Perfection through problem-solving

For his indomitable spirit and tenacity, Yao was awarded on Tuesday (Jul 25) the Businessman of the Year – the highest accolade of the Singapore Business Awards.

Scale to survive

One of the most important lessons Yao learnt early on as an entrepreneur was the need for scale.

In 1980, he and a few Taiwanese business partners – who were also in the line of creating moulds for plastic components – founded Hi-P to take advantage of the booming manufacturing scene in Singapore.

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After three years of poor company performance, Yao, as managing director, was tasked with turning things around.

“When I entered the company, my methods were different. My first finding was that the company lacked economies of scale, which hurt its profit,” he said in Mandarin.

A challenge that the company faced – and still faces today – was hiring tooling design workers for the moulds Hi-P needed to produce plastic components.

As a self-professed “troubleshooting expert”, Yao decided to hire workers straight out of junior high school and give them the necessary training.

“(Although my) business partners felt that I was not really a hands-on person, that I did not have the experience – but ... I proved that this solution worked,” he said.

In fact, Hi-P has trained many talented individuals in Singapore and China who later became entrepreneurs in the mould tooling sector, he said. They have likened the company to the Whampoa Military Academy, which produced many distinguished military commanders during the Chinese Civil War.

This belief in on-the-job training seems to have emerged from Yao’s own vocational school background in technical drawing.

Even without a formal diploma, he went on to work at a petrochemical company, drawing up designs for oil tanks and heat exchangers. Later, he joined chemical company DuPont, where he refined his moulding design techniques. It was there that he honed his problem-solving skills as well.

“At the time, there was a foreign manager... who would ask me to follow him whenever we faced problems,” he recalled. “He would ask me to solve them and I would snap my fingers and give him an answer.”

Upon reflection, he realised that he had developed a “problem-solving module” in his mind. This involved a multi-step process of identifying the problem, finding the root causes of the issue before coming up with solutions, then executing those solutions and checking the results.

This approach continues to permeate the culture he has tried to instil in Hi-P.

For instance, in every meeting room, there is a “meeting culture” sign that lists five principles that employees are encouraged to follow. They include “get right at the issue” and “no finger-pointing”.

“When we want to discuss something, we need to be aware of what our subject (and) objectives (are),” Yao said. “I hope people do not beat around the bush to find excuses, so that we can improve our productivity.”

Innovation-driven growth

One of Yao’s proudest achievements is that, during the first 28 years of business, he grew the company’s revenue by 10 times every seven years.

However, the journey was not always smooth sailing for Hi-P.

The company was hit by a worldwide recession in the early 1980s, in its first seven years.

At the time, the company had a client that refused to pay for goods that were already made. Also, Hi-P’s original business partners pulled their investments.

Yao determined that he would return the partners whatever they had invested in the company, even though it was doing poorly. This led to Hi-P holding a net debt of about S$40,000.

To tide the company over, Hi-P focused its efforts on improving the quality of its injection moulds, which had a higher productivity and could be reused more times than those of its competitors. This resulted in savings on the cost of retooling new moulds, said Yao.

Electric component manufacturer Molex was so impressed with the quality of Hi-P’s moulds and its manufacturing capabilities that it purchased a S$140,000 stake in the company.

“This was a very important investment for us – it rejuvenated the company,” Yao said.

In addition, he reused the connector tool design that Hi-P had previously created to produce components for hard disk manufacturers.

By 1987, the company made S$1 million by using a consignment model to manufacture products in China and export them to Singapore.

When Yao first arrived in Singapore from Taiwan in 1979 – as a technical support manager with DuPont – he realised that there were many multinational corporations that were setting up manufacturing operations here, such as General Electric and Philips.

“I felt that these companies would surely need to make moulds, and the business environment was also quite good,” he said. These observations prompted him to start making plans to enter the market.

By manufacturing components in China, where labour costs are lower, and using higher-quality moulds that last longer, Hi-P was able to make larger profits.

The company’s drive to increase its scale continues to pay off today as well.

At its manufacturing facility in Singapore, Hi-P employs automated double-injection moulding machines that can both degate a component and use a machine vision system to ensure that the component is within specifications.

Degating refers to the removal of excess material from a moulded component, as part of the injection moulding process. This used to be done manually but became unsustainable, as the tolerance of these products can be as narrow as 30 microns – or the width of two white blood cells.

