ENTERPRISE 50 2014 The Business Times | Friday, November 28, 2014 THE DNA OF SUCCESS In the 20 years of Enterprise 50’s existence, winners – such as Tee Yih Jia Food Manufacturing, Tat Hong Holdings and Petra Foods – have gone on to big things including overseas expansion and public listing. BY MINDY TAN W HAT is the of the E50 winners, with over a third (36 per cent) coming from the DNA of manufacturing, real estate/construction and engineering services sectors. success? Is This is also reflected in this year’s winners. In the top 10 winners alone, real it a drive to estate/construction players form more than a third of the winners. With the many be bigger headwinds faced by the construction sector today, we ask these companies what and better? makes them tick. Or the The other common thread that binds Enterprise 50 winners is a sense of relentless adventure, and looking outside of Singapore for expansion opportunities. Indeed, need to go further afield, whether in E50 firms have a presence in 123 countries! terms of geography or innovation? Their favourite countries? China, Malaysia, and Thailand. These Interesting fact: A total of 125 Enterprise 50 countries share the distinction of being able to meet local needs in firms have listed on stock exchanges – different markets and customer segments while tapping on the synergy including the Singapore main board and of a global network. exchanges in Hong Kong and Taiwan – a In the next few pages, we also tackle the question of Myanmar – what sure testament to the quality and calibre of do companies need to be aware of to take advantage of the market which Enterprise 50 winners. has only recently reopened her doors to tourists and foreign It might hence come as a surprise, but when the Enterprise investments? What are the challenges that come with being a first mover 50 Award was first conceived, there were concerns about and what is the key to sustaining your competitive advantage? whether enough companies would respond to the call for This year’s Enterprise 50 Awards celebrate visionary leadership and nominations. A quiet, soft launch was planned – just in case. entrepreneurial success. In these pages, we bring you some of their It was, of course, a huge success. The rest, as they say, is history. stories. In the 20 years of Enterprise 50’s existence, winners who have gone on The Enterprise 50 Awards is jointly organised by The Business Times to achieve bigger things include Tee Yih Jia Food Manufacturing – which and KPMG, and supported by the Infocomm Development Authority of was recognised at the inaugural Enterprise 50 Awards in 1995 – and other Singapore (IDA), International Enterprise Singapore (IE Singapore), companies such as OSIM International, Tat Hong Holdings and Petra Foods. Singapore Business Federation (SBF) and Spring Singapore. The This year, 50 companies are honoured. Borden Company, perhaps better known Enterprise 50 Awards are sponsored by OCBC Bank. by its flagship emerald green Eagle Brand medicated oil, tops the list. In second place is Sunray Woodcraft Construction, followed by Vigcon Construction. Inside In addition, two special awards have been given out. Seiko Architectural Wall Systems and Aik Moh Paints & On eagle’s wings .......................................................................2 Riding on productivity ............................................................15 Chemicals have been recognised with a 5 Year Award, and Solid foundation is key to success............................................4 Fashion + property = avant-garde buildings ...........................19 physical commodities trading company Wee Tiong was awarded the 10 Year Award. This is the first time that a Charting success in Myanmar................................................10 Timing it just right.................................................................... 21 company has received the 10 Year Award in the history of Exploring new frontiers ...........................................................14 A firm at the crossroads..........................................................22 the E50 Awards. Another interesting fact: Hard industry forms the bulk Supplement coordinator: Mindy Tan Sub-editors: Adeline Woon, Naveen Verghese Cover design: Ludwig Ilio Advertising sales: Rix Low: 9620 1365; Lina Tan 9620 1355 ENTERPRISE 50 2 | 2014 The Business Times | Friday, November 28, 2014 ON EAGLE’S WINGS I Borden Company does not rest on its laurels but is continually developing and adapting its products. BY VIVIEN SHIAO T IS a product that most Singaporeans associate with relief, comfort and home – Eagle Brand medicated oil. It has not only stood the test of time, but is soaring to new heights. The emerald green oil which is Borden Company’s flagship product has successfully penetrated into two new markets – the Philippines and Taiwan – as at the end of 2012, with encouraging results seen as early as last year. Christopher Yeo, managing director of Borden Company, said that the company has further plans to expand. “In order for us to grow sustainably, we have to make ourselves present in a lot of new markets. Our products are sold in more than 20 countries globally, including the US, Vietnam and Australia, with further plans for expansion in the works,” he said. This continual quest for improvement makes it hardly surprising that Borden Company won the Enterprise 50 Awards for the sixth consecutive time. The medicated oil’s reputation as a household name across Asia goes back almost 80 years. In 1935, German firm Wilhelm Hauffmann & Company formulated its medicated oil with its distinctive and unique green colour for trading house J Lea & Co owned by Tan Jim Lay. Together with a few business associates who joined the company as shareholders, they officially incorporated Borden in March 1960 to take over J Lea & Co’s business. Until 2006, the company manufactured and produced its products at a factory in River Valley before moving to its current seven-storey premises at Jalan Kilang Road. “We have come a long way since we started,” said Mr Yeo. “We are very honoured – the E50 Award serves as a Borden’s products are sold in more than 20 countries globally, and the company has further plans to expand, Mr Yeo says. this will attract PMETs (professionals, managers, executives and technicians),” said Mr Yeo. This attention to detail can be seen especially in the quality of its products. “The most important thing for us is to consistently produce oil that is of the best quality to meet the high expectations of consumers. These people grew up with the oil, and they will notice right away if there is any change in the standard,” he explained. MEETING CHALLENGES testament for us to know where we stand so we can compare with other companies and improve.” STEPS OF SUCCESS Mr Yeo attributes the success of the company to a combination of factors. Firstly, as the company has no in-house sales team, Borden cultivated close ties with its distributors, said Mr Yeo. The second factor has to do with Borden’s ability to diversify and innovate. Despite the unfading popularity of its flagship green oil that makes up for at least 80 per cent of its turnover, Borden Company does not intend to be a “one-trick pony” by depending on one sole product. Through the years, its range of products have increased to include eucalyptus oils, disinfectant sprays, medical balms, muscle rubs, plasters and various other analgesic products. Innovating to suit a fast-changing environment seems to be the trick to Borden’s survival as the company is continually developing and adapting to ensure that it keeps up in the competitive world of pharmaceuticals. “While the green oil is our main source of revenue, we want to capitalise on our branding to develop a wider range of products to reach a wider circle of consumers,” said Mr Yeo. Just this year, two more products were developed. One was a lavender aromatic medicated oil, and the other a pain relief patch. “These new products were developed to appeal and attract young users. Instead of simply focusing on pain relief, we have repositioned some of our products as stress relief instead, with the use of aromatic oil like lavender as the scent is lighter. We want to send the message across that our products are not just for the elderly, but suitable for younger users as well. This is the direction we want to move in,” said Mr Yeo. The combination of foresight and innovation seem to be the hallmark of the company as there seems to be no end to Borden’s quest for expansion. New products – such as muscle cream – are constantly being rolled out. Products are also using new packaging – such as a roll-on stick that will be pushed out to the market next year. Borden’s products are a result of meticulous market research and extensive research and development (R&D) which is done in-house. “Through our R&D, we are able to cater to different groups of consumers. We have to be innovative in order to be relevant. For example, the roll-on stick that we are launching has packaging that is very modern, and As a small and medium-sized enterprise (SME) with limited resources, there are many challenges to overcome in order to succeed. For Borden, managing its operating cost has been the biggest obstacle. Mr Yeo said that while the company is lucky to own the property that houses it, high labour cost is an issue. To cope with this, the company has embarked on a journey to use more automated machinery, reduce manpower and increase productivity. The firm’s productivity boost is considered a milestone for Borden as it recently took advantage of the government’s Productivity and Innovation Credit scheme that was introduced in 2010. Borden qualified for the grant and managed to put together a new manufacturing assembly line that helped to increase productivity by 30 per cent. “The scheme couldn’t have come at a better time,” said Mr Yeo. Another challenge that Borden fac- es is the fluctuating prices of menthol, which is a vital ingredient in its green oil and other products. “We use a lot of raw material, and there is not much we can do to control the prices as it is a commodity. In order to be prudent, we monitor the prices and buy more of it when they are low,” he explained. One issue that Borden faces is the appearance of counterfeit products. This is especially rampant in Third World countries such as Vietnam and Cambodia. To overcome this problem, the company took the initiative in 2010 to make changes in its packaging to curb counterfeiters. Innovative measures such as 3D holograms with added security features was one way to counter fakes. Mr Yeo added that the company also worked with local authorities to raid counterfeiters in a proactive push to stop the problem at the root. THE ROAD AHEAD Not surprisingly, Mr Yeo said that there are long-term plans to enter two major markets: India and China. “For India, registration has been approved and we are working to get a distributor. Hopefully, we will be able to ship our products next year,” said Mr Yeo. As for China, the situation is not as easy due to regulatory issues stemming from the protectiveness of the Chinese government regarding the economy. “Moving forward, we want to continue to explore and develop new products, as well as enter new overseas markets. New markets might require some time to take off, but we are confident that in three to four years we will be able to bear fruit. However, no matter how we expand, the local market will always be our testing ground,” he concluded. vshiao@sph.com.sg @VivienShiaoBT | The Business Times | Friday, November 28, 2014 LIEBHERR 3 ENTERPRISE 50 4 | 2014 The Business Times | Friday, November 28, 2014 SOLID FOUNDATION IS KEY TO SUCCESS Sunray’s trial by fire made management rethink its operations. It has since become one of the largest interior builders in Singapore. BY MINDY TAN T HE striking gold of Sunray Woodcraft Construction’s headquarters stands in stark contrast to the surrounding buildings in the Sungei Kadut industrial area. In conjunction with the move to the new building in May this year, some of the younger management thought that it would be apt to modernise the company logo. The proposal was stonewalled by the older management, before a compromise – leaning more towards the original design – was reached. Respect, especially for pioneer staff, is clearly a cornerstone of the interior fit-out company’s culture. “We have a lot of old pioneers at Sunray . . . (The important thing is) to not leave them behind. Train them, upgrade them, give them opportunities. They don’t have certificates; and if we leave them behind, they will get phased out by the market . . . It’s important to put in the extra effort to bring them up together with the company,” said chief executive officer Connie Wu. These are, after all, the people with whom Ms Wu built, and then rebuilt the business following a fire which destroyed the company’s factory cum headquarters in 1999. Sunray started off with carpentry and joinery work in 1987. Then, it had less than 20 employees on its payroll. In 1991, it consolidated its operations which had expanded to a few rented factory spaces, and moved to a two-storey factory in Bukit Batok Industrial Park. In 1999, a fire wiped out the entire business. It was only through the sheer determination and hard work of the Sunrayians who stayed that the company pulled through. And it is for this reason that Sunray aspires to be, what it terms, an “FMNC” (family multinational company). “We want to adopt that MNC methodology while retaining our family culture. Just because you corporatise yourself doesn’t mean you have to lose the family culture – call it a FMNC,” Ms Wu said. “It’s a difficult task because it’s somewhat contradictory – the approach and culture of how a company functions, what defines a family business and what defines a MNC. How do you bring it together and make sure it works? It is a challenging task. But we believe that it can be done. And if we can achieve that, I believe it will bring Sunray to a whole new level. You are bringing people together not just through a corporate structure but through bonds.” Don’t let her maternal approach to her co-workers fool you. Underneath the well-coiffured exterior lies a Hokkien-spouting contractor who not only learnt the trade by hand, she grew the company – which is in one of the more male-dominated industries – to be one of the largest interior builders in Singapore. One of the significant milestones for the company is that the fire made it rethink its operations. When it moved back to the Bukit Batok office in 2001 after it was reinstated by the Housing and Development Board, Sunray started to tender for projects on its own as a main contractor. In 2008, it was awarded a few major projects at Marina Bay Sands and Resorts World Sentosa. Total turnover increased from S$56 million in 2006 to S$98 million in 2008. Today, Sunray is poised for the next stage of growth. It has, in addition to its full suite of interior fit-out services, incorporated a small structural team. “We are trying to do more than provide just a service or a product, and be a total solutions provider,” said A BIG THANK YOU TO OUR VALUED CUSTOMERS AND PARTNERS Reefer Containers AWARD Flat Rack Containers 20’ Dry Containers ISO Tanks Open Top Containers BLPL Singapore owns and operates a growing container fleet of 22,000 TEUs including temperature controlled containers and special equipments for carrying odd size cargo. BLPL now offers services which cover 18 countries and 65 ports / ICDs spanning from China, South East Asia, Indian Sub-Continent, Middle East extending up to East Africa. BLPL SERVICE COVERS: BANGLADESH INDIA MALAYSIA PAKISTAN SOUTH KOREA THAILAND BRUNEI INDONESIA MALDIVES PHILIPPINES SRI LANKA UAE CHINA KENYA MYANMAR SINGAPORE TANZANIA VIETNAM A subsidiary of 120 Lower Delta Road, #06-00, Cendex Centre, Singapore 169208 Main +65 6413 0560 •Fax +65 6223 6822 •www.tgsin.com Ms Wu leads Sunray with a strong respect for the company’s pioneer staff. PHOTO: YEN MING JIIN Ms Wu. “We have close to 400 staff in Singapore and 1,000 workers inhouse. That means we have a healthy and efficient workforce that we can exercise to execute the jobs that are entrusted to us in this fast-paced market. On top of that, we have a lot of very supporting subcontractors, vendors, suppliers, that too play a key part to our success – and we will aid them to grow together. “Our brand promise is to deliver quality, timely completion and good value all at one go. So when people hire Sunray, they expect these three qualities. Even in our expansion, we try not to lose these three qualities when we deliver to the market.” It is for this reason that the company has taken its time in pursuing overseas