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
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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
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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,
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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
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U Paing No(Zamyinzwe-4), Plot No. (783/Taung Nyo-Na),
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Our Overseas Offices
Australia, Cambodia, China, Ecuador, Hong Kong, India, Ivory Coast,
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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
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