Capable of standing the test of time

Roundtable participants:

Moderator: Vivien Shiao, editor of The SME Magazine, The Business Times

Q1: Could you share on your company's core business and your latest developments?

Sam Chee Wah: Feinmetall Singapore is a German-Singapore joint venture precision engineering SME that specialises in the design and manufacturing of wafer probe cards for semiconductor wafer tests. Feinmetall's flagship product, the vertical probe card ViProbe, serves as a hardware to bridge wafer testing between tester and wafer. It is commonly used in wafer fab plant or wafer sort of operation in semiconductor industries. Unlike other wafer probe card, ViProbe employs a proprietary buckling technology that enables users to replace and repair the damaged beam by themselves. This is never possible with our competitor's product.

The business goals of Feinmetall Singapore are to design, manufacture and repair wafer probe card to support the semiconductor industries at a competitive price, acceptable delivery cycle time with 24 x 7 service support. Established in 2007, the company has grown from a five-man team to 60 employees today.

Anil Jhunjhnuwala: Our core business is the trading of timber, agro, yarns and pharma where 60 per cent of the business is related to trading of timber and timber products. The latest development over the past several years has been to go upstream into production or value addition in the timber industry where we have two of our own factories in Vietnam and Myanmar and Job Work in three factories in Surabaya.

We have also opened offices where it would support our procurement or sales of our core products. For example, we opened an Australia office last year to lend support to our procurement of agro produce. We have also realised that we need to go further away from our normal timber source of Sarawak thus we started sourcing from both Surinam and Liberia as the quota for timber export from Sarawak has been drastically reduced over the last five years.

GS Sareen: Omni United is in the automobile tyre designing, manufacturing and global distribution business. The company has a global manufacturing footprint and distribution network in over 80 countries worldwide. The latest development has been Omni's domestic distribution business that we have started in the United States by acquiring two companies over the last two years.

Q2: How has your company future-proofed itself to stay relevant all these years?

Sam Chee Wah: During the early startup phase, we encountered various challenges like extensive manual processes, limited production capacity and tight labour market. We are glad to have a partner like A*Star (Agency for Science, Technology and Research) to help us overcome the challenges.

This year, we adopted several technologies under A*Star Model Factory initiative in our new S$6 million, 6,700 sq ft digital manufacturing facility to stay relevant and remain competitive.

Anil Jhunjhnuwala: We have not rested on our past performances. We have always looked at new opportunities to grow all the time because if we do not grow we will regress. We have always opened new offices and closed offices which were no longer relevant. We keep reinventing the wheel as trade flows will keep changing. We will look for new sources and new markets all the time as what you have today might not be there tomorrow.

Our competitors are always targeting us and our business thus we always need to be on top of our game. We have also been fair in our business dealings so our customers and vendors always like to deal with us.

GS Sareen: The future belongs to those giving the consumer direct access to the products. To achieve this Omni United has started acquiring distribution companies. The first wave of acquisitions is being accomplished in the USA, where Omni currently has over 18 distribution centres and hopes to take this to 26 by the end of 2017. By having its own distribution centres Omni need not depend on the importers/distributors, thus future-proofing its business against competition. Omni plans to acquire distribution businesses all over the world.

Q3: How has winning the E50 Awards several years in a row benefited your business?

Sam Chee Wah: Winning the E50 Awards several years in a row has provided us the platform to work with research institutes to incorporate innovative ingredients in our products or services. In doing so, we continue to create value in specific products or services to achieve a higher revenue, which in turn provides a higher return of investment and indirectly, creates high value jobs for the people. This chain effect is scalable with a mindset that consistently embraces innovation.

Through the business networking platform with fellow award winners, we discovered our niche market position as a full turnkey solution service provider.

Anil Jhunjhnuwala: I believe winning the first few times has benefited us in terms of recognition by the Singapore banking community and local business with whom we interact. Since the majority of our business partners are overseas, most of them do not know about the E50 Awards. But we use it to our advantage by making them understand that it is the most prestigious award for SMEs in Singapore and it is not easy at all to win.

Another benefit of winning this award is attracting great talent as everyone wants to be associated with a company which is recognised on a regular basis.

