It is just over a year since local specialist distributor Corex was acquired by Partner Tech Corporation – part of the $25-billion Taiwanese giant Qisda Group – in one of the biggest deals ever struck in the South African IT channel.
As part of the deal, Corex CEO Mark Lu agreed to a five-year contract in order to structure the company for future growth on the continent and to establish a succession strategy for the day he exits.
He has also been granted leeway during this period to investigate and invest in potential new technologies and market sectors – a task he refers to as ‘Chapter 2’ in his career. It is, he says, a task he is relishing …
When Partner Tech Corporation bought Corex in October 2018, for some it was the end of an era. For others, like its CEO and founder Mark Lu, it was the beginning of a new one.
One of the few remaining independent distributors in South Africa, Corex was formed as a specialised, niche components distributor, filling in many of the gaps in this then lucrative market sector which was dominated by the likes of Axiz and Rectron. Over the years, though, the company has evolved from being a purely components-based trader into a specialist, value-added distributor in specific focus areas – point-of-sale (POS) and connectivity being just two examples.
So when Partner Tech, one of the largest POS distributors in the world, was looking to further entrench its presence in Africa, Corex was a logical choice for acquisition. Ties between the two companies had always been close. Apart from Corex being its main distributor in the region, Lu was also a shareholder in Partner Tech Africa (he sold his shares back to them before the acquisition), and Corex’s former MD Stewart Diss was head-hunted to lead Partner Tech Africa, based in Dubai.
As far as Lu was concerned, the acquisition was, as they say, a “no-brainer”.
“For me it was simple,” Lu says. “I had worked so hard for so many years selling hardware, so I thought it was time to move on. I’ve always said that every business is for sale if the price is right and an offer came that I couldn’t resist.
“So I sold the business.”
Lu says that he intends taking the lessons he has learned over his decades in distribution and putting them to better use as he plans and implements strategies for the future.
“I was involved with broadline distribution during my time at Rectron and when I moved to Corex the thinking was very much specialist niche, so I’ve experienced both,” he explains. “I understand the economies of scale in distribution, the skills required in specialisation and the focus that’s required to be successful in a very tough industry. It’s been a very interesting journey and I now want to use the expertise I’ve built up and my legacy experience into the future.
“Obviously, I want to see through the succession process and secure the future of the business,” he adds. “But it is in good hands and given freedom and time, I’m sure it will continue to be successful.”
As part of the process, Lu has adopted what he calls “the A, B, C, D strategy” encompassing the four main pillars, or industry sectors, that Corex is focusing on: AIoT; Broadband; Consumer; and Data Centre.
AIoT, he says, is a common acronym derived from artificial intelligence (AI) and the Internet of Things (IoT). “AIoT is not a term I invented,” he smiles. “It’s already widely used in the Far East and is becoming the industry norm.
“Anything can have a sensor,” he continues. “They all collect data which, in turn, creates Big Data. AI is not a business, AI becomes the enabler. You can’t make money by selling AI, but you will be out of business if you don’t use AI. It’s a necessity, but it’s not a business.
“Let’s take the POS business as an example,” Lu says. “People queue at a terminal, the product is scanned and the customer pays with a credit card. That’s the traditional way, but the future is very much more simple. Each and every product displayed will have an ID; the customer will select and pack their groceries, walk out the door and a sensor will automatically deduct the total price from whichever financial account the user selects.
“That’s the future and that’s why we’ve changed the name of the POS division to AIoT,” he says. “Traditional POS is moving to sensor automation and this is AIoT. We see the move from POS to self-service to mobile payments to manager-less stores. This is inevitable and any device, any sensor, any intelligence, any software service relevant to this will fall under this division.”
The second pillar in the strategy – “B” – is for broadband.
“Broadband is all about connectivity,” Lu says. “From 4G, 5G, fibre, wireless, WiFi, VoIP and core networks, through to a variety of services. We have a specialist sales team selling specialised equipment, all of which boils down to ‘broadband’.”
Corex has always been a powerhouse when it comes to consumer technology, especially gaming, and while it is maintaining its strong focus on this key sector, it is also expanding its vision when it comes to the third letter in its strategy.