expansion. “We can go, but can we deliver on our brand promise? And not just go there, be a one-hit wonder and come back. That’s why we put in a lot of effort to ensure our foundation is strong enough before we go overseas.” Re-entering the high-end residential market in Singapore is one of the ways that Sunray is looking to strengthen its foundations. “It’s about concretising our foundation in Singapore, consolidating our capabilities, and then focusing on going global. If our foundation is not strong locally, we can’t focus for our expansion overseas.” This is the first time that Sunray has won the Enterprise 50 (E50) Award. Said Ms Wu: “Benchmarking is important, because we are looking to constantly lead change. Singapore is moving so fast – look at the Singapore government, the Singapore economy. We have to be nimble and flexible to stay competitive. “We don’t look at the industry just locally but globally. In this ever shrinking world, what looks like a distant geographical threat back then can be a very real threat tomorrow. And if in the industry, as an individual company, if we’re not constantly trying to improve ourselves, leading change, we will get left behind. And you can see so many examples of that. We try not to follow in those footsteps.” tanmindy@sph.com.sg @MindyTanBT SME SURVIVAL TIPS Alliances may be the secret to SME success. BY NITIN PANGARKAR T HE business landscape in any economy is characterised by the presence of thousands of small and mediumsized enterprises (SMEs). They are often involved in a range of activities – from low-technology to hightechnology manufacturing – and also in various kinds of services. SMEs generally account for a good proportion of economic growth and employment. However, it is common knowledge that the mortality rate of SMEs is high – which begs the question: What strategies can improve the odds of SME survival and good performance? Just as there is no one formula for success in life or business, there is no one formula for SME success. But there are a few paths that SMEs can take to improve their chances. In a recent research article, my co-author and I found that SMEs which form alliances with a diverse range of partners achieve better performance. The case for alliances for SMEs is straightforward. Typically, SMEs have a narrow set of skills and strengths. For instance, they might be born out of an interesting product or service idea of their founder(s). Tesla Motors, for instance, was born out of Elon Musk’s passion for electric cars. However, narrow sets of skills – even if they are in the form of a superior product or service – often do not translate into business performance. A well-rounded set of strengths is needed to succeed, and that is where alliances come in handy. Alliances, which are looser forms of cooperation than acquisitions, can include an array of arrangements such as minority equity stakes, or arrangements involving research, distribution and cross-licensing, among other things. Alliances are flexible as they can be altered to address an evolving environment. OPPORTUNITIES FOR ACADEMIC PARTNERSHIP A key benefit of alliances is that they can be formed with a variety of partners, each enabling an SME to fill a specific gap in its skills. For instance, an alliance with a university might provide access to laboratory facilities for product testing, or research done by scientists at the university. In some cases, SMEs can also collaborate with students on projects to solve specific problems relating to either technology or business strategy. At the same time, venture capitalists – such as those working with start-ups at universities – can provide seed as well as later-stage capital infusions and valuable advice. COLLABORATION WITH CORPORATES SMEs can also benefit in a variety of ways through corporate partnerships. In addition to providing funding, corporate partners can help in areas such as distribution and branding. Many SMEs, for instance, serve as original equipment manufacturers (OEM) suppliers for bigger corporates that possess superior skills in marketing and distribution. Take Singapore Exchange-listed Hi-P international, which has grown larger than an SME. It is a firm that supplies mobile phones to a variety of customers including Xiaomi and Apple. These alliances allow Hi-P to focus on its strengths in managing supply chains and assembly efficiency, while leaving marketing and distribution to partners that excel in those areas. This also illustrates an important point – that it is not simply alliances, but alliances with diverse partners that can boost SME performance. REAPING THE BENEFITS A number of other Singapore-based SMEs have benefited from alliances, such as Stone Apple, a technology services firm that was once classified as an SME. It won the Enterprise 50 awards and has been growing at 55 per cent per year, so much so that today, with 1,400 employees, it no longer falls under the definition of an SME. Stone Apple has benefited from investments by backers such as Khazanah, SBI Brunei and Philip Capital. What is also noteworthy is that in addition to serving as sources of capi- tal, such investments play a role in enhancing the credibility of the company in the eyes of stakeholders. Stone Apple is a “platinum partner” of software giant Oracle, and has been able to successfully complete many enterprise resource planning (ERP) implementations, mainly because of this partnership. Clearly, alliances have been an important reason behind Stone Apple’s success over the past several years. There have been other instances where Singapore companies were acquired by foreign parents and subsequently benefited greatly from their expertise. After its acquisition by King Digital (maker of Candy Crush games), local gaming company Nonstop Games has profited in a variety of ways especially in terms of talent and resourcing, marketing and distribution. Interestingly, some of these benefits could also have been accessed through an alliance – for instance, through an acquisition of a minority stake in the Singapore company by the foreign investor. In summary, an alliance strategy can serve the interests of many SMEs well. To implement this strategy, an SME must figure out its focus, strengths, and key gaps such as skill shortages. Only when these gaps are identified can a company have a realistic shot at identifying a strategy to fill the gaps. MANAGING CHALLENGES AND RISKS At the same time, it is important for SMEs to manage risks in alliances. They need to choose the right partners – partners who are interested in helping SMEs develop further and not extort their key skills, such as technology. Partner management could also be a challenge, especially if there are significant differences in the way that an SME and its partner operate. However, partner management is a “soft” skill (an art rather than a science) and there may be a learning curve for SME managers. ❚ The writer is associate professor of strategy & policy at NUS Business School | The Business Times | Friday, November 28, 2014 is honoured to win the prestigious AWARD Thank you to our clients, partners and all Sunrayians for making this possible. Your one-stop solution provider Mr. Tan Teng Huat, Chairman for all architectural and interior fit-out works Resorts World Sentosa Mdm Connie Wu, CEO Equarius Hotel, Singapore Mr. Tan Choon Huat, COO Sunray Woodcraft Construction Pte Ltd 9 Sungei Kadut Street 3 Singapore 729143 T (65) 6566 2311 F (65) 6565 3332 E swc@sunray.com.sg ESPA, Singapore www.sunray.com.sg Sponsors 5 ENTERPRISE 50 6 | 2014 The Business Times | Friday, November 28, 2014 MORE THAN JUST A PAINT JOB J Construction is now one of Vigcon’s core pillars, along with its additions & alteration arm. BY CLAIRE HUANG UST like how a cowboy would roam the wild wild west on his trusty steed, Teo Yeow Soon did just that in his S$3,000 pickup truck in the late 1980s, busting his chops working on small-time paint jobs. After all, that was pretty much the skills that the then 25-year-old picked up from his younger days of helping out his uncle with odd jobs. Unknown to Mr Teo, he was layering his success coat by coat working under paint manufacturers including Nippon Paints and the former ICI Paints. From a one-man show handling what was described as “some painting of buildings”, Vigcon Construction was incorporated in 1990 and has continued to grow since. In 1996, Mr Teo’s older brother, Teo Tiow Guan, left his engineering job to help out at the company and the rest, as they say, is history. Fast-forward 18 years, the younger Mr Teo, 51, is now the managing director of Vigcon Construction while the older Mr Teo, 52, is its executive director. Together, the two bespectacled brothers now oversee about 230 staff, running a company that recorded a S$90 million turnover in 2013. Seated side by side with his brother at a long boardroom table on the day of the interview, Mr Teo Tiow Guan recounted the events shortly after he joined his brother. In 1998, the government introduced a man-year entitlements (MYE) policy which companies employing workers from non-traditional source (NTS) countries and from China for construction projects must adhere to. MYE reflects the total quota of foreign construction workers allocated to a main contractor for a specific construction project. Based on the value of projects/contracts awarded by Mr Teo Yeow Soon (left) and Mr Teo Tiow Guan (right) are looking to move into residential or industrial property development here or overseas in the coming years. PHOTO: ARTHUR LEE developers/owners, main contractors are allocated a number of man-years required to complete a project, and also a number of foreign workers that it is entitled to employ. “At that time as sub-contractors, we were relying heavily on main contractors to issue us this man-year entitlement. We were having difficulty getting sufficient MYE because painting work is very labour intensive,” explained Mr Teo Tiow Guan, who added that about 70 per cent of revenue is allocated to labour while the remaining go towards material. That got the brothers thinking about branching out as a main collector of wood and subsequently, the company tendered for government projects. Vigcon’s construction business took off and is now one of its core pillars, along with the company’s additions and alteration (A&A) arm. A&A currently contributes more than 50 per cent of Vigcon’s revenue. The business is going from strength to strength, providing the company with “a substantial amount of work” as shopping malls need upgrading works every 10 to 15 years. Other sources of work include hotels, flats and home improvement programmes. The past five or six years have been an “eventful” one for the brothers, who said that the company had attained an average growth rate of about 20 per cent per year. But they anticipate a slowdown in the construction sector in the next two to three years as the government had announced that it will launch 16,000 build-to-order units instead of the previous 25,000 units. While the company may be affected, the brothers said that Vigcon should be able to maintain the same turnover of about S$90 million in the next two years. One way to do so is to improve productivity, which is what the government has been advocating in recent times given that the labour crunch is squeezing businesses, particularly the construction sector. The silver lining: The labour crunch is not likely to have a major impact on Vigcon as it hires locals. Recognising the importance of upgrading workers’ skills, the company regularly sends staff for core trade training, which probably helps it to adjust to government policies with more ease. At the end of October, the government announced plans to raise the quality of foreign workers, starting with the construction sector. From Jan 1, 2017, at least one in 10 work permit workers on construction companies’ payrolls must be higherskilled R1 workers. A company that fails to meet this requirement would not be permitted to hire new basic-skilled R2 work permit holders for up to 12 months, according to the Building and Construction Authority (BCA) and the Ministry of Manpower (MOM). Construction firms with at least 15 per cent R1 work permit workers will be exempted from the new measure. The government will also let con- struction firms upgrade experienced foreign construction workers to R1 status, or hire R1 workers directly from overseas. This will take effect from Sept 1, 2015. Vigcon currently has about 12 per cent of work permit holders who are already under the R1 category, and said that it will work towards meeting the 15 per cent in the next three to six months’ time. Even as the company described the government move as positive, it noted that the workers’ turnover within the industry might drive wages to increase and that this will lead to higher business costs and ultimately, a rise in construction costs. On their part, the Teos have introduced ways to raise productivity and reduce reliance on manpower, although they said that workers cannot be totally replaced. “In the project sites when you do excavation, when the vehicle comes in, it’ll be full of mud at the wheels, so we cannot allow them to just go out and dirty the roads,” said Mr Teo Tiow Guan. The conventional method takes two workers about 10 minutes to hose off the mud, but that manpower is no longer required as the vehicle now drives through a recently-purchased automated drive-through wheel washer. Other initiatives include thumbprint identification linked to the payroll department to register the attendance of the workers, facilitating easier calculation of workers’ pay, and GPS trackers to facilitate deployment of vehicles to worksites. Besides technology, close supervision also helps to increase productivity as it reduces the margin for error and in the same vein, any rework. The brothers said that they do not expect more than 3-5 per cent of rework in general, as the construction margin is low and these few percent- age points differentiate the level of competitiveness between Vigcon and the others. “The top management is very involved in a project’s execution, that’s why in terms of A&A and fast-tracked projects, we can somehow do better because many of these projects require immediate decisions or quick thinking. So, for companies that have a lot of procedures, they may find difficulties in handling projects of such nature,” noted Mr Teo Tiow Guan, who laughed as he quipped that this has made them busier. Today, Vigcon is certified by the BCA as an A2 general building contractor, which means that the firm can bid for government projects of up to S$85 million. The Teos hope to raise this to A1 next year, which will allow them to “tender unlimited contract value”. But first, the Teos want to do some housekeeping. In the next one to two years, Vigcon will consolidate its business at a new one-stop facility hub comprising office, dorms, area for light production and fabrication, among others. In line with this, the siblings are looking to move into residential or industrial property development here or overseas in the next three years. While nothing is concrete, green energy and green products are some areas that the Teos are paying attention to as well. As for plans to get listed here, the brothers said that it would probably be five years down the road, barring market conditions. As much as they appear somewhat hopeful, the Teos remain cautiously pragmatic, choosing to focus on work – something they probably learnt from the younger Mr Teo’s earlier years. After all, it had never crossed his mind that he would get this far. huangjy@sph.com.sg @ClaireHuangBT SMEs SEE BRIGHTER 2015 Six in 10 Singapore small and medium-sized enterprises expect their business to grow next year. BY THEMIN SUWARDY AND MELVIN YONG N EARLY six in 10 small and medium-sized enterprises (SMEs) in Singapore expect their business to grow next year, according to the latest study of Asia-Pacific small businesses by global accounting body CPA Australia. This is a more optimistic outlook compared with the last 12 months, where just half of SMEs reported that their business actually expanded. SMEs are also most positive about the prospects for the economy than at any time in the last four years. Some 61 per cent of these businesses expect the Singapore economy to continue growing in 2015. “Singapore’s small businesses have typically responded well to these challenges with many focusing on reviewing costs, increasing marketing and improving customer retention,” said Gavan Ord, manager, business & investment policy, CPA Australia, who conducted the survey. “Improving staff productivity and skills were also identified by respondents as major drivers of expected growth in the coming 12 months,” he added. The