Confident in ‘crazy-competitive’ device market: Kata CEO eyes massive Asian growth

MANILA, Philippines - “No one knows this story,” begins David Chen with a smile. “See the scar on my hand? I got this when I was nine. One day, I had this idea to build my own wagon.” He holds his left hand up and points at a long, nasty-looking but clearly old ridge – a consequence of a log-chopping adventure gone awry in Chen’s hometown of Wenzhou in the southeast coast of Zheijang Province.

While his father had a government role, and his mom a “cushy” job of her own, they chose to relocate their brood of three to Brooklyn in 1983. “At that time, China was still a very hard place to live in,” Chen says.

“But when we moved to the US, it was horrible,” he maintains. David admits he missed the farmland, his friends, and being able to speak the language. He was picked on as a kid. “We were a typical immigrant family. Mom was a seamstress; dad was a dishwasher. Back then it was a hard life. And that’s how our parents raised us.”

Left to his own devices at home, David would tinker around with stuff. “I’d take apart the VCR and put it back together, just to see what it was and how it worked,” he says. “I always had these ideas.”

He complemented these “ideas” with hard work at university, where he took up accounting. “I was a natural,” he points out. “Not because I wanted to be an accountant but, just in case I needed a job, at least I could keep books… I never studied very hard, but I got very good grades.” He was also active in student government.

For even then, Chen was very clear – and confident – about what he was to do. “My first dream was that I wanted to buy a business. I wanted to make lots of money,” he declares simply.

His acumen was obviously noticed by multinational telco giant AT&T, which conscripted David to its financial leadership training program – with an eye at considering him “for future management.” But Chen moved on to other companies such as Bank of America and Cisco before finally starting on something he was “comfortable enough” on.

The early days saw him delving in IDD (international direct dialing) business and a contact center. An office in the country boasts a thousand people serving global clients.

As he maintains other interests, David Chen is understandably most known for being the founder and CEO of device maker Kata, which he put up in 2009 and envisioned bringing “innovation into something tangible and possible.”

He shares the rationale behind Kata: “We need something different. We need a tech-related product… something that would keep us going in the future.”

There is obviously a glut of competition in the price point of Kata, but Chen professes confidence in the unique value proposition of his products even if the segment is “ultra-competitive, crazy-competitive.” Besides, he adds: “Any industry is, in fact, very competitive, unless it’s government protected.”

He observes though, that cell phones have “a huge market,” and that “people buy phones all the time. They change phones, on the average, every two years. There is a lot of demand for phones.”

Kata’s R&D efforts are spread out in Hong Kong, China, US, and even in the Philippines. Manufacturing ensues in Shenzhen, China. Chen says that the company uses very different methods to get things done while keeping costs as low as possible. “Some stuff we do ourselves, some we outsource,” he explains.

“We’re focused on making the device better. A typical manufacturer knows how to make a device, but they don’t really care about how the device is used… We make a good device, a device that we want to use ourselves and is up to our standard,” Chen continues.

His faith in Kata is tantalizingly similar to how confident the executive is as a person. “Since I was a child, I’ve always been a confident person. I don’t believe in failure. I believe that through hard work, you can succeed. I’ve always believed that I can succeed… You can learn what you don’t know, and I’ve always been a very fast learner.”

He concedes that a lot of competitors make good devices, but there are brands who do nothing but price. “They match the cheapest price with the cheapest product,” Chen laments. “The end result is a cheap device. (On the other hand), we want to keep our phone as cheap as possible, while putting our hearts and minds in the phones that we build.”

Even as the brand has established a presence in the US, Canada, Singapore, Hong Kong, Indonesia, and the Philippines, Kata continues to vigorously work on expanding its global footprint. Pullini intimated that the company needs to “improve geographically.”

The Asia Pacific region is widely regarded in various sectors as the market promising the greatest advance. Chen agrees, saying: “We want to expand to more Asian countries – Myanmar, Taiwan, Thailand, Vietnam hopefully by Q1, Q2.”

Kata is adopting a different business model to realize the ambitious growth trajectory it envisions. “We’re looking at local partners,” says Chen. “The traditional was to have directly owned companies (but) you get to a point where you see this is not the right way to do it anymore.”

Chen admits that the way to “take it to the next level” is “to get other people involved – especially locals who know the countries a lot better than we do. It’s a win-win situation.” Still, he confesses that “finding a partner is very hard. There has to be a level of trust, and not just contract based.” For that reason, David meets them personally. “I want to know who they are; I want them to know who we are.” Kata is currently putting the finishing touches on a partnership deal in the Philippines that would allow the brand to grow its already sizeable presence of 50 stores.