GS Sareen: E50 is a recognition of the fact that the company is trending in the right direction. When the panel of judges confers the E50 on a company, it shows that not just the management but others also validate its plans.

Q4: What are some of the challenges that SMEs face in today's business climate?

Sam Chee Wah: Innovation is creating new economic trends which have significant impact on SMEs in today's business climate. Many traditional jobs such as routine work operations will soon be replaced by robotic and automated solutions.

Today, innovation is no longer a "nice to have" feature. Instead it is a survival tool for any company to move forward. Companies must be able to consistently create value in their products, services and people to stay afloat. If you need to beat your competition, then investing in R&D, automation and digitisation is the only path to survival.

Anil Jhunjhnuwala: The main challenge SMEs face today is the digital disruption that is taking place in all walks of life and it is going to be more and more disruptive. The other challenge is the uncertainty of the business environment. The cycles are much shorter. Our own revenue changes drastically from one quarter to the next. Finally, there is competition as there is too much liquidity in the market and everyone is chasing the same business which leads to high risks and a low margin environment.

GS Sareen: Scaling up and having the finances to do so are some of the major challenges that SMEs face today. Some businesses feel that expanding can put excessive pressure on operations which can lead to declining levels of both quality and customer satisfaction. For others, having existing IT systems that cannot cope with the growing or more complex business models is a challenge.

Apart from the IT and operational constraints, expanding to newer markets can also pose a challenge for some as they may not have sufficient knowledge of the foreign market and may require investment in human resources. Irrespective of any of these scale-up challenges, all require a significant amount of finances and procuring these finances can be a significant challenge.

Q5: What advice do you have for young entrepreneurs of today?

Sam Chee Wah: As the future of manufacturing will be driven by disruptive technologies, it is crucial for young entrepreneurs to keep up with global innovation trends and remain competitive. To that end, public-private partnerships remain an important platform.

In my view, young entrepreneurs should be bold enough to play a key role in promoting innovation. If young entrepreneurs can set aside their fears and take the first step towards innovation through technology adoption, they will inspire fellow startup entrepreneurs to start thinking about innovation seriously and follow in their footsteps.

Anil Jhunjhnuwala: Be humble and stay grounded. Save money for rainy days. Try to advise your colleagues to be loyal to the company and have long-term views instead of job-hopping frequently as it causes too much disruption to the business. This can only happen if you treat everyone in the organisation like family. Continuity is very important for success but that does not mean that you can be taken for a ride by your best performer. No one is bigger than the company. Conduct your business ethically and make sure you adhere to your commitments even when you are losing money. It can go a long way.

GS Sareen: This is the age of opportunity. Today everyone has the same power which was at one time reserved for the kings and the Pharaohs! Today if one has an idea it can reach the world in a flash. This is a very special power that technology provides. This is the time to break all boundaries of conventional businesses, which means one does not need to prove one's origins. Decoupling from the traditional businesses is happening faster than it appears and businesses of yesteryear will become irrelevant. Take the plunge, dream big and follow your instincts.

Q6: What are some plans you have for your company and what do you foresee in the business landscape going forward?

Sam Chee Wah: As a long-time partner of A*Star, we will certainly continue to deepen our collaboration in the area of smart technology adoption and material science research. Smart technology adoption will bring Feinmetall Smart Factory to advanced digitisation, whereas material science development will enhance our competitive advantage in technology breakthrough. We will continue to embrace innovation to further create high value jobs, as well as provide high value products and high value services for our customers.

Anil Jhunjhnuwala: The next generation has entered the business. My elder son joined the company two years back and the younger one will join from January 2018. I would like to sit down with both of them and draw up plans for future growth based on what we are currently handling and also on their interests. There has to be a common goal otherwise the company will suffer. Together with my top management team we will have to guide them to gradually form their own management team in the coming years. We hope to enter some sort of hospitality business which has been in our family for a long time. The business landscape is never going to get easier. With ample liquidity in the market, low interest environment and shorter business cycle, things are always going to be trickier.

GS Sareen: Omni United has very aggressive expansion plans over the next five years. Investments into acquiring businesses and building up the technology needed to efficiently run these businesses will be the key focus. The company will grow at a rate of 30 per cent year on year for the next five years.