With these two steps automated and consolidated, a single operator can oversee the operations of two machines. Previously, three employees were needed.

However, Hi-P could not have purchased these machines if there was not enough demand to justify their hefty prices.

In search of talent

Although Hi-P has overcome challenges to enjoy robust growth, Yao believes that finding enough talent to build the company’s capacity remains its greatest difficulty.

Whether the intention was to grow the company from just six employees to 60, 600, or even 6,000, it has been a huge challenge to hire competent managers and team leaders, he said.

“I am someone who can handle multiple functions, but it’s too tough to run a one-man show,” he shared.

In the past, the company would hire fresh graduates in China, but they would not last very long, he recalled. Often, after just two years, they would resign in search of better opportunities.

About six years ago, he took it upon himself to revamp Hi-P’s human resource department. He also hired a manager who re-examined the company’s policies.

Part of the revamp included better pay packages for employees, as well as more structured training programmes to boost worker retention.

When Covid-19 struck, Yao appealed to his workers in China to remain at the factories under “closed-loop management”, in order to keep production lines open.

“We had to explain to them that if they stayed at home, they would lose their income. If they stayed at the production facilities, we could also keep them safe from Covid-19,” he said.

Hi-P has also placed greater emphasis on rewarding those who perform well.

In 2022, Yao set aside S$28 million to reward such employees. Business unit heads also stood to earn six-figure annual salaries.

“We are tough on them, but they are serious about their work. Everyone has a strong sense of ownership, and we have enhanced their ability to make more contributions,” he said.

While such rewards directly impact the company’s bottom line, the lack of incentives could also lead to a loss of manpower – which would cause the company’s performance to decline, Yao noted.

Overseas expansion

Since geopolitical concerns affect different parts of the supply chain, Hi-P has expanded its presence to other countries in South-east Asia.

The company will continue to adapt to serve customers wherever they go, Yao said.

For instance, in 2022, the company acquired Seamco, a British high-precision plastic component manufacturer with a presence in the Philippines. Hi-P has also established facilities in Vietnam and Thailand.

“The labour in these countries is cheaper, so their products can be exported more competitively. Some countries even enjoy tax benefits,” Yao said.

These moves are part of his plan to grow the company’s revenue to S$10 billion by 2029.

Although markets this year have been weaker, he hopes to drive an average annual growth of 40 per cent – this would bring Hi-P back to its pace of increasing its revenue by 10 times every seven years.

Half of this growth would be organic, while the other half would come from mergers and acquisitions.

Yao also remains committed to the belief that it is important to encourage every employee to find solutions to issues that they spot on the ground, especially with such a diverse staff base.

Every two weeks, he spends about two hours talking to Hi-P employees around the world over Webex or Zoom. He uses call translation app Bilingo to translate his speech in real-time into other languages, such as Thai and Tagalog, to engage and motivate staff.

“The goal is to broaden their thinking, to help them find effective solutions and generate more and more innovations,” he said.

He added that with the amount of focus the company has placed on efficiency, even its in-house accounting system has received a patent in Singapore.

Although talent remains difficult to come by, Yao appears to have solved another major issue for the company: succession.

In February, he handed over Hi-P’s reins to Lee Kong Ann, who was previously chief operating officer of Jabil Green Point, a unit of New York-listed manufacturing solutions provider Jabil.

However, Yao intends to continue working at the company over the next five to ten years, and possibly even see it through its plans to go public once again.

At 83, he remains healthy and active. He takes 40- to 50-minute strolls daily, covering about 5 km to 6 km around Queenstown and Dempsey each time.

He also swims regularly, and can hold his breath underwater for a stretch of over 25 m, or half the length of an Olympic-sized pool.

He believes that for individuals to succeed, they should set challenging goals for themselves and have self-discipline.

It is his habit to wear two fitness trackers on his wrists – one tracks his sleep, while the other gives him data on his blood pressure.

“If I don’t get enough sleep, I would be in deep trouble,” he quipped.

He also believes that individuals should adopt good values and take on jobs that bring them satisfaction.

For those who wish to follow in his footsteps, he hopes that they dream big and be ambitious.

“If we grew the company from six people to 600 and simply stopped there, we may not have survived,” he said, adding that although Hi-P has come a long way, it continues to pursue growth to this day.