Eastern links key to future success

Liam Casey saw a potential gap in a rapidly developing market. Now the Cork-born entrepreneur employs 1,200 people across the globe, writes Kyran Fitzgerald

PCH is to say the least, an unusual company and its Cork-born founder, Liam Casey, a businessman who has come from relative obscurity to carve out a large space for himself as a key link in the chain between leading Western brands and the new workshop of the world in east Asia, in barely half a decade.

The company, which is based both in Cork and in the city of Shenzhen in southern China, is credited with having reshaped the linkages between Chinese manufacturers and Western customers — dramatically shortening the supply chain.

In the process, its turnover and profits have grown dramatically and it now employs around 1,200 people across the globe, most in the Pearl River delta north of Hong Kong.

In recent weeks, PCH has raised another $30m (€21m) from investors. It has just shelled out €16m to acquire an Irish firm, TNS and there is talk of an Autumn flotation on the Hong Kong stock market, one that could value PCH at around €300m, with Casey’s own stake put at €100m.

Revenues have jumped from $152m in 2009 to €413m (€289m) in 2010, with pre tax profits up from $1.5m to $16m (€10m).

The business has been driven by exploding demand for eReaders and smartphones.

PCH’s skill lies in sourcing manufacturers in China and in getting finished product rapidly to market. Since 2004, it has worked to develop what is described as a unique end to end integrated supply chain solution, from product design stage through to fulfilment. PCH works with factories — it does not own them. It is asset light and accordingly, highly flexible.

The business model is based on tight inventories and full use of communications technology. A customer in America can order goods on a Sunday evening and expect to receive them by the following Wednesday morning. This represents a really rapid turnaround.

Many PCH customers are based on America’s West coast. The Cork customer service operation makes full use of Ireland’s central time zone position. Customers deal with English speakers rather than with weary Chinese having to work in the middle of the night.

Now aged forty five, Casey grew up on a farm and went to school in Blarney.

After a stint in the College of Commerce in Cork, he started work in retail, initially with the Saville group.

“I learned about branding and getting products to market on time from Kevin Kelleher at Blarney Woollen Mills.” Liam managed the Tricot Marine fashion store in Grafton Street, Dublin and helped Kevin’s sister, Freda Hayes with the launch of her Meadows & Byrne stores in Galway & Cork as marketing manager.

In 1996, he took time off to head to southern California where he worked for a trading firm. It was there that he first spotted his big business opening. His employer traded in both electronics and fashion goods.

He realised that there were huge openings for intermediaries in the fast growing IT space.

“I saw an opportunity to go to Taiwan to a big electronics trade fair. I spent time beforehand in Ireland looking at the companies that were there. In Taiwan, I spent five days at the show and five days looking around factories. I would advise anyone thinking of starting a business to attend a big trade show and just walk around.”

He soon became aware of the emerging potential of China as a centre for low cost manufacturing. Four years before, its leader, Deng Tsiao Ping, had famously proclaimed that to get rich is good, providing official sanction to the emerging capitalists of the East. Shenzhen, a city close to Hong Kong, was developing rapidly as a model city of enterprise. In just thirty years, Shenzhen has come from almost nowhere to reach a population of some fifteen million.

In 1996, Liam established ‘PCH’ and he set up shop in Shenzhen. The company is named after the Pacific Coast Highway, near Liam’s former base in California. He frequently travelled the highway to renew his passport in Tijuana, Mexico.

PCH started out as a trading company, effectively a conventional middleman. By 2003, however, Casey realised that large Western companies were moving into this space and that PCH needed to move up the value chain, becoming a virtually integrated entity.

By then, Casey had built up considerable knowledge about the huge and growing base of suppliers in the Pearl River basin in southern China. In the early days, the job of the import/export firm was to source a manufacturer, any manufacturer.

Over time, however, PCH has built up a huge database on suppliers as well as experience in managing the relationships.

It now has around one hundred partner manufacturers and deals with nine hundred.

PCH set out to put in new value added services. At the end of 2004, he opened a new packaging facility, allowing the business to physically trade for the first time. In 2006, PCH opened a fulfilment centre enabling it to reach the final customer directly.

PCH advises on product design, supervises outside manufacture, packages and sends to the final customer.

Inventories of final goods are kept low, thereby reducing working capital requirements.

Buffer inventories are maintained at the back end of the supply chain in case of disruptions to supply.

“We reduce the product development cycle by having the right people at the right places. We pick the ‘best in class’ factories.”

PCH works for several Fortune 500 companies and is heavily backed by US venture capital, mainly.

“We break the supply chain into different areas.”

Casey’s idea is of PCH as a disruptive force promoting disruptive technologies, helping to promote a new Chinese led commercial revolution with which hopefully we will be able to live.

PCH employs just over one hundred people in Ireland, having recently added 35 people through its acquisition of local firm, TNS. Cork serves as the administrative and financial centre, dealing with the flow of information and of cash, leaving it to the Chinese OEM firms to deal with the supply of product.

Casey is coy about talk of an IPO (initial public offering) . “I can’t comment.” He dismisses talk of a late 1990s style Tech bubble.

“We deal in real customers and real profits — these companies are doing very well. the industry is moving very fast. The products we handle — smart phones, e-books, did not exist five years ago. ”

He reckons that the prospects for Irish firms in China are “very good.” Many could look to China as a source of low cost inputs while others will look to sell into a rapidly growing consumer market — he advises firms against combining the two approaches.

He cites food, tourism and education as key areas of export growth opportunity. “Our universities are doing well on the ground in China. They should come together to provide packages for students — we have very good educators in Ireland.”

Liam is single himself and he lives in hotels.

“If you like what you do, you never work a day!” He has built a team of around a dozen senior managers, underneath there are supply based teams. He insists that his management structure is flat. “They are a fantastic team of people.”

Business is conducted in English — Liam is not a Chinese speaker.

He gets home to Cork every month, but it could be quite a while yet before he settles down to enjoy the fruits of his labour...

Getting to know Liam Casey

Age: 45.

Born: Donoughmore, Cork.

Education: Blarney, national and secondary school. Leaving Cert: College of Commerce, Cork.

Career: Saville Group. Harmony. manager, Club Tricot. 1993-95: Marketing manager, Meadows & Byrne. 1997: Founded PCH. 1997 to date : Chief executive, PCH. 2007: Ernst & Young Entrepreneur of the Year, Ireland.

Marital status: Single.

Residence: Shenzhen, China.

Leisure: Keeping fit. GAA supporter.

Picture: Maxwells