While in China recently, Barry Matties joined longtime I-Connect007 friend and contributor Hamed El-Abd of WKK to congratulate him on his upcoming retirement. They reflected on Hamed's time spent in the industry, specifically in China, how far it’s come, and where it might be headed next.
Barry Matties: Hamed, you're coming close to your retirement. Congratulations.
Hamed El-Abd: Thank you. Yes, that's true, September 1.
Matties: We want to talk a little bit about your journey. When and where did you start in the industry?
El-Abd: In this industry, I started in 1978 with an American company out of the L.A. [Los Angeles, California] area called Amistar. Primarily, their business at the time was just in the U.S., and they wanted to get a presence overseas, so they hired me to set up and run their international business.
Matties: What was the product line?
El-Abd: At the time, it was automatic insertion equipment, so they competed against Universal, Dynapert, and Panasert back then.
Matties: And then you found your way to China at some point?
El-Abd: My first trip to China was in 1980. The plane landed at 1:30 a.m. from Zurich, and it was like a whole new world.
Matties: China in 1980 was a lot different than China in 2017.
El-Abd: In 1980 in China, everybody wore the Mao-type suit, and there were hardly any cars. There were buses, trucks, and some trains, but very few cars. The cars were mostly government cars and some taxis, and everybody else was on a bicycle. I remember I rented a bicycle from the hotel for $1 for the week (laughs).
Matties: Probably the best way to get around back then, too.
El-Abd: It was the best way to get around back then.
Matties: So what was your first mission here?
El-Abd: We were coming here to look at the opportunities of opening this market for equipment, because China was just at the infancy stage of electronics, and at the time, it was really the military that was doing their electronics work. There was very little commercial stuff; they weren't doing the big, heavy stuff that you see today.
Matties: So you saw opportunity?
El-Abd: A lot of opportunities, and people had no clue what we were doing. In 1980, that was just the beginning. In 1981, the very first electronics show was held in Beijing.
Matties: But you weren't a resident here at that point.
El-Abd: No. We were coming in from Switzerland. I was stationed in Zurich. I moved to Zurich in early 1980, because we needed to set up Europe. Then we started opening Asia, because I felt that Asia was going to be a very important market.
Matties: So you just stepped off the plane in 1980, in a very different China, and you were getting around by bicycle, but you weren't living here yet.
El-Abd: That was way back when, but China was not new to me. My uncle was the Egyptian ambassador to China, and he was also the dean of the Diplomatic Corps. Growing up around him, he was also in Washington, D.C., so we knew everything about this. We were very close, and when he came here, we learned a lot about China, what to expect, and what it was like. It's different until you see it.
I remember the first weekend I was here. I took the bicycle and there were a couple other people with me from England. We rode around the entire city. We got lost a couple of times, riding the bicycle here and there. We didn't speak Chinese, obviously, but the people were so wonderful. I cannot tell you how wonderful and nice the people were.
We rode into a huge square and we noticed the kids were playing soccer in the middle of it, and everybody was on the steps, looking at the kids. So we kind of stopped, and we were watching, and by sheer coincidence, the ball gets kicked over to our side, where we were, and the English guy, Ian, gets off of his bicycle, does a couple of loopty loops with the ball, and kicks it back. The next thing you know, the ball gets kicked back to us right away, so we ended up, three of us, playing soccer with these kids in the middle of the square. Then, when it was finally over, the people came out with tea for us. We didn't expect this kind of a reception, really, and they were so warm and so wonderful to us.
Matties: Back then, there weren't a lot of foreigners.
El-Abd: No, there were very few foreigners. You counted them by a couple of hundred. That's it.
Matties: The fact that you were a foreigner, and a foreigner on a bicycle.
El-Abd: Yeah, and a foreigner wearing clothes that they had never seen before. They were all wearing olive green, blue, or gray. That was it. You know, it was an exciting and interesting time. I remember, the following weekend we went to the Great Wall, and it was very cold with a little bit of rain. If you've ever been to the Great Wall, it's packed with a lot of people, especially if you go on a weekend. Back then, there was nobody there. The only people we encountered at the Great Wall were people from the People's Liberation Army (PLA). They were the only ones there, and they were tourists, and we ended up hanging out with these people from the PLA, switching hats, and you know, it was a wonderful experience. It wasn't this belligerent type of atmosphere that you were told about, you know, the Chinese communists. It wasn't like that at all.
