edge technology. Tri-Net Technology is one of the more modest-sized companies, but its rapid growth offers lessons on how someone with good instincts and a careful business strategy can take advantage of an exploding market.

"When I first got into this industry, people were just starting to talk about networking," Chung said. "I had a feeling it would be big, so I stayed in it. Sometimes in business, you have to look into the future and follow your feelings."

This year the global market for networking products is estimated at $14.2 billion, almost $8 billion of which is outside the United States, according to Dell'Oro Group, a Portola Valley, Calif.-based market research firm for networking products.

"The exporting potentials are just phenomenal, because the market is still untapped," said Dwayne Shirakura, a Dell'Oro Group analyst.

John Armstrong, a networking analyst for San Jose-based research firm Dataquest, said there is strong worldwide demand for networking parts. He said developing countries, such as those in Southeast Asia, are particularly eager for these products because their governments have made it a priority to upgrade the countries' communications infrastructure.

"The whole industry is growing at a pretty steady rate," Armstrong said. "And with all the new technologies being introduced, I think that will only support this growth."

Chung launched his business in 1992, with only two employees and a 2,000-square-foot office in Walnut. Now the company has 30 employees and operates out of a 12,000-square-foot warehouse. Chung hopes to buy a 30,000-square-foot facility as early as next year.

Tri-Net Technology specializes in local-area network products, which link computers, and wide-area network parts, which allow video, fax and telephone capabilities to be integrated onto a single system.

Initially, the company exported its products only to Taiwan and Hong Kong. It now sells more than 5,000 networking products to distributors in 22 countries, including South Korea, China, Singapore, Japan, Greece, Australia, Russia and the United States. Chung sees the rest of Europe as well as South America as his next target.

"My goal is to have distributors in every country of the world," he said. "Exporting has all kinds of good potential because there's still not much competition. Most companies are still focusing on the domestic market."

Tri-Net manufactures cables at its two warehouses in Walnut and Taipei, but its primary business is exporting brand-name products from such American companies as AT&T, Belden, Lucent Technologies, Cabletron and Cisco through its mail-order catalog. Chung decided to carry top-of-the-line U.S. products because his foreign customers specifically request American networking parts.

"People feel they have to buy from the U.S. because it's the leader in this type of technology," Chung said. "But the main reason this market is growing is that people know they need good communication systems to make their countries stronger."

After immigrating from Taiwan in 1981, Chung attended Valdosta State College in Georgia and received a master's degree in computer science. When he and his wife moved to Los Angeles, Chung began selling cookies to Chinese grocery stores. He sold televisions and home appliances for a trading company before being hired away by a manufacturing firm to sell telephone jacks in 1983.

With that introduction to the telecommunications industry, he and a business partner in 1987 started a networking company called Unicom in Santa Fe Springs. Unicom carried products similar to those offered by Tri-Net, but Chung decided to set up his own company because Unicom concentrated on the domestic market and he had his sights on overseas clients.

He picked Asia as the starting point because of his own background. His brother, who used to live in Japan and speaks Japanese, came on board as his international sales manager.

"We're Asian, and we know our culture," he said. "We know how business is done."

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