Sepaton Looks East For Major Growth
When Mike Thompson came on as president and CEO of Marlborough-based Sepaton in February, the company made it clear to him that there would be one goal for his tenure leading the company: Growth.
Thompson has taken what he considers a major step toward that goal. The company recently announced a partnership with Digital China Holdings Limited, one of the largest IT service and products suppliers in the Asian powerhouse.
Digital China will resell Sepaton's enterprise-data security solutions across China, which Thompson said means the potential for big growth in one of the world's faster-growing economies.
"When this company recruited me to be CEO here, it was very clear that we had great assets, great products and that now is the time to accelerate growth," he said. "Now we're making changes throughout the U.S., Europe and Asia-Pac to do that."
Familiar Territory
Doing business in China is nothing new for Sepaton, but the size of this deal and its potential for expanded sales is unprecedented for the company.
Sepaton already works with a handful of Chinese businesses in the construction, banking, agriculture and utility markets.
With the new deal, however, Sepaton has partnered with one of the largest IT service providers in the country. Thompson said Digital China has already trained about 80 workers on how to use and sell Sepaton's datacenter protection products and Sepaton has inventory already in China, ready to ship to new customers.
Thompson said the deal with Digital China was the result of prior work that he and other top executives from Sepaton have done in China, and specifically with Digital China.
"They really have an outstanding reputation in the Chinese market, and they're one of the largest IT service providers in China," Thompson said. "It's a great company because they don't just provide products, they provide solutions, and they'll wrap solutions around our Sepaton products."
Still, Thompson knows that doing business in China can come with its risks.
Other businesses in Central Massachusetts have learned that the hard way, including Devens-based American Superconductor, which filed civil and criminal charges of economic espionage related to its Asian customer allegedly stealing AMSC's intellectual property.
Thompson said Sepaton has some built-in securities protecting the company's IP in China. First and foremost, the relationship with Digital China is purely a resale deal - there is no development or manufacturing associated with the agreement. Plus, he said, Sepaton has given Digital China exclusive rights to market the product, providing further protection to Sepaton's IP. With the exclusive rights, Digital China already has a leg up on competitors there - which do not have Sepaton's product - reducing any potential incentive to illegally take Sepaton's IP.
The issue of IP is a big one when doing business in China, Thompson said, but there are other challenges too, such as profitability.
"It's a very complex market to address," he said. "It is very price-sensitive because of the intense competition."
With so many businesses competing for market share, he said, many are willing to give up margins. Businesses that go into the market without already-established partners in the country are doomed to fail, he said. That's why Sepaton went in with a partner like Digital China.
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