annual survey – conducted in September this year – polled small businesses in Singapore, Malaysia, Indonesia, Vietnam, China, Hong Kong, Australia and New Zealand. Nearly 3,000 responses were received, spread evenly across all eight markets. With the targeted realisation of the Asean Economic Community in 2015, there is much potential for Singapore SMEs to capitalise on the opportunities. Good preparation for the expected challenges in business and economic conditions is key, especially in strengthening SMEs’ finance functions. As a global professional body representing 150,000 accounting, business and finance professionals worldwide, CPA Australia regularly provides tools and resources that help its members and SMEs excel through the business cycles. CPA Australia suggests a few things that a business owner can do now to get ready for the challenges ahead. REVIEW COST STRUCTURES Cost structures are arguably one of the most fundamental parts of any business wanting to ensure that it maintains a healthy balance sheet and sustained profitability. The Ministry of Trade and Industry’s 2013 Economic Survey of Singapore noted that labour, utilities and rentals were key drivers in recent increases in business costs. It is good practice to revisit your business plan and budgets, and change them to reflect current and expected circumstances. Review the assumptions underpinning your business plan and, if those assumptions have changed, amend your plans and budgets to reflect the new conditions. Look at the costs that are under your control. One common mistake is to rein in costs indiscriminately by slashing all expenditure. Training, staff welfare, advertising, repairs and maintenance, for example, may be discretionary but they play a large role in ensuring the continuing success of your business. For costs that are not within a business’ direct control, such as supplies and inventory, consider asking or selecting suppliers who are willing to be your business partners. Some suppliers may be willing to change how they deliver stock to you. This can reduce warehousing costs if they supply on a “just-in-time” basis or provide them on consignment. IMPROVE YOUR PRODUCTIVITY AND STAFF SKILLS Getting more from your assets and staff is essential to success – it ensures that your business is operating as efficiently and effectively as possible. Productivity and staff skills are important across all your business functions from front-line and production staff to support functions such as accounting and finance. They are not all about automation or turning the whole economy into a “machine nation”. Take accounting and finance, for instance. As your organisation grows, it is important to invest in accounting capabilities and capacity. For your business to succeed, the accounting and finance function should be seen as more than just a transaction processing department. “The high pressure, lower value adding activities completed by finance functions often result in finance employees suffering from low morale, which invariably leads to higher staff turnover rates,” said R Raghunathan, partner at PricewaterhouseCoopers Singapore, in a CPA Australia publication entitled Accounting and Productivity. A good accounting and finance function spends considerably more time developing business insight and managing risks to help the organisation operate effectively rather than focusing on transaction processing. It should help businesses evaluate its current performance by collecting data on business performance and comparing that to previous performance, industry benchmarks and the strategic goals of your business. An effective accounting and finance function will help monitor cash flow components such as receivables, inventory and payables, as well as examine asset utilisation and returns on investments. It should regularly evaluate the performance of identified key drivers against goals and look at areas for improvement. The best way to do this is to have a system that presents evaluations in a clear and concise way, such as dashboard reporting. Transaction processing is undoubtedly necessary in any business but it should be achieved with utmost efficiency. Think about any internal accounting or finance-related forms that you still use. Set a challenge to have them converted into electronic versions or Web forms by next year. As businesses prepare for 2015, the Monetary Authority of Singapore has projected that the economy will grow at a modest pace next year. But while business conditions may seem challenging, SMEs will find value in the many opportunities if they are consistent in the strategic direction of the organisation and can be properly funded. Businesses can also create their own opportunities by seeking out new markets. And the Asean Economic Community, with a population of over 600 million consumers, may well form the bedrock of growth opportunities in the region. ❚ Themin Suwardy is associate professor of accounting (practice) at the Singapore Management University and Singapore divisional president, CPA Australia. Melvin Yong is Singapore general manager, CPA Australia. The Business Times | Friday, November 28, 2014 | 7 ENTERPRISE 50 8 | 2014 The Business Times | Friday, November 28, 2014 PASSING THE TORCH OE Manufacturing’s founder is preparing his children for succession – all part of the plan for him to retire by age 70. BY JACQUELYN CHEOK T HE last time that The Business Times checked in with James Wong, founder and managing director of OE Manufacturing, the 60-year-old revealed ideas for succession planning at his company. Those plans, then mostly preliminary, seemed to have materialised. Six months on, Mr Wong said that he was getting closer to passing the torch to his children, having helmed OE Manufacturing – a maker of hydraulic cylinders and a winner at this year’s E50 awards – for almost 20 years. “The basic framework has been set up, mindset has been aligned and . . . it’s off we go now,” he told BT in a recent interview. Work procedures have been documented, for instance, in the form of instructions, flowcharts and checklists. Decision-making has also been decentralised, as managers are given more authority to make business decisions. But one of the biggest advancements that the company has undertaken is the shift from “owner-manager” to “owner-mentor”. “Traditionally, a manager is one who is intensively involved in the business and supervises all aspects of it. Now, we’re trying to cultivate more mentors, who, as managers, will not micro-manage but leave it to the staff to do the work,” Mr Wong explained. “Mentors too, tend to give staff more space to make decisions and to learn from their experiences.” When asked about the challenges faced in handing over the company – founded in 1996 – to his children, most of them who are only in their early 20s, Mr Wong said that it mostly boiled down to different mindsets between the old and young. These include having to consider their lower tolerance threshold, understand their different spending philosophies and – perhaps the biggest of all – manage their lack of experience. But the businessman, a veteran with over 23 years of experience in the cylinder manufacturing field, said that technology might actually save the day. “Founders of businesses often rely on experience and intuition to make decisions. This trait will be lost if a new, young leader is at the helm.” Veteran leaders typically learn from hard knocks and resolve issues based on practice or instinct, he added, but new leaders will encounter unfolding, unfamiliar obstacles that demand quick and sound decisions. “With no gut feel to help them, young leaders can turn to computer analytics software to help them calculate the costs and benefits or risks involved in business decisions . . . this will help bridge the gap and is one of the smart ways forward." And even though such technology cannot beat real-life experience, Mr Wong said that it is still a good-to-have, especially for untried leaders. For the next decade at least, he will be preparing his children for succession – all part of the plan for him to retire by age 70. Meanwhile, now is quite the trying period for SMEs (small and mediumsized enterprises), he said. “We are in the highway of world economies that are transforming, where everyone is trying to outdo one another. SMEs need to keep pace with the event and plug into the transformation fast lane to grow, let alone survive,” said Mr Wong. “As such, they need to find their own support lifeline to supplement what they can get from the government.” Those that solely depend on government incentives such as training, research and development grants or the recently introduced Productivity and Innovation Credit scheme will not get far, Mr Wong cautioned. “Stimulants and incentives will not make a company rich and prosperous. Tapping on them for some kickstart will get the wheels turning, but SMEs need to find their own way around, and uphold a sustained level of energy and momentum.” More importantly, he said, SMEs need to constantly innovate and work around defined boundaries, which are often government policies implemented to achieve long-term nationalistic goals. “Take the labour policy, for instance, which puts a quota on foreign manpower and is causing a labour crunch for many companies. I know it’s not a bad policy per se, because the government has a longer-term goal in mind, but it is definitely affecting businesses now,” he said. “So what do we do? Instead of harping on the manpower shortage, we look instead at how to improve productivity and innovation and how to move the company up the value chain. “We are also trying to move be- Even though succession planning is now underway, Mr Wong says that he has not completely ruled out two other continuity strategies – going public or selling the company. PHOTO: YEN MING JIIN yond old ways (such as relying on a certain headcount) and take a longerterm approach. Once that’s done, you realise a lot of things will change for the better.” OE Manufacturing, which started off making hydraulic products primarily for the industrial and construction sectors, in 2003 re-positioned its offerings to serve the marine and offshore industry. Its clients include local as well as foreign shipyards in Japan, China and the US. Headquartered in Singapore, the company also has offices in Malaysia, Japan and China, and distributors across South-east Asia. And even though succession planning is now underway, Mr Wong said that he has not completely ruled out the two other business continuity strategies that he had earlier identified – going public or selling the company – just yet. It would depend on what comes up, he shared. The veteran businessman had one last, universal piece of advice for SMEs: It pays to be nimble and have a positive attitude. “Amid an already dynamic and ever-changing business environment, policymakers set the rules, which can lead to a major restructuring of the national economy. “So SMEs should respond to changes innovatively. Innovation can help them cope with new policies and bring about new business ideas that sometimes come with better growth prospects,” he said. It is also imperative to keep learning and stay open to ideas, even if one has been in the industry for long. “Have foresight on events . . . coping with short-term discomfort will bring about changes for the better, in the long term.” jaccheok@sph.com.sg @JacCheokBT The Business Times | Friday, November 28, 2014 | 9 ENTERPRISE 50 10 | 2014 The Business Times | Friday, November 28, 2014 CHARTING SUCCESS IN MYANMAR Roundtable participants: ■ Neo Tiam Boon, Chief Executive Officer & Executive Director, TA Corporation Ltd TA Corporation Ltd is an established property and construction group in Singapore, with its main construction business principally undertaken through its wholly-owned subsidiary, Tiong Aik Construction Pte Ltd. In 2012, the group expanded into the distribution of high performance motor oil and lubricants with the acquisition of Sino Tac Resources. Beyond the shores of Singapore, the group has grown its footprint by participating in joint ventures in China, Thailand and Cambodia. In 2013, Tiong Aik added Myanmar to its regional footprint by working with its local joint venture partner to sell and distribute petroleum fuels and lubricants in the country. In the same year, it was appointed by Shell as the distributor for its automotive and industrial lubricants products in Myanmar. ■ Mahesh Sivaswamy, Chairman and Chief Executive Officer, Transworld Group Singapore Transworld Group Singapore is one of East Asia’s fastest growing shipping companies. Since its establishment more than 14 years ago, the group has In 2011, Myanmar reopened its doors to tourists and foreign investments. Within two years of opening up, foreign investments into the country have jumped from US$901 million in 2010 to US$2.62 billion in 2012, with businesses from Asean making up nearly half of the firms being established within the country. OCBC Bank and three Singapore companies that have investments there shared their thoughts on what makes Myanmar such an attractive destination, the challenges that come with being the first movers in the emerging market, and the key to sustaining their competitive advantage, as the market starts getting crowded. OCBC: With the opening up of Myanmar, one of the largest frontier markets right here in Asean, at the point when the Asean Economic Community (AEC) 2015 is about to take off, it is not hard to see why the country has captured the imagination of the world at large. In your opinion, what makes Myanmar the place to be now? What are some of the opportunities that attracted you to this market? Tiam Boon: Since Myanmar opened its doors to the world, we have seen the country pursuing and implementing bold political, economic and social reforms. Ministries have been reorganised to improve transparency and efficiency, laws have been passed to provide greater clarity and protection for foreign investors, and greater attention has been given to social issues such as farmers’ rights. From what we observed, the reforms are progressing and moving in a generally positive direction, and this gives us confidence in the long-term investment potential of Myanmar. As the country goes through the early stages of economic development, there will usually be a boom in infrastructure and property development, as well as construction. In addition to the large-scale projects that have since been announced by the Myanmar government, we have also witnessed a surge in construction activities within Yangon. As the pace of economic development picks up, we can expect even more activity and opportunities in these sectors. It is such opportunities that make it compelling for us to explore possibilities in Myanmar. Mahesh: Myanmar is not just the largest frontier market in the region. It is resource-rich and a key supplier of grains, pulses and other essential agricultural commodities. It is for this reason that we set sight on this market more than a decade ago. Unlike mineral or steel, the agricultural products being exported out of the country are essential commodities that are sought by buyers across the world, all year round, regardless of economic and political developments. With the agricultural sector remaining a key pillar of Myanmar's economy, we believe there is potential for us to further grow our operations in the country. Han Feng: Our story is a little bit different from everyone, as our foray into Myanmar was actually prompted by the decision to embark on our internationalisation strategy. We looked at a number of markets and eventually decided on Myanmar as it was at the brink of opening up, and we see the opportunities that would be availed to us as an early mover into the market. More importantly, we saw the match between what it needed – project management and consultancy services, design, building and development capabilities – and what we could offer. Chor Sen: Since opening up, Myanmar has won quite a lot of interest from foreign companies across the region and the world, mainly because the nature and the pace of reforms in the country have been relatively good so far, considering the tall order that the government has to undertake in order to drive through the changes across multiple sectors. Many of these foreign investors who took up projects in the country are our customers. Hence, there’s a very rational reason for wanting to set up a branch in Myanmar, as it would allow us to expand our footprint so that we can continue to extend our support to our corporate customers as they expand into the region. Our keen interest in Myanmar is also in part due to our close affinity with the country. We have been operating in Myanmar