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Venturing abroad revs up Cyclect Group's growth
GOING overseas is particularly important for Singapore small and medium sized enterprises (SMEs) because the customer base in the country is too small to allow companies to benefit significantly from economies of scale, says Melvin Tan, CEO of Cyclect Group, a home-grown business which has benefited from going overseas.
"Singapore is a good place to test out new ideas and new developments, because all the policies and structures are in place, and even new policies can be developed and modified efficiently to test a new idea or application. Once the SME has developed strong business processes, marketing and financial bases, the real opportunity to scale up and grow will be the international market," says Mr Tan.
Depending on the industry the SME is in, there are plenty of opportunities in the region. Internationalising will also allow a company to stay competitive and constantly keep improving through the cross-flow and collaboration of different ideas and technologies in the different countries, he adds.
While Cyclect was established in 1943, it was only in the 1980s that the company decided to venture overseas. At that time its main business was electrical works and motor repairs for ships and vessels. In the 1980s, the maritime industry was seen as a sunset industry and the increasing competition from neighbouring countries forced Cyclect to get out of its comfort zone and look at new strategies to remain in business.
Thus it decided to set up servicing workshops and offices nearer customers in countries such as Malaysia, China, Brunei, Japan, and the Philippines. "It also helped that, because we were servicing the maritime industry, we already had good exposure with regards to dealing with foreign companies, and using this experience, we started to diversify our customer base in the different countries," says Mr Tan.
The most common issue with going overseas for SMEs is risk. Pricing in an unknown risk makes internationalisation seem unviable, particularly to an SME using its own cash and resources.
"Even in the South-east Asian region there are a lot of differing market practices in each country that seem daunting to an outsider without real experience. Some ways to alleviate this risk would be the sharing of market research and country practices, and a good network for partnerships and co-learning," says Mr Tan.
In this regard, he says that International Enterprise Singapore is already doing a good job in supporting Singapore companies in the various countries through the introduction of partners, opportunities and general reports. More of such reports can perhaps be commissioned and made available to the public, and even made sector specific and country specific, so that an SME which is interested to go into a particular sector in a particular country can easily get information about what to look out for, rules and regulations and the risks involved, he suggests.
In fact, he says that IE Singapore has been of great help to Cyclect and it would not have entered certain markets without the government agency's support. "They have introduced opportunities and partners, and made it easy to plug into the local network of whichever country that was of interest to us. They have helped us with advice on specific sectors, and the differing rules and regulations of the different countries. All this support alleviated the risk of entering a new country," says Mr Tan.
"With regards to their financial assistance schemes, programmes such as the Market Readiness Assistance, Global Company Partnership and Double Tax Deduction help defray the cost and risk of entering markets through market research, trade mark and intellectual property (IP) protection."
The main activities of Cyclect include maintenance, repair and overhaul of industrial machinery; engineering and construction services for industrial plants, infrastructure facilities and offshore/marine assets; manufacturing, trading and distribution of electrical machinery and equipment; and power plants.
New directions in the works for the company include automation and robotics for the aviation and logistics sectors, says Mr Tan. "We are one of the finalists in the Changi Aviation Challenge that helped developed an innovative system to automate the baggage handling of narrow body aircraft. This should increase productivity by 30 per cent, and we hope to interest other airports and the logistics industry to allow us to customise and develop such intelligent productive systems for them."
Closer to the core business, the company is also looking to set up more maintenance, repair and overhaul workshops in the region to provide its quality services to not just ships and vessels, but also the heavy industries and power plants.
Cyclect says that among its clients at home and overseas are governments, multinationals and local companies in industrial, infrastructure, marine and offshore sectors. The company provides them with engineering, construction, maintenance, supply and installation services.
The company has grown significantly over the past few years, particularly in the last decade. "We took some risk and won a few significant contracts, resulting in a rapidly expanding workforce. I cannot emphasise enough the importance of good staff in this whole process. All the heads of the business units in my company have been with us for more than 10 years, some even more than 20 years. They have been with the company through thick and thin, and they want to be enterprising; to grow, to challenge the teams and to succeed has been ingrained as a part of our culture that has enabled us to scale up so quickly and successfully," says Mr Tan.
"Finding the right people has always been difficult, finding the right people who are a good fit to your culture, and willing to work for the betterment of the company is a million times tougher."
Revamp and modernise
"Through the years, the company also had to revamp and modernise its image and update and upgrade the internal processes. Such change management in a company with a long history is always a long and arduous process. However, in order to internationalise efficiently, these are changes that have to be made and communicated effectively to the staff to get their support," he adds.
Mr Tan says that it is important for Singapore to nurture entrepreneurs. For him personally, being an entrepreneur means pursuing opportunity regardless of the limitations of the resources.
"It is important for Singapore to nurture more entrepreneurs, so that we can create a more vibrant and inclusive society. It adds another dimension to the culture in Singapore when more Singaporeans dare to try new things, and have the confidence and the will to make it succeed.
"It will also encourage more collaboration among the different sectors in Singapore, and this is where innovation, and cross fertilisation of ideas will happen to help Singapore succeed. When people do things out of passion and ownership, they will enjoy themselves more and that is how communities are built ground up," he adds.
Mr Tan says that as an entrepreneur, it is his job to keep looking ahead for the business, to watch how the industry is changing and interacting with technologies from other industries, and to keep a look-out for anything that can change the landscape so that he can position the company properly and be ready when it happens.
"As a company, we will continually invest in new technology, trials, processes and talents to ensure that we are constantly moving up the curve to provide a service that is always of better quality, consistency and standard than the last. In the process, I will enjoy my time in the business and community, innovate in my fields of business and also outside it," he says.
His advice to budding entrepreneurs: "Know what it is that you are changing for the better, then grab it and do not let go. Don't forget to do market research, always stay honest, and work your butt off!"