“Western Digital and SanDisk continue to be our flagship products in the consumer tech space and we are bringing on board a lot of new international franchises – particularly when it comes to the smart home and wearables.
“Today’s wearables are very advanced,” Lu adds. “More and more, they are linked to health care as people look to live healthier lifestyles. We’re also seeing increased interest in smart home appliances, home secretaries, cameras and sensors.
“Again, this is the transformation we’re experiencing as we move into the future.”
And at the heart of this transformation is cloud computing, which has heralded an upsurge in data centres – the fourth division established by Lu to take the company forward.
“I’m convinced that cloud computing is finally taking over,” he says. “This means that things like software as a service (SaaS), platform as a service (PaaS), everything as a service becomes reality. Connectivity becomes real. There has been massive deployment of data centres globally and in South Africa – explosive growth in data centres, networking, storage, services and, of course, cybersecurity.
“The key word here is cybersecurity,” he adds. “If you can’t manage cybersecurity, cloud computing becomes your worst nightmare. Cybersecurity is the future key application and is key to the future of computing.”
Secure in the knowledge that he has laid the foundations for a successful future for Corex, Lu is revelling in the flexibility that Partner Tech has given him during the rest of his tenure to explore future technologies and potential new markets. And he’s already well into the groundwork on some of them.
“I sat down and thought: What does this continent need? What does this world need? What can I do to make society better?” he says. “I don’t believe in charity for charity’s sake. Meaningful charity needs to be sustainable and profitable, and add real value to society. So I want to use my experience and find a way of applying technology to these new ideas.
“The first part of my life has been devoted to IT distribution – that was Chapter 1,” he says. “Chapter 2 will be relevant to IT, but I’m not going to start another Rectron or Corex.
“The way I see it,” he continues, “is that any successful company has to be a technology company. Not necessarily selling technology as a commodity, but rather how you use technology, how you apply your mind with technology, that can be the biggest disruptor for any business.
“People say Amazon is an online retailer. It’s not. It’s an IT company. It has a very successful IT platform and supply chain, and uses Big Data and AI to manage its prices. The system automatically prioritises its Top 10 sellers as they’re sold to consumers. It doesn’t wheel and deal like an online retailer. AI dictates the price, not the purchase manager. When you supply like they do, you dictate the sales price and what you sell.
“Technology has enabled Amazon – and others like Alibaba – to come in and disrupt the whole e-commerce business,” he adds. “They’re not shy to bring in automation, robotic picking, a fully-fledged IT system to make themselves more powerful and, by doing so, disrupting the traditional model.”
And that’s what Lu wants to be – a disruptor – in the four areas that he has earmarked as he embarks on Chapter 2: smart logistics; green energy; water and waste water management; and agriculture.
“My Chapter 2 is simple,” he says. “I want to use the knowledge I’ve accrued over decades, and use technology to disrupt any industry. At the moment, I’m inclined to get involved with basic needs, so my focus is on logistics technology, renewable and green energy, water and waste water management, and food which, basically, means agriculture.”
And he’s already making waves with the first of his projects – a “smart warehouse” which is almost completely automated (and will be in the near future), which some major food retailers are already expressing interest in. Lu has always been a big fan of automation in his warehouses as both Rectron and Corex can attest to. But, using the latest available technology, Lu has surpassed those earlier efforts with a warehouse specifically designed for the wine industry.
He got into wine purely by accident, but immediately recognised that technology could play a huge part in alleviating some of the industry’s major headaches such as breakages and shrinkage.
“The wine business was, and is, purely a sideline,” he says. “I’m not an alchemist, and I’m not a big drinker. But I soon discovered that there were problems … stock problems. I’m an IT guy, so I put automation in place, automated picking, robotic pallets, a central control centre – done and dusted – and now, after only two years, I’m the preferred supplier to the industry.
“It just goes to show how a disruptor can succeed,” he adds. “The major problem of shrinkage in the wine industry was because they didn’t apply technology in the business. Now, using this type of equipment and technology, there is increased productivity and no shrinkage.