for 60 years now. 40 years first as a branch, from 1923 to 1963, and then another 20 years as a representative office. In that regard, we are delighted to be able to reengage Myanmar as a branch. built up strong capabilities in the area of ship-owning, feeder services, liner shipping, logistics and agency representation of major shipping lines. These services are offered through its five subsidiaries, among which include BLPL Singapore – a two-time E50 Award winner. In addition to operating its own ships, the group also represents other shipping companies in Singapore, Malaysia, Myanmar, Bangladesh and Sri Lanka. Its local representative office in Myanmar, established in 2002, serves as the local agent for several other major shipping liners, and the Transworld Groups’ liaison office for inbound/outbound cargo from Myanmar. ■ Lim Han Feng, Director, Soilbuild Group Holdings Ltd A leading integrated property group in Singapore, Soilbuild Group Holdings Ltd, offers a full spectrum of real estate solutions to both private and public companies. In 2013, the company successfully listed Soilbuild Construction Group Ltd and Soilbuild Business Space Reit on the Singapore Exchange. The group marked its foray into Myanmar in 2012 where it has quickly established a foothold. In addition to having secured four contracts to provide project management and professional consulting services in Myanmar through Soilbuild Construction Group, the group will be launching its very first residential project – Rosehill Residences – in collaboration with its local Neo Tiam Boon’s observations are that Myanmar’s reforms are progressing. Mahesh Sivaswamy believes there is potential to further grow operations in the country. OCBC: Myanmar is undoubtedly a country that requires a long-term commitment from any player. How does setting up here make sense from a business point of view? Tiam Boon: When we decided to set up shop in Myanmar, our intention was to grow and develop together with the country. This would mean spending time and resources to understand the market, and developing meaningful relationships with our partners for the long term. We believe that this is a necessary first step to working in any international markets. To accomplish this, it is necessary to have a physical presence and have staff dedicated to our business interests in Myanmar. While many companies may see this as an additional overhead cost, we believe this makes it easier for our Myanmar partners to communicate and do business with us. Mahesh: We decided that our group will focus on deepening our presence in this region, covering China, South-east Asia and the Indian sub-continent. Myanmar, given its strategic location – situated between China, the world’s biggest factory, and the big Indian market – naturally becomes an ideal base for us to deal with our core markets. Across the Group, it is not just our different business streams that have grown from strength to strength. Our Myanmar operations have also fared well. In addition to representing the interests of leading shipping lines in Myanmar, we have been progressing steadily into the landside activities, with us operating a container depot in Yangon as well. As the country continues with this pace of growth, the future remains bright for the logistics industry as players like us would be required to provide logistics solutions to help with the transportation of cargo both in and out of Myanmar. Han Feng: We subscribe to the belief that once we start something, we stay committed to it for the long haul. Hence, we are committed to Myanmar. After all, it has just opened up after being closed for many years, time is thus needed for it to grow and catch up. As the country continues to open up and progress, their needs for the different types of development will also evolve. After the first wave of foreign investments that brought with it the demand for proper housing and offices, the next wave to come along would be the emergence of the affluent middle class, and with it promote the demand for retail and commercial facilities. That’s when we can come in to build mixed-use developments. Given the immense opportunities that are present within the market, all the more it makes sense for us to make it our second homeground for the next decade or so. Lim Han Feng sees the match between what Myanmar needs and what his firm can offer. Chor Sen: Noting our customers’ strong interest in Myanmar over the last three years, our representative office in Myanmar has been facilitating enquiries, investigation, research, as well as making contacts for many of our customers, including MNCS, from the region. We have also led two mission trips to Myanmar – the first to Yangon in 2012, and the second to Mandalay in 2014. In both instances, we bring a targeted group of business owners to meet counterparts from similar industries. The interest level had been strong for both trips, with a good proportion of the companies moving on to do some projects. So for the bank, having a branch in Myanmar is a natural extension of our current support to our corporate customers, who themselves are in search of opportunities in resource-rich Myanmar. With a branch here, we would be able to do so much more for our corporate customers who are already based or looking to base their operations in Myanmar. Like our customers, we are here for the long term and look forward to becoming a key contributor to the country by supporting its rebuilding efforts through our engagements with foreign companies, and their JVs, as well as our collaboration with the domestic banks. OCBC: Doing business in any emerging market is not without its risks and challenges. In your view, what are some of the greatest challenges to doing business in Myanmar? How did you overcome these challenges? Tiam Boon: One of the key challenges to doing business in Myanmar is understanding the local business culture, which can be very different from Singapore’s. It takes an open mind to understand how things work in the country, and acceptance of the fact that we will have to adapt to their ways, rather than expect them to adapt to ours. The local legal framework, which can be confusing for new entrants to the market, can also prove challeng- Tan Chor Sen says OCBC’s keen interest in Myanmar is partly due its close affinity with the country. ing for some. Hence, it is important to engage a good legal counsel, and to engage in open and on-going dialogues with the relevant government authorities in order to clarify the different frameworks, ensuring that we leave no room for misinterpretation. This also ensures that we operate within the legal boundaries, and our investments are protected by the relevant Myanmar laws. Mahesh: Myanmar, like any other growing economy, has its own business nuances and complexities. While the lack of clear directives and infrastructure remains a challenge for many, the authorities have done to the best of their ability to catch up with the pace of growth by providing adequate support to businesses and strengthening the country’s infrastructure. Having operated in different markets in the region, we have built up the capability and experience to overcome the initial challenges of doing business in a new market with ease. By leveraging this key strength, we have been able to penetrate and grow in complex markets. Han Feng: Like Singapore, Myanmar has its own set of cultural nuances, hence it is important to take time to learn and understand how things are done here. The speed and pace at which things work in Myanmar also needs some getting used to, and while the infrastructure and proper regulatory framework are still lacking, we remain cognizant of the fact that opportunities are abound within the country. Thus far, our experience in Myanmar has proven that the challenges of working in Myanmar can be overcome, as long as we go in with our eyes open, know what to expect, and be ready to learn from our partners. Chor Sen: We have had a good track record in the country, but it is still a frontier market, it is still an emerging market, and so, one would expect policy adjustment to match the different challenges that the country faces opening up to different players. But joint venture partner in Yangon in January 2015. ■ Tan Chor Sen, Head, International, Global Commercial Banking, OCBC Bank. OCBC Bank is a diversified universal financial services enterprise, with strong capabilities in commercial banking insurance, investment banking, private banking, stockbroking and asset management. For more than 80 years, the bank has remained committed to helping entrepreneurs and SMEs succeed locally and internationally. OCBC Bank’s history in Myanmar dates back to 1923, when a branch was opened in Rangoon by the Oversea-Chinese Bank – one of the three banks that merged to form OCBC Bank in 1932. With the opening of the Burma Road in 1939, linking the country to the south-west of China, OCBC Bank established another branch in Lashio, to cater to the growing trade with China. As a foreign bank, OCBC Bank was actively involved in trade finance and foreign exchange activities in Myanmar, supporting businesses and traders until 1963. In 1994, OCBC Bank returned to Yangon to set up a representative office, and on Oct 1 this year, the Bank received the provisional banking licence to open a branch in Myanmar, making it possibly the only foreign bank to re-establish a branch in the country. ■ Moderator: OCBC Bank all in, we don’t expect too many surprises. The track record of the government in the past three years and the interest levels from foreign investors have given us enough comfort that the way forward would be reasonably good. relationships that we are able to collaborate, be it in the areas of joint financing or bringing in new financing ideas into the market. With the right framework and system, we would like to be a key contributor to Myanmar. OCBC: For the next few years, competition in Myanmar will only intensify as more companies look to enter this market. Moving forward, how do you ensure that you continue to stand out from the competition? OCBC: You have been operating in Myanmar for a while and have cultivated a good understanding of the market. Based on your own experience, what attributes are critical to ensuring a company’s success in Myanmar? Tiam Boon: As the market develops, it is inevitable that more foreign companies will attempt to establish a foothold in Myanmar. Our advantage over them is that we have already established a physical presence on the ground, cultivated a good understanding of the market, and most importantly, roped in good partners. This will enable us to deliver competitive products and services that are of high quality, at reasonable cost, and in good time. Tiam Boon: For companies that are keen to invest in Myanmar, the most important and challenging attributes to master are patience and humility. It is important for companies to treat their Myanmar partners with respect and as equals. Both sides have much to offer each other, whether it is technical expertise, operational know-how or capital. More importantly, companies need to accept that things seldom go as planned in Myanmar, and this can get very frustrating. In such moments, which may be plentiful, it is important for companies to keep a cool head and find alternative routes to achieve their objectives. Mahesh: As mentioned earlier, with investments growing beyond Yangon, we see tremendous opportunity to leverage the business synergy between the shipping and logistics arm of our group to provide customised logistics solutions to our customers in Myanmar. We did not follow the crowd and waited till now to enter Myanmar. On the contrary, our key advantage stems from our decade-long history in Myanmar. Since entering the market more than 10 years ago, we have gained a good understanding of the local working environment and remained committed to the country despite having weathered various challenges and market fluctuations. This, we believe, will surely give us an edge over the competition. Han Feng: We decided to enter Myanmar because we saw the match between what the country needed and what we could offer them through the sharing of best practices and skills. By value-adding, we were able to help the local owners redeploy their land into higher value uses as residential and office spaces to meet the market’s urgent need for good quality buildings. This ability to match skills to needs will require that we stay nimble and ready to take on new projects in different segments as the country moves into its next phase of growth. Chor Sen: Unlike the three of you, our situation is slightly more unique. While we foresee keen competition for banking talents during the initial year as the foreign banks prepare to get their branch ready for operations, we believe that collaboration is going to be the foreign banks’ modus operandi in Myanmar at least for the short term. If you look at the amount of work that needs to be done in the areas of rebuilding the economy and opening up the various different sectors, we believe there would be more than enough to go around for the foreign banks, as your projects – which we seek to support – can be large in requirements. In addition, there is also a need for us to assist in the development of the financial sectors including treasury markets which no one bank can do it alone. That said, we believe our innate knowledge of Myanmar would be the key differentiating factor for us. Myanmar is a market that we feel that we understand, and it is a market where we have had a reasonable track record and where we ensure we remain consistent in the coverage of the market over the years. We have also had opportunity to understand the Myanmar banks over these years. We have good relationships which are built on years of collaboration in training and capability building. It is on the strength of these Mahesh: We do agree that Myanmar will soon become one of the fastest growing economies in the region but we believe that there is no magic wand which will transform Myanmar into Manhattan overnight. For any economy to grow, the infrastructure must be in place. The country must also have a strong and fully functioning financial sector in order to be able to be the catalyst for the economy to grow. All these are being put in place even as we speak, so what’s left now is to endure and persevere as we work towards achieving long-term success in Myanmar. Han Feng: You must be prepared for a certain degree of risk. And are you prepared to stay long term? If your answer is yes, then we’d say that you’re ready for Myanmar because once you are there, you must be prepared to accept that the regulatory framework is still being finalised and so there might still be some uncertainties involved in investing in the market. You must also put in the effort to keep your ears to the ground. When we first entered the market, we took the time to visit the different government agencies to introduce ourselves and find out more about the regulatory framework. At the same time, we wanted to also show our commitment to the government that we are here for the long term, and how our skillsets provide a match to what the country needs as it rebuilds itself. As a result of our engagement with the regulators, making it an effort to understand what is happening on the ground, be it at the regulatory level or working level, we received the Myanmar Investment Commission’s (MIC) official endorsement for the development of Rosehill Residences. That was gratifying for us, as this project made history by becoming the first and only private-to-private entity project that is MIC-approved. Chor Sen: Like you, we believe that it is important to understand that Myanmar, as in any emerging market, is still developing its infrastructure. Hence, when it comes to dealing in this market, we need to go in with the expectations that we need to be patient and hold a long-term view. We need to be good listeners, and put in the effort to engage the different stakeholders, including the regulators, the banks, local businesses and foreign businesses in order to fully understand their needs and address their issues. We need to be willing and ready to collaborate and partner with the local stakeholders, and most importantly, we need to demonstrate our commitment and willingness to create capacity for the country. | The Business Times | Friday, November 28, 2014 We are proud and honoured to receive the 2014 Enterprise 50 Award THANKYOU To all our clients, suppliers, associates, employees and friends for your support and contribution towards our growth and success. “Taking Singapore’s Chocolate to the World...” ~ Richard Lee, Founder & CEO Aalst Chocolate Pte Ltd Aalst Chocolate