You are here
Core driving force
ASK consummate entrepreneur G S Sareen about the tyre business, and he is as likely to dig deeply into philosophical insights as he is to expound on Omni United's visionary distribution plan.
The founder of Singapore-based Omni, tyre manufacturer and distributor whose products are dubbed the "Ikea" of tyres, wears his responsibilities as a company chief, husband and father lightly. You'd think business was a breeze, and life a balance of work, relaxation and philanthropy - and why not?
"There are three stacks in life - you work hard, make money - but money is not the end of it. With the money you are supposed to enjoy life or invest in your children or in humanity. Those three stacks have to be equal. The purpose of working hard is to have a fruitful and productive life. Why am I telling you this?
"Because it does not matter that I'm in the tyre business or any business. I was not born dreaming that there will be a piece of rubber that will be converted into a tyre. It was by chance that I stepped into the civilian world and among the things I did, this industry somehow stuck. It's not that I had a natural born talent to be a tyre man; it just stuck."
By his reckoning, it didn't take any special genius to cotton on to the opportunity in the potentially vast, price-sensitive segment of tyres for the passenger car market. All it took was persistence.
"One thing I realise is that if you want to make anything a success you have to stick with it. You can vacillate too much, try this or that and give it up - that's wrong. Failure is when you quit. If you don't give up, you keep trying, right? If you don't quit, there is no failure; you're building and growing, so what's the problem?
"The tyre market has a lot of potential; it's big and a unique product. I got into it, stayed with it and things have worked out."
Born in India, Mr Sareen, 50, holds a degree in statistics and became a decorated military officer, fulfilling a childhood dream. He resigned the service in 1992 when he was about 26.
His youth was touched by tragedy, however. His mother was paralysed in an accident in Africa when he was four. His older brother died at age 27 in a car accident. He and his wife Rewa moved to Singapore in 1994. He founded two e-commerce businesses, one of which was Mindtrac.com, a B2B exchange for the tyre industry, before he set up Omni in 2003. He has since won a number of entrepreneurship awards and in 2012 was among Fortune magazine's "Asia's Hottest People in Business".
Today Omni boasts a stable of four tyre brands - Radar, Goodride, Roadlux and Corsa. Revenue is expected to reach US$350 million to US$400 million by 2018, exponential growth from its initial turnover of US$7 million in 2003. Between 2015 and 2016, the firm acquired two distribution businesses in the US - Texas-based A to Z Tire & Battery and Interstate Tire Distributor in California - marking yet another phase in its expansion.
"The market segment we're in is typically not known by a brand name; it's driven by price. America has a population of 320 million; there are 265 million registered passenger cars. The driving population is huge. Every vehicle has four tyres; the average age of American cars is 11 years.
"People are not changing cars frequently. The quality of cars is better and roads too. These are great indicators for our business. We're in the replacement market...
"If you look at the tyre industry, chances are Singaporeans don't know what tyres they have. It's not a cheap item; it costs S$1,000 or more when you change tyres and you have no idea of the brand."
The US is Omni's largest market, comprising 65 per cent of sales. The emerging markets including the Middle East and Africa have a 15 per cent share.
He is keenly aware of the challenges if protectionist barriers arise in the US and Europe. Still, he is optimistic. "The world is a sensitive place if large countries start to look inwards and put barriers to business. But our expansion in America is not dependent on the political situation. It basically depends on the power of the American economy which is driven by people. The US (president) is there for four or eight years. You can't make business decisions based on the short-term and socio-political environment.
"On the contrary, in times like these you can expand and grow at a cheaper rate. Smaller companies get squeezed; you can buy them at a good price and build those businesses.
"We're looking at acquiring companies in Europe, Asia, wherever we can grow. My horizon is not two or four years. I'm looking at growing this business for a very long period of time. With that horizon, you plan and don't get upset by speed bumps."
He is convinced that technology and robotics will alter the supply chain in major ways. Already third-party distribution, which adds a layer of cost, is squeezed. Hence, his strategy to acquire distributors. "There is no global tyre distribution company; there are large regional distributors but no one who is global. And I don't see why not.
"We have to look at the next level of distribution which will be in tune with the times, technology driven, with a new retail concept. We're looking at consumer behaviour 10 to 15 years from now."
The challenge is that going to a workshop to have your car tyres changed is typically not something to look forward to. "It's a grudge purchase - o, do I have to do this today? We're looking at - what does the consumer want? Can we get something to you, instead of you coming to us? Can we take care of things so you don't have to do it? Hopefully in the next few months we'll announce some initiatives. One has to try everything. You only fail if you stop working."
Mr Sareen believes there are two qualities a good leader must have. One is to have an opinion. The second is to realise what things are not negotiable. "You don't mess about with certain things, whatever your core convictions. There are some things you should be willing to die for. This is the driving force of our business. When we collectively decide what we should do, we don't waver."
One of the non-negotiable aspects is the group's commitment to philanthropy and corporate social responsibility, initiatives which gained notice. One is Omni's partnership with the Breast Cancer Research Foundation. For every Radar tyre sold, Omni donates 25 US cents to the Foundation. To date, the campaign, started in 2011, has contributed over US$1 million, and funded over 21,000 hours of research towards preventing and curing breast cancer.
There is also the partnership between Omni and Timberland to launch the Timberland Tires. The latter represents an innovative rubber compound that makes it easier to recycle. Consumers are incentivised to bring their worn Omni tyres back to retailers. The tyres are recycled into crumb rubber and used in shoe outsoles by Timberland. Timberland Tires has won the WGSN Futures award in the category of sustainable design and is nominated for other awards as well.
And then there is the effort to be carbon neutral: Radar tyres are the world's first carbon neutral - or zero carbon - tyres. Between 2011 and 2012, the firm engaged Ernst & Young to assess the carbon footprint of Radar tyres. In response, the firm has engaged in offset activities that remove or reduce carbon dioxide, including the funding of reforestation programmes. The aim is eventually to become carbon negative.
Mr Sareen says the commitment to give back to the community has its roots in his father's admonition to give away 10 per cent of the children's allowances. "When I was young my father would give me 10 rupees (20 Singapore cents). My brother got 10 and my sister got 20 rupees. He told me - one rupee out of that you have to give to someone. This is the culture I grew up in.
"So from the beginning when we started to make money that's what we tried to do - give 10 per cent to charitable causes. I'm always told - when we start making this much money, that 10 per cent is a lot. But c'mon, with a high tide, all ships go up. If you are making more, you give more. What's the problem?" W