Matties: So that was 1980, and then, at some point, you decided to become a resident of China.
El-Abd: I was commuting for 13 years, back and forth, and then in late '93, I moved to Hong Kong, and then I moved to work with WKK. Then we started opening up all of our offices, because keep in mind, WKK is 42 years old. So we have the first office for any distributor in the electronics industry in China, and of course, the first office was 1975 in Beijing. At that time, you only had one customer, the Chinese government. You had no other businesses, so when you sold something, you sold to the Chinese government, and it went into factory 101, factory 125, factory 77. That's how it worked back then. It was an interesting experience, and when you went to visit a factory, it was, “Oh, we're going to see factory 106 today.”
Matties: Interesting. So, when WKK started, did it start as a distribution company first?
El-Abd: Yes, in 1975.
Matties: So, being the first distributor in China, opportunities were just everywhere for you?
El-Abd: Honestly speaking, they didn't know anything about manufacturing, so all this technology, all this equipment, was totally new. We had to educate them in everything. Today, they know everything about everything.
You're not educating them about anything. They're educating you on the new stuff, but back then, you had to help educate them. Part of the success of WKK is we didn't take this arrogant attitude like some people take. We understand that you don't know. We know. We're here to help you. We're here to educate you. This equipment does this and this, and then we recognized early that it was all about service, because they didn't know how to take care of it themselves, so we had to put our service teams here. We had to educate our own service people, bring them into China, and then spend a lot of time educating the locals about how to do all the regular daily routine maintenance that needed to be done.
Matties: Now, when you look at WKK, you guys are manufacturing. You're EMS, you're distributors, and you’re training. It's turned into a little city down in south China.
El-Abd: Well, that's all part of growth, because if you don't move forward, you end up moving backwards. So we want to constantly keep moving forward, like looking at technologies in various fields. So like today, we showed you the 3D printing, printed electronics, and the 3D printing of metal parts. This is unique, and this is leadership in the technology world here. Then, we want to be a leader in everything that we do. We don't come in saying “oh, it's okay. We're going to play catch-up or something.” I don't want that. I want us to come in with a leadership position. You know, what is a leadership position? One, two, three. If we're not number one, two or three, we really look at that, whether it's worthwhile.
In today's China, it's totally different. There is virtually nothing that these people are not capable of doing. Now, some people will say yeah, they copy everything, and yeah, that's true. They copy everything, but so did the Japanese. So did the Taiwanese. So did the Koreans. I mean, I don't fault them for it. If they want to get ahead, they copy. What bothers people is there's a lot of IP that's copied. There are ways around that. There are ways to protect yourself, and a lot of people don't necessarily understand. The foreign companies don't understand how to do it. How do I protect my IP so that I can come in?
Matties: Well, the thing that you really got to witness was this just amazing transformation of an entire society, from third world to where we are today, an economic giant. And you've watched the middle class rise up. I think there was virtually no middle class when you first arrived, and now what? About 230–300 million people have entered the middle class.
El-Abd: At IPC APEX EXPO 2017, I gave a keynote speech on China, and I spent several weeks researching to make sure that whatever information I gave during the talk was correct, and in China, one of the driving factors is education. They graduate close to a million engineers a year. Now, some people might argue, "Yeah, but they're not that good." But maybe 25% of them are pretty damn good, and they have a lot of PhDs, and they have a lot of engineers with master's degrees, and they focus on areas where we don't.
If I fault the U.S. for anything, it's that we're allowing our leadership position to be eroded, because we're not focusing on the right things, where the Chinese are focused on the right things. The government says we're heading in that direction, and we're all going to go in that direction, and they do.
Matties: But they have their own set of problems now with automation coming in.
El-Abd: Yes, they haven't really grasped that yet. It's already becoming a huge issue, but it's equally going to be an issue in the United States. It's going to be an issue worldwide. As you automate—and you need to automate—and as you put in artificial intelligence to do some of the functions that we normally do today, what are you going to do with the people?
Editor's Note: Click here for the part 2 of this interview.