Pte Ltd | 26 Tuas Ave 7 Singapore 639273 | T. +65 6863 2626 | F. +65 6863 6262 | E. sales@aalst-chocolate.com.sg 11 12 | The Business Times | Friday, November 28, 2014 The Business Times | Friday, November 28, 2014 | 13 ENTERPRISE 50 14 | 2014 The Business Times | Friday, November 28, 2014 EXPLORING NEW FRONTIERS China, Malaysia and Thailand have been identified as the most popular destinations with E50 companies looking to internationalise. BY OWI KEK HEAN AND CHIU WU HONG A MID an uncertain economic climate, firms in Asia are moving forward and taking leaps with their internationalisation efforts. As Asian firms evolve into powerhouses and increase their receptiveness to foreign investment, the region’s economy continues to be daring yet demanding. Globally distinct brands and rapid venture activity foster new opportunities in Asia for international firms. Companies looking to expand or enter the region will need to be more risk-intelligent, make brainier decisions and move quicker to capture global advantage. What remains on top of their checklist are their risk appetite, market-access advantage and cost structure. These areas are where the Asean Economic Community (AEC) can help. As part of China’s rapidly opening economy, companies looking to enter can expect to lower market barriers for private and foreign participation. PHOTO: BLOOMBERG Businesses will also be given direction by the AEC to assess if the country is a right fit for them, from the suitability of talent, government policies and the country’s levels of technology or innovation. For expanding multinationals and emerging firms that are going global, the AEC will offer new ways of nurturing enterprises by giving them access to new markets for products with proven success. Reports by the Japan External Trade Organisation and China Council for the Promotion of International Trade also show considerable demand for Asean’s high-potential growth areas, by Japanese and Chinese investors. China, Malaysia and Thailand have been identified as the most popular destinations with Enterprise 50 companies looking to internationalise for growth. These countries share the distinction of being able to meet local needs in different markets and customer segments while tapping the synergy of a global network. Business owners entering these markets may want to consider a change in their business model or relook their strategies for capturing market share. CHINA’S CONSIDERABLE PROGRESS As part of China’s rapidly opening economy, companies looking to enter can expect to lower market barriers for private and foreign participation. Furthermore, China’s manufacturing is maturing and becoming more complex. New import licences, the introduction of administrative and logistics services for factories or changes in production facilities could follow. China’s continued emphasis on exports, added to pro-growth measures such as aggressive tax reductions and supporting enterprises, makes China a thriving location. The China Business Report 2013 argues that nearly two-thirds of US companies surveyed said that they were “in China for China”. Investors and business owners will need to learn ways to capitalise on China’s tax incentives and other tax-based preferential policies. These may include reductions or exemptions in corporate income tax, import tax, urban land tax or value-added tax. Those thinking of expanding their China presence will need to understand China’s tax policy in its entirety and align their business strategy. Investors and entrepreneurs entering China will need to better understand corruption and non-compliance in China so as to be able to protect their businesses from disruptions or irregularities. THAILAND TAKES ON THE REGION Today 1960s Thailand is admired by new entrants as it offers low annual costs for business space, requires minimal hassle to register a business property and promises a lower cost of living and a transparent business environment. An International Enterprise Singapore (IE) report states that Thailand remains a hub for the agro-business, electronic and automotive industries. Plans are in place to create a stronger business-friendly environment and bolster business-enabling arrangements. These initiatives are in place to attract, root and multiply successful multinationals and enterprises. For example, a leading foam and rubber components manufacturing company in Singapore has plans to acquire a new factory and restore operations at its affected plants, despite the recent floods. By taking advantage of Thailand’s competitive tax regulatory and legal system, companies can play to the strengths of Thai businesses. For example, Thailand’s renewable energy sector holds great promise as its demand for energy has risen significantly in decades as it industrialises. Businesses looking to expand can leverage on Thai organisations’ extensive networks to access alluring prospects in neighbouring countries such as Vietnam and Myanmar. MALAYSIA PROVES STIFF COMPETITION At Chee Fatt we’ve been supplying high quality industrial equipment and tools for over 50 years. We started off small in 1962, operating in a zinc roof hut within Singapore’s old hardware district at Sungei Road. Today, we are one of the largest distributors of industrial equipment and tools in South East Asia, and have continued to expand our presence throughout the region. We have extended our products and services across multiple industries such as Marine & Offshore, Oil & Gas, Aerospace, Building & Construction, Energy etc. While we operate in a dynamic environment, we maintain our family business culture, by never compromising on our core values of working hard, working close and working forward with our clients and partners. Winning the E50 award brings us great pride. We would like to take this opportunity to thank our staff, partners and clients for their continued support on this journey. Malaysia is widely admired as being a capable, prosperous and flexible market. The peninsula state is also a prominent driver of growth in a number of areas including services outsourcing in aviation, exporting commodities such as palm oil, a state-of-the-art and productive seaport and advancements in property development and telecommunications. For those looking to start a business, Malaysia promises a fuss-free process. The government only requires three procedures, six days and costs 7.6 per cent of income per capita in fees. There are also numerous tax incentives available to support various investments, especially in promoted areas such as Iskandar Malaysia. Other business-friendly benefits of the multilingual state include efficiency in tax administration, licensing approvals and ease of cross-border trading. Malaysia was also ranked the world’s top location for manufacturing by real estate provider Cushman & Wakefield in 2013. It is also recognised as a global leader in Islamic financial services, offering access to liquidity for firms and strong investor-protection policies. One prominent area of growth is in information technology-business processes outsourcing (IT-BPO). Tax incentive support includes an investment tax allowance of up to 100 per cent to encourage businesses to consider IT business process outsourcing in Malaysia. Another growth area in tandem with competitive tax advantages are industrial parks. Kuala Lumpur’s Technology Park Malaysia (TPM), for example, caters to the needs of technology-intensive industries and research and development facilities. A NEW STAGE OF GROWTH Chee Fatt Co. (Pte) Ltd. | Address: 54 Tanjong Penjuru Singapore 609035 | Tel: 6294 2066 | Fax: 6297 0697 | www.cheefatt.com While companies are right to be excited about entering these markets, foreign entrants need to delicately balance the pros and cons. They will need to tackle challenges such as an uncertain legal landscape, inconsistent regulations and protectionism. Local customisation and branding, new approaches to diversifying markets and navigating through an everchanging tax landscape will pave the way to internationalising into the new era of growth. ❚ The writers are respectively deputy managing partner & head of enterprise market segment, and head of enterprise incentive advisory, KPMG in Singapore. The views expressed are their own. ENTERPRISE 50 2014 The Business Times | Friday, November 28, 2014 | 15 RIDING ON PRODUCTIVITY The welding equipment and solutions that AllAlloy sells are precisely those that other companies are now on the lookout for to raise their productivity. By TEH SHI NING I T IS rare to hear a small and medium-sized enterprise (SME) boss speak as glowingly of Singapore’s ongoing productivity drive as Victor Khaw does, but then, his firm AllAlloy has been a benefactor of the national campaign in immediate and evident ways. Often, even the SMEs that acknowledge the longer-term benefits of upgrading their equipment or improving processes continue to struggle against manpower shortages and higher wage bills in the short term. Happily for AllAlloy – whose 37-strong staff in Singapore is largely comprised of residents – the welding equipment and solutions that it sells are precisely those that other companies are now on the lookout for to raise productivity. Because of this, general manager Mr Khaw said, AllAlloy’s sales by geography have taken an unusual trajectory. Most local SMEs start out with Singapore as their dominant market, before venturing to gain market share in foreign markets. But things have gone in the opposite direction for AllAlloy. For the first three years since the firm’s incorporation in 2008, revenues from Singapore, Malaysia and Indonesia’s Riau Islands each made up about a third of overall turnover each. But after Singapore launched its productivity drive in 2010, local sales shot up to contribute half of revenue, even as export sales continued to grow. Mr Khaw sees this as directly linked to the current productivity drive – both the incentives to invest in technology to boost efficiency, as well as the tightened foreign manpower policies that are pushing companies to maximise what they can achieve with limited labour. “This is especially as our customers are in the marine industries. By next year, the foreign worker levy will increase again,” he said. In July this year, the levy for foreign work permit holders in the marine sector was hiked to S$300 for a skilled worker and S$400 for an unskilled worker, from S$250 and S$300 previously. By July next year, the levy will be raised further to S$350 for a skilled worker and S$500 for an unskilled worker. “This is very difficult. Singapore yards are already highly productive. Now, they need to increase productivity by about 30 per cent just to bring themselves back to square one. They would be handling the same tonnage, not more. This can be very demoralising,” Mr Khaw said. But it has created an opportunity for AllAlloy to help others, and to clinch some new business in doing so. “We hope to help companies redesign jobs, so that they can attract more locals to work in the shipyards. We recommend them equipment and tools to make the job more bearable to locals. If they can attract more Singaporean workers, they also won’t have to release their foreign workers,” said Mr Khaw. One example is a welding system that AllAlloy designed and commissioned – with its shipyard customers in mind. “Most have already come to see it, and quite like it,” said Mr Khaw, optimistic that the new set-up will find favour. The new semi-automatic system to weld large metal pipes can be made five times as productive, as less skilled technicians can be more easily trained to conduct tungsten inert gas (TIG) hot wire welding, a type of welding which otherwise requires great skill and experience. “Previously, only 5-10 per cent of welders would be able to do hot-wire welding. But with this new system, many more welders can be trained to do this,” he said. As part of the process can be controlled from a monitor a short distance away from the actual welding, Mr Khaw thinks that this also makes the job itself more pleasant. “The welding can generate a lot of heat and chemical smells, which many Singaporeans wouldn’t want to face on the job. Being able to do it from a distance may be better,” he said. Another example of a product that has been designed with SMEs desiring to raise productivity in mind is a mini submerged arc system that AllAlloy designed to be low-cost and energy efficient. It is smaller – suitable for the smaller work spaces that SMEs typically have – and is able to use standard power sources. This saves SMEs the need to undertake costly rewiring too, Mr Khaw said. The initiative taken by AllAlloy is appreciated by the brands that it represents. Chris Robson, Air Liquide Welding’s manager for South-east Asia and Pacific, who was in town for a routine meeting, said: “Most distributors are reactive, they wait for the customer to call. The big difference with AllAlloy is that they are proactive. They go to the customer and introduce solutions before the customer realises that he needs it. That makes them rather unique.” AllAlloy has won recognition in the form of awards too – 2014 marks the fourth consecutive year that it has clinched the Enterprise 50 award. As AllAlloy is still primarily a distributor – it represents 28 brands today – its plans for overseas expansion hinge on where its principals already have local distributors. Markets in which established companies have no distributors are likely to be more challenging ones to operate in too, Mr Khaw pointed out. “Because we are selling at the top end, there is a limited market in every market. So we can either go down to sell mid-range products, or spread geographically. We chose to spread geographically, and went to Malaysia and Indonesia first,” he said. “But we put in a lot of resources into each territory to make it work. It’s not half a job here, half a job there,” he added. At its branch in Perth, Australia, for instance, the nature of business is quite unlike that in the other markets. “There, the market is very different. In Singapore, Malaysia, we’re serving the offshore market. In Australia, it’s mainly the mining industry, so the product mix is different.” The next stops for AllAlloy lie in South-east Asia, specifically Vietnam and Jakarta, Indonesia. “We’re already exporting there, but in order to really be there, we need to set up shop there too,” Mr Khaw said. China, which is building rigs at an astounding pace, is a natural fit too. “There is definitely a plan for us to go into China. There are opportunities already. We told them we’re not ready now, but 100 per cent we will go into China. There’s too much knowledge here for us not to use there,” he added. China, after all, is a major steel exporter. And the technical expertise related to welding extends to knowledge of steel, the various alloys and metallurgy too. “It’s in the natural cycle of what we’re supposed to do,” Mr Khaw said. With an eye on expanding its core business regionally, Mr Khaw also has plans to give AllAlloy’s non-core businesses a more consumer-facing slant. It may be less known for this, but on top of selling welding machinery to shipyards, AllAlloy also distributes hydration products under the brand Sqwincher. These include ready-to-drink isotonic beverages, which are also sold as powder concentrate and liquid concentrate. With no calories and sugar, these products are focused on hydration – a key need for shipyards whose workers are often out in the sun or working under high heat. “Honestly, when I talk to my friends who are not in this line, not many of them can understand what my business is about. But when I talk about something like an isotonic drink, that people can identify with,” Mr Khaw said. He thinks that there is an opportunity for Sqwincher products to be retailed not just to businesses, but also to regular consumers. tshining@sph.com.sg @TehShiNingBT Mr Khaw (far left) with his team and clients from Air Liquide Welding including Mr Robson (second from right). Sudima Group – Proud to be recognised in the Enterprise 50 Awards Sudima is a name synonymous with faith, belief, success and credibility. Our mission is to be one of the most reliable and preferred value chain partners. The company adds value by carefully assessing market needs, establishing qualitative standards while linking validated suppliers with customers. Over the years we have evolved into a successful Raw Material/Service solution company. Sudima believes in expressing itself in dynamic ways & performance is the best benchmark it offers. As a company philosophy, all developments undergo constant review backed by technical support & market research. Our Core ore Products or Prod cts Our Manufacturing Facilities Sudima Panels Co. Ltd DT 747B Street, Khanh