Amber Road acquires China-based GTM vendor
The global trade management (GTM) software provider Amber Road on Wednesday said it has acquired Shanghai-based GTM solutions provider EasyCargo in a move aimed at providing its customers with a more incisive tool to navigate China’s complex customs regulations.
The deal, which closed Sept. 3, has been in the works since February, Amber Road Chief Executive Officer Jim Preuninger told American Shipper
in an interview.
The catalyst was General Electric, a key customer for both companies. Preuninger said GE advised Amber Road as far back as February to discuss with EasyCargo ways to integrate the companies’ two platforms, as EasyCargo provided robust capabilities in helping GE with its China production and export process.
Amber Road executives were left impressed with the sophistication of EasyCargo’s technology, and the companies worked through the summer to hammer out a deal.
EasyCargo specializes in aiding customers with China’s so-called Processing Trade provisions, a set of regulations designed to encourage foreign companies to import raw materials into China, manufacture goods, and export finished goods.
It promotes itself as serving the China trade management (CTM) space, an underserved market that addresses in greater depth China’s web of import and export regulations.
“We started in 2007, and at that time, there was no such market as CTM,” said EasyCargo founder and chief executive Kae-por Chang. “Companies were using tools or excel spreadsheets to manage operations. We saw there was a void in the market. We also saw companies treating the supply chain and CTM as separate tracks. There was no tool to have a cohesive business processes, to kill two birds with one stone. We saw an opportunity with that.”
Preuninger said the acquisition has two primary benefits for Amber Road: it expands the company’s technology footprint into a critical, but challenging market that nearly every Amber Road customer does business in; and serves as a launching point for Amber Road’s sales and marketing endeavors in China and the Asia-Pacific region.
“What adding EasyCargo does is allow us to go deep when (our customers) bring raw materials in, manufacture and export out,” he said. “It’s difficult to track this through the manufacturing process. It’s an amazing piece of technology these guys have developed. Now we have the roundtrip ticket. We can get you get in, manage everything inside China, and then get you back out.”
He said the deal was not driven by a need for greater content in China.
“We have pretty good China content, so there’s a bit of overlap there, and an area where we expect to have some synergies,” Preuninger said. “The depth of the software capability and the combination of our platform and theirs is fantastic.”
EasyCargo has roughly 50 customers, some overlapping with Amber Road (aside from GE). Preuninger said the timing of the deal was poignant.
“We had a bunch of customers this summer asking us what we were doing in China,” he said. “I was delighted to be able to answer some RFPs under NDA about this. It was a good validation that this wasn’t a point solution that a few customers were going to be interested, but that this was a theme that many customers were going to be interested.”
EasyCargo will be rebranded as Amber Road China, with Chang to serve as the subsidiary’s managing director. It’s the first acquisition for Amber Road since 2005.
“We’re not a very acquisitive firm,” Preuninger said. “We like to build technology. But we took a look at the opportunity in China, and we saw this could very well be as large as everything else we do. It would take a long time to build something this big. I looked at our guys and said, we could never do this. We can now spend pretty aggressively to grow, with Shanghai the center for Amber Road in Asia.”
Preuninger said the two companies have already done a “great deal” of work in integrating the two platforms, with a target date for the end of 2013 to be fully deployed.
“We both use very modern Web-based architecture, so there’s a great deal of commonality there,” he said. “In both cases our business is about integrating our technology with other tools, whether it be an ERP or a supply chain tool.”
The deal greatly expands Amber Road’s footprint in Asia.
“We had a fair number of people in Hong Kong working in our content group, and some customer-support personnel,” he said. “But that was pretty limited. With this transaction, we pick up a strong base in Shanghai. This is a great market for talent, the culture is right, the energy is terrific. There are great competencies in terms of trade, logistics, and technology. Now we have a base to build on for all of Asia.
“This deal opens up those doors for us – both with multinationals and Chinese companies, even middle-market companies and small and medium enterprises. We’ll invest heavily in infrastructure. We’ll also invest pretty heavily in sales and marketing and drive business here in China,” Preuninger said.
Financial details of the transaction were not disclosed. - Eric Johnson