“Through this experience we not only have a new company focused on smart logistics, but we also have a warehouse that is a showcase for what technology can do for other major manufacturers and retailers struggling with the scourge of shrinkage.”
With load shedding once again part and parcel of everyday life for South Africans, alternative energy sources – green energy, renewable energy – are top-of-mind. It is for Lu too.
Power utilities around the world are struggling with ageing infrastructure, he says, from redundant coal-fuelled power stations through to proper maintenance of the supply grid. The answer, he feels, is decentralisation.
“We have beautiful sunshine in South Africa, so solar power is always a popular option,” he says. “But we have to decentralise. Each house, each business, should have its own independent system with batteries that can contribute surplus energy back on to the grid. Think of all the billions of rands that have been, and still are, being pumped into Eskom. That’s a lot of solar systems. That’s a lot of people off the grid and potentially contributing back to it.
“We should be looking to upgrade people off the grid,” he adds. “That, in my opinion, is the way to go.”
In terms of solar power, Lu also feels that government is missing a trick when it comes to job creation. Instead of concentrating on the actual manufacture of solar panels for jobs and investment, he says that the services around the industry could have bigger impact.
“We shouldn’t be thinking about the future in such a conservative, old-fashioned way,” he says. “The jobs are in servicing the solar industry, not the actual manufacturing. This government seems to be obsessed with manufacturing and overlooks the potential of the services sector. The guys servicing and installing solar panels will create hundreds of thousands of jobs. Not just the couple of thousand that may be employed at manufacturing plants which, by the way, could have a limited lifespan.”
Services around the alternative energy industry, however, may not only be limited to solar and, for example, wind turbines. Lu says that major discoveries currently being developed around the world could prove to be game changers in the sector.
“There have been some huge breakthroughs in using hydrogen to generate power,” he says. “France and Japan are very advanced in developing hydrogen-powered cars using a catalyst to convert water to electricity and power an engine.
“Green, renewable energy is definitely something I’m going to put my mind to,” he adds.
Third on his to-do list for the future, Lu says, is a resource that is probably under the worst threat in history. It is life-sustaining and some analysts predict that future wars may even be fought over it. Water.
“For me, water management and sustainability is a no-brainer,” Lu says. “We’ve all seen the droughts and experienced the water shortages that Africa – and South Africa – have gone through over the years. And, with climate change a seeming reality, we have to prepare for worst-case scenarios. I really want to focus on how technology can be harnessed to better manage and disseminate water.
“Waste water management is a similar issue,” he adds. “If you look at the demographics of Africa it is difficult for governments to maintain sewage systems, never mind build new ones. I want to investigate sustainable systems that can biologically process household waste water that can either be used to replenish existing water sources or, alternatively, be re-used on a regular and safe basis.
“Again, I think this kind of solution needs to operate in a decentralised model.”
Lu’s final focus area for the immediate future is around food. Or, more specifically, agriculture. He says his interest in this particular subject was spurred by a demonstration at a recent seminar in China where he watched a mining device being put through its paces in an underground shaft by an operator who was literally thousands of miles away in another city. This was an example of the application of robotics and remote control in an unfamiliar environment.
“That, I thought, is the future,” he recalls. “Why not use a robot to farm? Who says you have to drive a tractor under a blazing sun to farm? I’ve seen demonstrations of a pilot controlling 11 drones at the same time. Why can’t you have a guy sitting in Sandton operating 11 tractors on different farms in Mpumalanga? You could have a solar-powered tower in the fields for connectivity and get on with the production of food.
“Drone farming? Robot farming? Remote farming?” he asks. “I don’t know what you would call it, but my way of thinking is to adopt technology to disrupt some traditional vehicles.
“Everyone knows how powerful drones can be when it comes to warfare, why can’t people see how practical and reliable similar technology can be in more productive areas?”
With stability and a clear direction established at Corex, and at least one of his future projects currently up and running in the smart logistics sector, it probably won’t be long before others come to fruition. Lu, no doubt, will find additional ideas to take their place.
“Maybe I’m thinking too futuristically,” he laughs and shrugs. “Nah! I don’t think so.”