Binh Ward, Dist: Tan Uyen, Province: Binh Duong, Vietnam. Myanmar Veneer & Plywood Private Limited U Paing No(Zamyinzwe-4), Plot No. (783/Taung Nyo-Na), Padamyar Ward, Sagaing Region, Myanmar. Our Overseas Offices Australia, Cambodia, China, Ecuador, Hong Kong, India, Ivory Coast, Malaysia, Myanmar, New Zealand, Sri Lanka, Ukraine, USA, Vietnam. Our Business Partners 151 Chin 169876 Tel: (65) 6732 7180 Fax: (65) 6732 7125/6732 0985 info@sudima.com www.sudima.com n Swee Road #15-03 Manhattan House e Singapore Singap ENTERPRISE 50 16 | 2014 The Business Times | Friday, November 28, 2014 THE DRIVE FOR GROWTH Equipment provider Aver Asia has grown five times in five years to nearly S$100m in revenue. BY CAI HAOXIANG T Mr Ang expects overseas activities to keep him busy for a while. PHOTO: ARTHUR LEE O GET a sense of how Aver Asia is growing, one just needs to make a trip to its new industrial premises in Jurong’s Benoi Place. The company trades and rents out equipment for the construction, oil & gas and shipping industries. It moved to Jurong in 2012 where the spacious new site is bigger than the previous Tuas location. But space is still being efficiently used. In the midst of cranes and power generators sits a machine platform lift that functions as a mini multistorey car park. It stacks cars on platforms and enables 10 cars to take up the space of just two. “There’s not enough space,” said Aver Asia managing director Ang Poh Kiang. There is plenty of room for the company to grow, however. This year, Aver Asia set up a subsidiary in Myanmar. It is also incorporating its second Indonesian branch in Jakarta, after the first in Batam. The new branches are opening as the company continues to grow rapidly. Since 2008, when the company was last recognised in the Enterprise 50 awards, Aver Asia has grown its annual revenue from around S$20 million then to S$70-80 million in 2013. This year, revenue will almost hit S$100 million, Mr Ang said. In Malaysia, the company now has five branches: Johor Bahru, Kuala Lumpur, Terengganu, Labuan and Pengerang. “We grew fast by setting up more branches overseas. Singapore is saturated,” Mr Ang said. “There was also demand. We might not have a branch in some countries like Thailand and Brunei, but we still have business there.” There are also links between its rental business and its trading business, he said. Rental customers might decide that buying a piece of equipment makes more sense. “We are their suppliers, we rent to them, have their contact, have the first hand information,” he said. “If you maintain a piece of equipment properly, it can last for 10 to 20 years.” SHIPYARD BEGINNING Aver Asia started out in 1999, founded by Mr Ang and his older brother Ang Poh Thong. Previously, the two brothers were contractors delivering blasting services to shipyards. “We found out it was very tedious to get manpower and manage them . . . so we started our rental business, bought equipment and rented it out to the shipyards,” Mr Ang said. The Angs pooled their savings and got bank loans to start the company with about 30 aerial lifts. These are cranes with platforms attached, enabling painting or maintenance work to be done without the need to build a scaffolding structure. The business gradually grew, aided by a strong focus on being there for customers whenever equipment problems occur. “For our kind of business, service is important – responsiveness to the customer,” Mr Ang said. “So we emphasise long working hours, we answer phone calls around the clock, we work round the clock to service them.” A turning point was 2005, when the company branched out into providing equipment for the oil & gas and construction industries, which were about to boom. “We wanted to grow faster,” Mr Ang said. Today, Aver Asia has a total fleet of over 4,000 units that are mostly rented out. Other than aerial lifts, it provides air compressors, used for blasting works and for equipment requiring air pressure; diesel generators, used to supply power to remote sites; welders, inverters, air winches and forklifts, among others. The generators, air compressors and mini-excavators that Aver Asia sells and rents are mainly of the Airman brand belonging to Japanese manufacturer Hokuetsu Industries. Many aerial lifts are made by American firm Genie Industries, now owned by Terex Corporation. The company also sells forklifts made by South Korean firm Doosan. Other brands that Aver Asia represent include Irish firm Ingersoll-Rand, Japanese firm Denyo, and American firms Lincoln Electric and Miller Electric. Aver Asia is not the sole distributor for these brands, but so far, Mr Ang “still feels comfortable” with the competitive situation among distributors. In Singapore, business is flat, but he senses that demand for equipment is increasing. “Maybe because of manpower issues, companies start to use more equipment, with the Singapore government implementing more (policies) on the safety and high-tech side of things,” he said. Companies are now looking for more reliable new equipment compared with second-hand equipment previously, he said. Aver Asia also sells used equipment through its trading arm. This also refreshes its equipment fleet, Mr Ang said. Both trading and rental arms contribute about half of revenue each. MANPOWER CHALLENGES Like other Singaporean firms, Aver Asia faces a manpower crunch as the government has implemented measures to slow down the inflow of foreign workers. The company currently has about 120 staff in Singapore and 140 overseas. Many of them are technicians who are required to go out into the field to maintain and repair equipment. For the rental business, calls often come in during the weekend. The company provides maintenance services, replacement units and a 24-hour hotline. “The only thing we can do is to get more Singaporeans. We hire apprentices, and fresh graduates from polytechnics and the ITEs (Institutes of Technical Education),” Mr Ang said. “But not that many people are willing to try, because of the work environment. The sites are in the hot sun, it can be dirty.” Looking ahead, Mr Ang has no plans to list the company, noting that it is still not big enough. But he sees opportunities in neighbouring countries. “There is still a lot of infrastructure that needs to be built. These countries are mostly rich in oil. All these are areas we can target,” he said. Malaysia, for instance, already accounts for a fifth of revenue. There will be construction activities there related to the high-speed rail link from Singapore to Kuala Lumpur, he said. Malaysia, as an oil producer, is also very aggressive on building refinery plants. The company is in Pengerang because of that, he said. In Terengganu, which faces the South China Sea, the company also supplies to oil & gas firms that are building oil rigs in the ocean. In Kuala Lumpur, Aver Asia supplies to construction companies building commercial and residential structures. Indonesia is also a more mature market, while Myanmar is still “a bit slow”. “A lot of things need to be sorted out, like the importing of goods and banking,” he said. Mr Ang, who is 51 this year, thus expects overseas activities to keep him busy for a while. “That’s enough for us. We cannot over-expand,” he said. haoxiang@sph.com.sg @HaoxiangCaiBT ENTERPRISE 50 2014 The Business Times | Friday, November 28, 2014 | 17 STAYING THE COURSE Sim Koon Lam stuck to his own convictions and bought out his bosses when they did not share his plans for growth. BY KENNETH LIM I N 2007, Sim Koon Lam found himself at a crossroads. After 15 years at the Singapore subsidiary of Dutch offshore contractor Vrijhof Ankers Beheer, he felt that the parent company did not share his view on how to continue growing what was then a marketing unit. He could have acceded and put aside his own convictions; he could have walked out and started afresh. Instead, Mr Sim did what frightens even those who have less to lose: He went all in. When life gives you a chance to guide your own fortunes, take it and never veer from your goal, said Mr Sim, founder and director of Mooreast Asia. Speaking to The Business Times from his Loyang office, Mr Sim shared his vision and plans for the mooring systems fabrication and supply business that he bought less than 10 years ago. “It is never a smooth journey,” Mr Sim said. “We always encounter bad weather, storms. We go through all sorts of hardship . . . learning things . . . but the one important thing is that you must be determined.” Mr Sim was not always selling anchors. When he was younger, he tried working with his father as a building contractor, but soon found himself wanting to strike it out on his own. He landed in the offshore and marine industry, and has stayed there for about three decades. Before Mooreast, Mr Sim had actually started a business – his first – with a partner, but he left that outfit after a falling out. “I consider it as a learning curve,” he reflected. “My judgment was not good enough.” In 1992, he joined Vrijhof’s Singapore-based sales and marketing unit. Back then, it was just him and one other colleague, but they doggedly helped to grow the business here. But around 2007, Mr Sim began to feel the limitations of simply being a sales and marketing outfit. He felt then that Mooreast Asia had to move beyond simply sales and marketing and into fabrication if it were to survive. “We think that in the long term, you need to develop your own line of products,” he said. But Vrijhof had just undergone a management change in the Netherlands, and Mr Sim did not feel that he had their support. “They wanted us to only be sales and marketing, so there were no prospects at all,” he said. “But we have to look at how we want to grow.” He realised that he had few options. Stick with the status quo, and he risked being caught in a grounded ship. His prospects did not look good either if the current ship sank, or if he decided to jump to another ship. Already around 50 years old then, Mr Sim did not think that it would be easy to find a new job. If he wanted to Sim Koon Lam, founder and take the business in director of Mooreast Asia the direction that he believed was the correct one, there was only one thing to do: Mr Sim bought out the company. The buyout cost S$1.3 million, and happened just as the global financial crisis occurred. With the banks reluctant to lend, Mr Sim turned to friends and family when he needed extra financing. “That was the time of recession,” he said. “It was tough. I had the support of my brothers, and of course my wife and family. And I borrowed from friends. So at least I still had someone who trusted me. We managed to do it, and we managed to pay it all back a few years later.” Trust is something that Mr Sim has spent a lot of time and energy cultivating, especially with customers. It was only by earning the faith of customers that he could grow and sustain the business, especially when Mooreast Asia was moving into fabrication for the first time, he said. Mr Sim’s advice for building trust is simple: Do as you promise. “As an entrepreneur, first of all, even if you have the capability, you must be able to create trust so that people believe in you and give you the opportunity to trust,” he said. “If you can deliver, then there are a lot of things that follow. You will get recommendations. That is how you build up your base, your reputation, your goodwill.” The hard work has paid off. From the two-man outfit that Mr Sim started out with more than 20 years ago, Mooreast Asia today employs about 65 people, and the company has been profitable ever since Mr Sim bought over the business. Mr Sim will also be moving the company to bigger premises in Tuas, and has set up an outfit in Europe to pursue more opportunities there. If there is one sure sign that Mooreast Asia is doing well, Mr Sim complained that it was hard to find enough manpower to take on the projects that are available. He also noted how the company has grown to the extent that thinking about the future is now a major preoccupation. “My opinion is that Mooreast has reached the second stage of growth – if we want to list,” he said. “So it’s a different ball game now. Earlier, we were building it up . . . trying to keep ourselves alive. Now, we have to make sure we grow in the proper way . . . make sure we’re managed more professionally.” Business has been so good that Mr Sim even received an offer from Vrijhof, his old boss, to buy back the business. Mr Sim turned them down. “At first, they don’t want you . . . you become their unwanted child,” he explained the rejection. “Now they see, ah, you’ve now become a pretty girl, I want you . . . Tomorrow, if the market is down or “It is never a smooth journey. We always encounter bad weather, storms. We go through all sorts of hardship . . . learning things . . . but the one important thing is that you must be determined.” the market is no good and you don’t perform as they want, they don’t want you again.” It was not just a matter of pride. “Also, one of the reasons I didn’t want to sell is: If I sell, I don’t think it’s fair to my staff,” Mr Sim said. “What happens if the new owner starts retrenching people or starts restructuring? I still have staff who are working with me – today they’re 70 years old. And they’ve been working with me for so long, I can’t just drop them this way.” “We always believe we’ll go on our own now,” he said. “That’s why this year we’re establishing our own brand, Mooreast.” Looking back, Mr Sim is certain of one thing: That it pays to not give up. “Never say you will die. You will never die,” he said. kenlim@sph.com.sg @KennethLimBT When life gives you a chance to guide your own fortunes, take it and never veer from your goal, says Mr Sim. PHOTO: ARTHUR LEE THANK YOU! Our sincere gratitude to all our business partners, friends and staffs. The Essential Element Responsive Reliable Resourceful AvantChem is proud to be ranked amongst the top fifty enterprises in Singapore by Enterprise 50. From humble beginings nine years ago we have grown into a regional enterprise and are now an essential element to our business partners. www.avantchem.com Indonesia Malaysia Myanmar Philippines Singapore Thailand Vietnam ENTERPRISE 50 18 | 2014 The Business Times | Friday, November 28, 2014 BUILDING A STRONG PRESENCE T HE construction sector has been facing numerous headwinds in recent years, from the cutting-down of foreign manpower to rising labour and materials costs. Three E50 winners share how they have overcome these challenges to become stronger companies. Question: What are the key challenges in the construction/housing industry now? Teo Yeow Soon: Shortage of manpower has been strongly felt across the construction industry in the recent years. To overcome this, Vigcon is working hard on achieving better productivity by maximising the use of machinery and technology advancements, wherever possible. The recent new rules to boost construction skills to raise the quality of workers is a good move by the government to drive construction productivity to the next level. As an industry player, we strive to meet the requirements/changes. Having attained higher skills or getting higher wages under the market-based skills, the loyalty and appreciation of workers will be put to the test. Workers’ turnover within the industry may drive wages to increase, this will lead to higher business costs and ultimately to a rise in construction costs. Another challenge is to attract good and capable staff. Construction is still very much a labour-driven industry; most, if not all, of the work processes are performed/supervised by humans. We need talented and dedicated staff from top management to ordinary workers to deliver quality products to stakeholders. Kenny Tan: The cooling measures introduced by the government over the past few years have affected the general sentiment in the real estate market. Replenishing land banks has been another challenge. We compete venturing overseas, and continues to monitor countries around the region for future prospects. Participants Teo Yeow Soon, managing director at Vigcon Construction Kenny Tan, group chief executive officer at Link (THM) Group Jimmy Chua, group general manager at Huationg Holdings Moderator Mindy Tan, Journalist, The Business Times with other property developers for new land sites and with more competition, we may face bigger challenges to acquire suitable sites at costs acceptable to us. The construction costs of our projects fluctuate with the prices of various construction materials and the costs of leasing construction equipment may also fluctuate over time due to changing supply and demand conditions. Also, the construction of our projects requires a relatively large number of skilled and unskilled labour. Jimmy Chua: