.ISSUE : MAY/JUN 2008
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| - Turning Ideas into Businesses - SPRING Enterprise Conference 2008 - Intellectual Property Demystified | ||
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SPRING Singapore
Tech Digest (May 2008)
A new Financial |
SPRING Chairman Mr Philip Yeo shared how SPRING, together with other government agencies and partners, can help local enterprises to grow. While Keynote Speaker, Mr Paul Peeters, CEO of Philips Electronics Singapore, gave insights into how innovation can be used to generate growth. The event also marked the launch of the new $50m Technology Enterprise Commercialisation Scheme (TECS), aimed at encouraging enterprises and entrepreneurs to turn their R&D concepts into businesses. | |
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Daring to Go Global Fear of the unknown, intolerance for failure or family control and other reservations have not stopped our SMEs from going abroad. Last year, seven in 10 SMEs generated some of their revenue from major overseas markets. While Malaysia, Indonesia and China remain the top foreign markets for our SMEs, new emerging markets are gaining interest. The Middle East, for instance, has overtaken the USA as a popular overseas destination. Likewise, some other enterprises are boldly breaking new ground in Indo-China, Russia, Eastern Europe and Latin America. HTL International Holdings Ltd is one such company who now exports leather sofas to 40 countries and has 8,000 employees around the world. HTL was established in 1976 and listed on the Singapore Exchange in 1993. Mr Por Khay Ti, HTL International Holdings' Deputy Group MD, said in those days, the furniture sector was regarded as a "sunset" industry since Singapore did not have the natural resources and manpower. HTL's business is leather tanning and the manufacture of designer leather upholstered sofas.
Today, 90% of HTL's manufacturing is in Kunshan, Changshu and Yangzhou in China with the Singapore office leading product development. Their operations use up 1.2 million sq m of leather hides (from about 250,000 cows) which are shipped in 2,000 containers every month. In-house and external designers and factories churn out 30 new models monthly. HTL makes furniture for the living room only, Mr Por said, and it's almost all business-to-business. That's why you never see their HTL name on that sleek leather designer sofa. Last year, HTL's sales were S$690 million. The company exports to 40 countries with 65% of exports going to Europe, 20% to the Asia-Pacific, and 15% to the USA. Their offices are dotted around the globe in Hong Kong, Taiwan, Japan, Australia, UK, Germany and USA, with agents and representatives in the Benelux, France, Spain, Portugal, Italy, Switzerland and Korea. What's the secret of HTL's success? HTL never forgets these four very simple factors: "Product and customer focus, our relationships with our partners and customers, the quality and reliability, and competitive pricing of all our products, and effective cost management," Mr Por said. "You must also be open-minded to change and always do your homework," he added. "Study your markets and customers closely. Do your research through several channels. And choose the right partners, people you can trust and rely on. This advice applies locally but it's even more important when expanding overseas." ET Daring to Go Global
The group now exports its products to 65 countries with core markets in Russia, Ukraine and Kazakhstan and a good presence in other CIS countries, Iran, Mongolia and Vietnam. Their bestseller is the MacCoffee instant 3-in-1 coffee mix. They have built strong brand equity and loyalty in several key markets, including Russia, Ukraine and Kazakhstan where MacCoffee is recognised as a leading 3-in-1 instant coffee mix brand. Today, their MacCoffee is valued at S$167 million by Brand Finance, an international valuation agency. The group ventured into the food & beverage business in 1992. Currently, the Food Empire Group manufactures and markets more than 200 types of instant beverages and food products such as frozen finger food, frozen sea-food, candy and snacks under its own brands MacCoffee, Klassno, FesAroma, OrienBites, MacCandy, Zinties and Kracks. The instant 3-in-1 coffee specialist caters to different consumer tastes by offering a wide variety of beverages such as regular and flavoured coffee mixes and cappuccinos, instant chocolate, flavoured fruit teas and cereal drinks. Their core product - instant coffee beverages - is marketed mainly under the MacCoffee, Klassno and FesAroma brands. When MacCoffee was first introduced to Russia's predominantly tea-drinking population in 1994, the concept was alien to the consumers. "We had to educate the consumers by persuading them that our 3-in-1 MacCoffee was the easiest and most convenient way to get a hot, steaming cup of coffee," said Ms Ritu Kapoor, Manager, Branding & Strategy for Food Empire. A decade ago, Russia wanted to adopt everything Western so Food Empire capitalized on the design of their packaging and the instant convenience of a cup of piping hot 3-in-1 coffee. Today MacCoffee commands more than 50% of the market share in Russia, Ukraine and Kazakhstan. It wasn't always so easy though. When they first ventured into the Russian market, Food Empire faced several challenges. "Our biggest challenge was charting the unknown," said Ms Kapoor. "The consumers, language and culture, retail environment, government regulations and logistics were all new to us. We also had to manage the foreign exchange risk." Now the group has 12 offices worldwide including Russia, Ukraine, Kazakhstan, Uzbekistan, Turkey, Iran, Poland, Belgium, Bahrain, Mongolia and Vietnam. There are four manufacturing plants in Singapore, Russia, Vietnam and Malaysia. Ms Kapoor has a dozen handy tips for those SMEs who want to go global. 1. Keep the focus on the consumer - the product must suit consumers' taste
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So about 15 years ago, HTL and other furniture companies got together and went on study missions to China and Vietnam in search of manufacturing facilities. 
SGX main board-listed Food Empire Holdings Limited took a very bold step when they successfully introduced coffee to the tea-drinking markets of Russia and the Commonwealth of Independent States (or CIS which comprise 11 former Soviet Republics).
"You need the attitude to take risks. Go into the market with proper planning, cover all aspects but still be geared for failure. So if you try going overseas and it doesn't work out, you can take a step back, figure out what went wrong and why before you try again." 
"Fear of the unknown. From my experience, many of us here are brought up with certain expectations. Everything must be done well. There's no uncertainty. So it's fear of the unknown and what to expect thats holding us back."
"I think we need to loosen up as a society. First, we need to be more patient and not measure everything with results. Second, we need to tolerate some degree of untidiness. Creativity is the essence of expression, design and innovation; it can be an untidy process and is not always immediately measurable. The good news is that we recognize this and there are ongoing efforts to develop a more conducive environment for creativity and innovation - from encouraging arts and incorporating creative thinking in school curriculum to support from government agencies like SPRING to encourage businesses to innovate, and then go overseas when they're ready."
