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From Southern California Entrepreneurs

Credibility Is Everything

Chip Distributors Cultivate Customer Relationships Based on Honest Dealings

July 15, 1998|KAREN E. KLEIN | SPECIAL TO THE TIMES

George Lim had worked in the fast-paced and competitive field of semiconductor manufacturing for nearly 12 years when he and his partner, Tommy Vogtman, decided to open their own company last year. They had little working capital, and they started at a time when the industry was in decline. What they did have going for them, Lim said, was credibility and a good reputation that has proved priceless. Lim was interviewed by freelance writer Karen E. Klein.

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Our company is in a very small niche industry. Every semiconductor company is always trying to differentiate itself from the other firms out there.

We have found that the thing that drives business is relationships. And reputation and credibility go a long way in making relationships with our suppliers and our customers work.

When we started the company, we put together a business plan and talked to investors but found no one wanted to help us with financing since we had no track record. In fact, our credibility and our reputations were all we had going for us. Without that, we were nothing.

But the vendors and suppliers who knew us and trusted us helped us get our company started. A few of our customers prepaid on their orders or gave us cash advances to go buy the parts they needed. We had customers right away because they knew we had honest dealings with them in the past.

We have some policies here that have helped us maintain our integrity. For one thing, we don't cancel any purchase orders that we place with our vendors. Period.

One of our good customers accidentally ordered the wrong parts. It is things like that that really test us--would we live up to our word? We decided to keep the order alive and bring the order in, even though the customer did not want it.

We took a loss and had to hold the product for a while. But the vendor really appreciated our commitment, and when we placed a new order for the right parts, he gave us a really, really good price. We sold that to the customer who put in the original order, and he was so grateful that we hadn't forced him to pay for the wrong parts that he paid us extra. In the end, we recouped our losses.

That customer gave us another order the next time, and we offered him a certain price. He decided again to give us more money, just to show that he felt the value of our long-term relationship. That was really gratifying.

Another example is that we ship a lot of product COD, where the customer has to pay for the shipment costs. But for many of our regular customers, we sometimes will pick up the shipping charges of $70 to $200 as a way of thanking them for giving us their business.

Being honest has also paid off for us. We deal with a lot of overseas suppliers, and when the Asian currency crisis began to affect our business, we were very upfront with our customers about it. We laid out all the issues for them and then we let them make their own decisions about whether and when to place orders.

We find that our emphasis on honesty and relationship comes into play when we least expect it.

A customer had me on the line the other day, and he had a competitor of mine on the other line. "George," he said, "your competitor is offering us a cheaper price, but I'm going to order with you and pay your price." I think he did that because he trusted our company and wanted to keep up our relationship.

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At a Glance

* Company: Solar Technologies Inc.

* Owners: George Lim and Tommy Vogtman

* Nature of business: Wholesaler and distributor of semiconductors

* Location: 23422 Peralta, Suite C, Laguna Hills

* Founded: 1997

* Employees: 4

* Projected annual revenue: $12 million

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