We are facing two main challenges. The first is tighter restrictions on hiring foreign labour which is a problem because drivers and operators are mostly foreigners. The second is the retention of mobile crane operators, given that there are fewer skilled and experienced crane operators, and regulations make it more difficult to get an operator certificate. Q: How does your company overcome these challenges? Mr Teo: We have been sending workers for CoreTrade training as soon as they are eligible. This will satisfy the new rule effective from Jan 1, 2017, that at least 10 per cent of construc- “Vigcon is well-positioned to capture the growing demand for A&A works, an area that it specialises in,” says Mr Teo “We have always adopted proactive cost-management measures in our projects,” says Mr Tan “We hope to duplicate our business model in Myanmar and also other countries eventually,” says Mr Chua tion workers in the company must be higher-skilled R1 workers. In fact, we already have more than 10 per cent of workers who are higher-skilled. so ensure that all operators have their own machine/equipment so they can feel a sense of ownership and are thus more likely to stay with the company. There is also an emphasis on the sense of an extended family, as most operators have been working with us for a long time now. with the intended user’s requirements of functionality and affordability. The group’s property development projects have consistently achieved sell-outs, even before the official launches. Additionally, the group is focused on our core competencies. In this regard, the group is focused on sourcing for suitable land banks for the continuous growth of our property development business, while construction and sales activities are outsourced to the relevant professionals. Reflecting the group’s track record in property design innovation, resources are also channelled to conceptualise new designs and track market trends. With this focus, the group has been able to manage resources more efficiently to capitalise on suitable market opportunities, lower our exposure to fluctuations in market conditions and reduce our borrowing costs. Separately, having proper customer feedback channels in place ensures that key issues are brought up directly to the management for review on a timely manner and customers are also updated in relation to the solutions undertaken. Mr Tan: To mitigate these challenges, we intend to focus on a number of thrusts. One is to expand into other property segments in local and overseas markets to diversify our revenue base and increase our recurring revenue channels. We also intend to work with an extended network of real estate professionals and agents and continue to proactively seek new land sites at a reasonable rate and cost. Managing business costs is part and parcel of all business activities. On this front, we have always adopted proactive cost-management measures in our projects. To support and extend the business growth in Singapore and beyond, a team of like-minded and talented professionals are required, hence priority will be given to this area as well. Mr Chua: At Huationg, we overcome these challenges by using equipment/vehicles that are new, or auto transmission as Singaporeans are more willing to operate vehicles and/or equipment that are new. We al- Q: What is your company’s competitive strength? Mr Teo: Vigcon’s greatest strength is the ability to undertake fast-track and complex Additions and Alterations (A&A) projects that require customised attention and quick response to project demands. We have gained a competitive edge over our competitors through excellent project management. Vigcon’s ability in delivering quality and timely services come from close supervision by senior management, dedicated and well-trained project team members and a strong workforce. Mr Tan: A few differentiating factors, including an emphasis on design innovation, focusing on our core competencies, and establishing business relationships and extensive networks, have been vital to our growth. In the past, the emphasis by property developers was to build to the maximum gross square feet allowed by the authorities at minimum costs. In a land-scarce country like Singapore, the end-result of this approach is generic-looking buildings. However, we recognise that design is an important element of innovation that is often overlooked in property development. And, in today’s market, the efficient use of land area must be combined with unique property concepts to create holistic lifestyles and sustainable value for property owners. Committed to this belief and insight, the group’s property development projects have integrated good design Mr Chua: Providing a one-stop solution to lifting and shifting, being customer-oriented, and focus on quality of service rendered. Q: What is the outlook like for your industry? Mr Teo: Vigcon is well-positioned to capture the growing demand for A&A works, an area that it specialises in. For the near term, Vigcon’s efforts will be focused solely on the local market to sustain its current business model, and reap maximum effectiveness and productivity from our present workforce. That said, the management is well aware of the opportunities and benefits of growing the company by Mr Tan: Singapore retains its popularity among global real estate investors who see the market as a safe haven offering solid returns that are underpinned by the country’s position as a global financial hub and stable political environment. While there were additional cooling measures introduced by the Singapore government over the past few years, the long-term sentiment remains relatively positive in a land-scarce country like Singapore. We support the government’s approach for a sustainable property market and we remain optimistic about the long-term prospects of the property market. While the market may be indirectly affect by the slowdown, our strong financial position as well as our growing overseas business presence will enable us to steer through and emerge stronger. Mr Chua: With the government’s plans to build more HDBs and enhance the public transport system, we expect a growth in the industry. Q: What are your plans moving ahead, whether in terms of expansion into other countries, or expansion of your products and services? Mr Teo: We are on the look-out for a suitable location to set up an integrated facility hub for office, warehousing, production, equipment repair centre and workers’ dormitory. In the longer term, we hope to expand into property development and overseas business opportunities. Mr Tan: To strengthen our market position and build sustainable growth, the group has identified the following strategic plans: ■ To acquire new development sites to support our property development pipeline of about three to five years on a continual basis; ■ To expand further into different market segments within the property market with our unique approach of design and functionality; ■ Other future plans include the expansion of business through joint ventures and/or strategic alliances and sourcing for opportunities to develop and manage property developments in Singapore and Asia. Building on our established business foundation and design approach on innovation and prestige, Link (THM) is setting our sights on harnessing new business opportunities beyond Singapore. Mr Chua: We currently have business in Myanmar. The business is still in the infancy stage. We hope to duplicate our business model in Myanmar and also other countries eventually. TAKING A LONG-TERM VIEW By Malminderjit Singh msingh@sph.com.sg @MalminderjitBT THE offshore and marine sector may generally be going through a rough patch now but for Rotating Offshore Solutions (ROS), a strategy mix of diversification, taking on new projects and keeping costs low offers continued optimism. Set up in Singapore in 2004, ROS Engineering began by offering frontend engineering design (FEED), cost reduction analysis, and project management design and solutions as well as providing the oil & gas industry with hardware for its operations. However, ROS has since taken on floating production storage & offloading (FPSO) engineering projects. In the offshore industry, FPSO units are floating vessels which receive, process and temporarily store oil & gas. The product is then offloaded onto a tanker or pipeline. With oil prices plummeting by more than US$20 per barrel since October, the offshore and marine sector and its investors are showing signs of nervousness as stocks from the sector are taking a beating. Speaking to The Business Times, Eli Xanthopoulos, managing director of ROS, admitted that this is a concern. “The short-term downturn on oil prices is a major concern given the impact of reductions in capital spending on projects by the oil and gas companies.” Even though he noted that he saw a tightening in all oil & gas projects as a result of the decline in oil prices, he pointed out that this, however, is a short-term trend. “I think the longterm trend is very promising given that the demand for oil & gas will continue to increase, and the supply is limited and more costly to produce.” To take advantage of the current environment and the brighter longer- Mr Xanthopoulos says the group’s strategy of dealing with low oil prices is to handle more projects term prospects, ROS is looking to diversify into new areas of business while expanding its footprint across all business segments. “Our future intention is to expand into the engineering, procurement and construction (EPC) of more diverse and larger oil & gas process modules and facilities,” Mr Xanthopoulos said. “For the FPSO market, we are expanding into the EPC of complete topsides facilities.” As for larger facilities, Mr Xanthopoulos explained that ROS has already completed one EPC project for conversion of a mobile offshore production unit (MOPU), and that the group is looking to convert more of these types of projects. Overall though, he said, the group’s strategy to deal with the environment of low oil prices is to do more. “Our strategy is to pick up as many projects as possible, not necessarily just FPSO projects, to weather this short-term storm.” ROS has a strategic asset to help it push ahead with this strategy – its new facility on a two-hectare site at JTC’s Offshore Marine Centre (OMC). The new S$25 million facility, located at Tuas South Avenue 8, comprises a four-storey office-cum-warehouse building with waterfront access. It also has a fabrication area that comprises three sheltered yards and an open yard designed to achieve a smooth work flow and high safety standards. With all its operations already consolidated in the facility, the OMC has not only sharpened ROS’s advantage in delivering high quality products in an optimal time frame, it has also allowed the company to deepen its EPC and FPSO businesses. “We overcome a competitive marketplace by keeping our costs low and delivering quality products/ packages faster than our competitors . . .We continually review and evaluate ways to keep costs down,” Mr Xanthopoulos said. One way in which the group has managed to do this, he elaborated, is by setting up an engineering office in India to perform the labour-intensive and detailed engineering designs. “Now, the Singapore office prepares the proposals and conceptual engineering scope, and India performs the detailed engineering.” Listing holding on to seasoned employees and attracting experienced engineers as challenges, Mr Xanthopoulos argued that the difficulty is not so much in finding talent but in keeping the associated costs low. “We continually search for talent at a cost level that will keep our costs low,” he pointed out. Despite these challenges, ROS, under the direction of Mr Xanthopoulos, has proven that it can derive the best from its resources – it managed to achieve a turnover of S$3.3 million in revenue within a year of operation in 2013 with a lean staff size of 14 – so there is every reason to believe that it will achieve new milestones. ENTERPRISE 50 2014 The Business Times | Friday, November 28, 2014 | 19 FASHION + PROPERTY = AVANT-GARDE BUILDINGS Ex-fashion distributor Kenny Tan continues to wield his design-savvy hand in the properties he builds. By LEE MEIXIAN L INK (THM) Group differentiates itself from other developers through its focus on avant-garde design, even for usually drab developments like indus- trial buildings. For instance, the design of one of its completed industrial buildings in Bukit Merah, called Central Link, was inspired by the Eiffel Tower, except that instead of an iron lattice tower, it boasts a full glass façade that lets daylight stream into every one of its eight storeys. Group CEO Kenny Tan said that it was a visit to Paris which inspired the design. The well-travelled businessman, who first started his business in fashion, has also taken a visual design course in Tokyo which enables him to visualise the final look of a building prior to its construction. ONE WORLD MEDINI Mr Tan’s eye for design has been instrumental in the group’s biggest project currently: a S$1-billion development known as One World Medini, located in Medini in Iskandar. Its highlight is a “seven wonders” retail segment which will be split into seven cultural themes: Japan, India, Korea, China, Europe, the United States and a Malay palace. And Mr Tan has not scrimped on the details. “We have 10 architects working on this. For the seven wonders alone, we have seven different architects working from each of these seven regions. We want to replicate the details up to the finest possible. The architects, consultants and I even took almost about 1 1/2 months to finish touring all the seven regions for inspiration to find the right spots and concept,” he said. The integrated development also comes with another two retail terminals, three blocks of offices and four blocks of residential units. Mr Tan envisions the “seven wonders” to become more than just a tourist attraction or educational experience, but a “celebrity town”, given its proximity to Pinewood Iskandar Malaysia Studios. The filming studio, he said, lacks in-house sets depicting backdrops in these various countries. “So if they need a Japanese scene, they will need to build a temporary Japanese architecture; if they are filming a Bollywood scene, they will need to build Indian architecture. “But when our development is completed, Pinewood will be able to spill over here for their filming. Most importantly, when they come here to film, everyone has a chance to rub shoulders with the celebrities. “Already, Pinewood is anticipating the completion, because it will save them a lot of time and cost,” he noted. The challenge with most attractions in Iskandar is attracting a sustainable stream of recurring visitors to support its businesses. Mr Tan has calculated that the studio is able to take on three to five filming projects at any one time. Each project brings in a crew of 300 to 500. Add to that the studio’s own staff and logistics personnel, and there would easily be 5,000 people working at the studio at any one time, providing abundant footfall to the retail and food and beverage (F&B) shops. Link (THM) is in the late stages of preparing to launch the marketing campaign for this integrated development, with the office units to be launched in the first phase. Although it has also received of- stock, Mr Tan managed to secure deals with major fashion brands in Hong Kong, Singapore, and Malaysia to dispose of their inventories by re-exporting them to Japan – and at a tremendous profit, too. Today, Mr Tan’s fashion business, which is not part of the group, is managed by his wife. He entered the property development business after learning from the dual crises (the Asian Financial Crisis and the dot-com bubble) the important lesson of diversifying one’s businesses. After analysing price trends in Singapore and Hong Kong, he entered Singapore’s property market with two partners in 2004, just before property prices started to rise, and built the business to what it is today. LISTING AMBITIONS The next leg of growth for Link (THM) is likely to come from overseas expansion, and not just in Malaysia, says Mr Tan. PHOTO: YEN MENG JIIN fers for the Japanese street by Japanese investors, and the Chinese street by Hong Kong investors, it insists these are not for sale. STARTING OUT Mr Tan’s keen interest in design can be traced back to the start of his career in a fashion distribution business he started when he was 27 two decades ago. Together with his wife, he set up the firm with a humble capital of S$27,000, after selling all their valuable assets except for a four-room flat. He started by importing handbags from Hong Kong and Kuala Lumpur to Singapore, but business