This week witnessed the second stage in Staples’ quest for Asian domination. On Monday, the retail giant announced that it has established a joint venture (JV) with UB Office Systems and one of its business units, UB Express, a leading office supplies delivery business in Taiwan.
The move, details of which were not disclosed, comes almost two years after Staples struck a JV with the highly-successful Chinese internet and catalogue delivery business OA365.com, which has brought a number of big clients to Staples. The OP giant has also disclosed plans to open office supplies superstores with direct sales in China over the coming months.
With the Taiwan OP market estimated at $2.5 billion, Staples’ logic is clear. Spokesperson Owen Davis explained to OPI+: "This joint venture is an efficient way for Staples to develop our capabilities in the market by partnering with local business experts and a leading brand. Staples looks forward to working with the UB Express team including Elton Lin, UB Office Systems chairman and CEO, who is highly regarded for his leadership."
Like Staples’ Chinese partner, UB Express customers place orders via catalogue and online, and include government agencies, large financial institutions and large multi-nationals.
UB Office Systems, established in 1973, is the largest office furniture manufacturer and retailer as well as the leading copy machine distributor serving corporate customers in Taiwan. UB Express meanwhile was established in 1998 as a business unit of UB Office Systems.
And now the company will start a new era, under the name of UB Staples. "UB is a strong brand name in the Taiwan market," said Davis. "The joint venture will be co-branded UB Staples, leveraging two leading brands.
"Combining UB’s customer base, well-known brand and experienced management team with Staples’ best practices and global procurement power represents a significant opportunity for Staples to grow in the Taiwan market," he added.
Some analysts say that the Taiwan market, currently highly fragmented, offers a plethora of opportunities for the big box player. Desmond Wong, president and CEO of Sino Strategies Group and former China expert at Ernst and Young, told OPI+: "[This is] a very positive move. Taiwan has a more advanced economy than China and therefore spells greater per capita market potential for office products.
"Staples brings a world-class brand name, product assortment, sourcing, service standards and presumably cutting edge inventory management expertise to an important economy in the Pacific Rim," he added. "It has teamed up with a strong local partner to kick-start what can be a very significant Staples presence over time."
But Dan Binder, SVP of Buckingham Research, warns that Staples’ Taiwan JV will have a limited impact on the bottom line. "The Taiwan JV is a very small venture and we did not issue a note on it. I do not think there are lots of natural synergies outside Staples’ general expertise in running a business and maybe minor synergies on global brands. I do not expect the deal to be meaningful to either Staples sales or over the medium term."
Despite his praise for the move, Wong also expects there to be minor local challenges for Staples in the country. "[There will be] fierce local competition, albeit from fragmented, smaller entities that may not have the resources and scale of economy of a Staples/UB partnership," he said. "Direct linkage with the next-day delivery business offers Staples but one venue to perfect its delivery business model for elsewhere in the world.
"But Staples’ strengths can help overcome local competition," he added.