was poor due to the unknown brands he was bringing in. This changed in 1995 when Mr Tan managed to convince agents of Cartier, Mont Blanc, Valentino, MCM & Dunhill in Singapore to let him distribute their writing instruments and other apparel to Sumatra and Batam. It was thanks to the goodwill of bankers and retailers that he was able to run his business even with his tight cash flow at the time. He later ventured into Japan and a year of exploration later, landed his first order, worth US$300,000, to import high-end designer labels into Japan – a deal which he made no money from after air freight costs wiped out most of his profit. But it found him friends among Japanese businessmen, something that would come in handy a year later when the Asian Financial Crisis hit most of Asia, but not Japan. As South-east Asia became flooded with huge volumes of unsold Link (THM) Group has targeted to list on the main board of the Singapore Exchange by 2015 and is still on track to meet that timeline, Mr Tan said. It sees listing not just as a platform to tap public capital to grow its capital-intensive property development business, but also as a way to recognise its staff’s hard work. “The main motivation is not just for me only to own the company. Our success comes from every staff’s contribution, many of whom have been with me since day one. In order to recognise their effort, as well as to further progress as a property developer, I feel the company has to be recognised,” Mr Tan explained. Asked if in its currently unlisted state, it struggles with forking out huge capital for land acquisitions and paying contractors punctually, which in turn helps to complete construction work on time, he said no, citing the group’s well-managed and strong cash flow. The property market is a cyclical one, so it comes as no surprise that the developer has also seen its business invariably impacted. That’s normal, Mr Tan pointed out. What’s important is that during a downturn, a company continues to prepare itself for when the market recovers. “That preparation will build a stronger foundation for us. That’s what we're doing now: restructuring, looking at how to diversify further into other markets, and how to venture into new businesses.” The developer’s revenue more than doubled to S$72.9 million in FY13, while net profit grew over five-fold to S$14.4 million. Presently, the group is busy delivering its properties under construction, some of which are scheduled for completion next year. It is also actively bidding for land. But the next leg of growth is likely to come from overseas expansion, and not just in Malaysia, Mr Tan said. It is looking at clinching some deals in Myanmar – including a possible hotel development project there. “For the hotel development project, we are going in with a few partners in Singapore, because for commercial BOT (build-operate-transfer) developments, there are no problems with 100-per-cent foreign ownership at all. But for another mixed development project with a residential component, we are partnering local developers in Myanmar,” he added. Mr Tan has also travelled to Cambodia, Vietnam, Hong Kong, Japan and China in search of expansion opportunities – and does not rule out enlarging the company’s footprint in these places. leemx@sph.com.sg @LeeMeixianBT 20 | The Business Times | Friday, November 28, 2014 ENTERPRISE 50 2014 The Business Times | Friday, November 28, 2014 | 21 TIMING IT JUST RIGHT Wee Tiong director Tan Wee Beng explains how a pinch of luck, a bit of daring, and a lot of hard work have helped to transform the firm’s business. BY MINDY TAN W EE Tiong’s director Tan Wee Beng is, to borrow the words of Winston Churchill, a riddle wrapped in a mystery inside an enigma. The man who loves fast cars – he is eagerly anticipating the arrival of his McLaren 650S – is quick to say that he does not speed on the highways. He is a trader who deals with millions, and yet is a careful investor. He is also the man who walked out of school with an engineering degree, went into the family business which was then a local rice and sugar importer and wholesaler, and turned it into one of the leading physical commodities trading companies in the region. “I was very lucky to be in the right place at the right time,” said Mr Tan. “I joined in 2002, and that’s when the market started to shift from normal trading – when there wasn’t much interest in commodities trading – to the boom which really started in 2004, 2005 ... I think luck is very important.” A pinch of luck, a bit of daring, and a lot of hard work are the factors that have arguably transformed the business, which at this year’s Enterprise 50 Awards, netted its tenth consecutive E50 award. This is the first time a company has been awarded the 10 Year Award in the history of the E50 Awards. PROFITABLE MANTRA The turning point for Wee Tiong was the day it realised that being the middle man is a difficult position to maintain, especially when there is no value-added service. It thus went on to form a team of traders to conduct research into worldwide supply and demand. Armed with the latest financial instruments and trading platforms, the trading team was able to provide advice as well as timely information on global demand and supply to clients. Notably, speculative futures positions take up less than 5 per cent of Wee Tiong’s total “paper” futures. “(After all these years), I’ve learnt not to play so big. If you want, you can, but play within your means. At least, when the market is against you, you have enough to pay,” explained Mr Tan. “Of course, I don’t engage in those very risky ... Okay, we do,” he admitted, with a laugh. “But only once in awhile,” he was quick to qualify. “When the market is handing the money to you not on a silver platter but a gold platter, of course we do. But,” he stressed, “(we only take deals that are) within our comfort zone.” It is a mantra that has proven profitable for the company. Wee Tiong’s yearly turnover for the past 10 years has averaged from S$150 million to S$300 million. In 2012, it achieved US$334 million in sales turnover, with a profit of around US$9 million. EXPANSION NOT ALWAYS THE KEY The other key lesson he has gleaned in the past 10 years, is that expansion is not always the key to success, said Mr Tan. “It’s not just about expanding and getting more business. I think sometimes, when the market is not good, you really have to learn to hold your horses and just wait for the right opportunity.” Wee Tiong has been looking to open a sugar refinery in Indonesia for a while now. The project is finally expected to be ready in 2015. “We had our own plans (too), but it’s lucky it didn’t go through because prices came crashing down,” noted Mr Tan. Trade houses were aggressively purchasing assets to move upstream (through the purchase of millers, for example) or downstream (through the purchase of refineries) between 2007 and last year. Some of them bought producing factories, mostly in Brazil, India, or Thailand, or through collaboration in Indonesia and the Philippines to build refineries, as sugar prices hit record highs. Sugar prices have since fallen amid oversupply, however. “If let’s say we had the licence from January, you cannot say I anticipate prices will drop to US$400 in the month of November. That would be pure speculation. And the loss is huge! We’re not talking about 10 tonnes, it’s about 2,000 to 3,000 tonnes. There’s a lot of money at stake. And the worst part is, the rupiah has come down against the US dollar. So you buy in USD, and you store in rupiah ... I wasn’t very active in expansion (previously), which is a good thing. Sometimes, expansion isn’t always good. I escaped this whole bloodbath.” With the facilities due to open in 2015, Mr Tan was optimistic that things will pick up. “It’s a very good time to enter right now. The best time. We had a lot of problems in the beginning, like getting the land and getting the licences from the government. Now is a good time to push because those who have suffered will be getting out of the market. And price-wise, where the rupiah is right now, it is the best time to go in. “Our cash contribution might not be as significant but our role is crucial to the cooperation as we understand the mechanics of physical commodities trading, especially the financial instruments like hedging, options. In this way, we control the portion in procuring the raw sugar which will generate healthy sales turnover for us. The goal in the long run is to solidify our position to compete with the trading houses and expand our reach to other countries,” he added. Looking ahead, an initial public offering is not something Wee Tiong is looking at in the near future since “right now, I don’t really need the cash”, said Mr Tan. “The first refinery, we are really embarking on it right now, and probably can commission it by next year. In a couple of years, if we can get the second one, then maybe I will think about it. But right now, we are really very comfortable,” he concluded. tanmindy@sph.com.sg @MindyTanBT “I think sometimes, when the market is not good, you really have to learn to hold your horses and just wait for the right opportunity,” says Mr Tan. PHOTO: ARTHUR LEE ENTERPRISE 50 22 | 2014 The Business Times | Friday, November 28, 2014 A FIRM AT THE CROSSROADS Huationg Holdings must realign its business strategies and harmonise internally to support further expansion, says its group GM. BY CHAN YI WEN C HERYL Lee is learning the ropes from her father, Lee Chin Tiong, founder and managing director of Huationg Holdings, a civil engineering and logistics solutions provider for the oil and gas, construction and marine port sectors. It has been a rags-to-riches story for Huationg, since its humble beginnings in the early 1980s with just one piece of equipment – an excavator – managed solely by Mr Lee. Today, Huationg employs 600 workers, has 700 pieces of equipment under its belt, and has business spanning mainly three main divisions: Huationg Inland Transport Service, Huationg (Asia) and Hua Resources. Ms Lee, who holds the title of business development manager, is entering her father’s business at an opportune time. With business growth plateauing in Singapore, Huationg now stands at the crossroads. It wants to sustain the local business while replicating its capabilities in regional markets, where it sees huge business potential. But first, the group must realign business strategies and harmonise internally to support further expansion, according to Huationg’s group general manager Jimmy Chua. Mr Chua, who has been with the company for six years now, said that the biggest hurdle for Huationg is the labour crunch in Singapore. The company prides itself in being people-centric. According to Mr Chua, its workforce is like an extended family and Huationg ensures that its staff receive relevant training and are provided ample opportunities for growth. This has been one of Huationg’s core values. But Ms Lee is beginning to understand that while the company is sufficiently staffed today, many of its equipment operators are getting old- er. At the same time, several constraints are preventing the younger generation from entering the industry; if things are left as they are, there will come a time when Huationg becomes understaffed. It’s thus crucial for the company to shift gears away from labour recruitment towards productivity gains. Huationg has shown initiative in this area. With funding support from the Workforce Development Agency (WDA), Huationg has sent its management for the Operations Management Innovation (OMNI) programme, a joint initiative by the Singapore Institute of Manufacturing Technology and WDA, which empowers Huationg’s employees to improve current operational processes for better work efficiency, thus enabling optimisation of existing manpower. to now, growth financing has always been supported by various banks and equity owners. But the company is now contemplating the possibility of turning to the capital markets as a final resort to support further its ambitious growth plans. KEY INDICATOR A CLEARER PICTURE At OMNI, Huationg’s employees are taught to document their operating standards of procedures, instead of relying on memory, which narrows exposure to mistakes and provides employees with a clearer picture of the company’s operations, placing them in a better position to implement improvements. Huationg has also tightened its maintenance regime to cut down on equipment failure. Presently, all of its equipment is tied to manpower. To avoid any sort of employee downtime, Huationg has to ensure its equipment is well-functioning. Hence it is collating more data on its equipment lifespan and whereabouts to have a better track record of its assets. “It doesn’t matter even if manpower’s there. If equipment fails, the output is zero,” explained Mr Chua. The company is also shaving off inefficiencies to optimise resources. It is looking to downplay its LSS (Liquefied Soil Stabiliser) business, an advanced backfilling and grouting mate- Ms Lee, Huationg's business development manager, has joined her father's business just as it enters into a new growth phase rial that is used to replace conventional compacted fill. While it’s an interesting idea, Huationg has realised that it’s not easy to operate this business, as activity in this area is often limited by soil availability, which is often inconsistent. Instead, Huationg will place more efforts into its core equipment rental business. Huationg has followed International Enterprise Singapore (IE Singapore) for trade missions to various countries. In the mid-term, when business in Singapore stabilises, Huationg hopes to derive half its annual revenues from abroad. Today, revenue from its business abroad accounts for less than 10 per cent of total annual Published and printed by Singapore Press Holdings Limited. Co. Regn. No. 198402868E. revenue, but with Huationg’s foray into Myanmar still in the infancy stage, the company hopes to do more there. Mr Chua explained that business structures and regulatory frameworks of emerging countries may not be the most straightforward but these nations still have the biggest growth potential. Thus, it is necessary for the company to mitigate the numerous hurdles often present in such markets. Due to regulatory inefficiencies, Huationg encountered a situation where equipment sent to Myanmar was stuck at the port there for more than nine months. But the benefits of venturing overseas may still out- weigh the costs of expansion. “Language will be a problem ... but workers there will be cheaper, more willing to learn,” pointed out Mr Chua. Beyond Myanmar, Huationg is also eyeing the Indonesian market, which recently inaugurated a pro-business president. But the company has learnt to not take the route it took when entering Myanmar. Instead of starting business from scratch in Indonesia, which would be too time-consuming, Mr Chua prefers to acquire local businesses to get a stronger and faster foothold into the market. But how far and how fast Huationg grows will ultimately depend on how deep its pockets are, said Mr Chua. Up By the end of the year, Mr Chua is confident that Huationg will be properly aligned. The key indicator of whether the company is poised to enter its next stage of growth is when employees are able to deliver customer satisfaction when entrusted with more challenging tasks, he said. That will show whether their processes are sustainable or just a “flash in the pan”. “Our people are key; it’s all about their mentality and attitude. The job may not be that difficult, but in the oil and gas sector, they are more concerned about the right processes. At a live plant, if anything happens, it’s as though an atomic bomb has hit the country. We have to ensure that we have strict processes,” Mr Chua said. With Ms Lee joining Huationg, Mr Lee sees it as a sign that the younger generation is willing to come in and step into his shoes. The company will also open its doors for students to get their hands dirty in the business to learn more about the industry, Mr Lee said. Having just graduated from the National University of Singapore, Ms Lee said that peers her age prefer jobs in multi-national corporations or big banks, and wouldn’t think of going into an industry like this. “(But) it’s definitely interesting, not as boring as I thought,” she noted. “I used to think we are just a construction company, but after I joined, I realised we are also in other areas, like oil and gas. And it helps that my father and Jimmy are always there to guide me if I’m unsure of anything.” yiwenc@sph.com.sg @ChanYiWenBT A member of Audit Bureau of Circulations Singapore. Customer Service (Circulation): 6388-3838, circs@sph.com.sg, Fax 6746-1925.