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Taking to the high seas
FOR a people living on an island, Singaporeans don't venture out on the waters enough, says Arthur Tay, chairman and CEO of lifestyle and consumer goods conglomerate SUTL.
He's talking about leisure boating, as he looks out on the yachts docked at ONE° 15 Marina Sentosa Cove - part of the growing network of marinas worldwide run by the group's listed arm, SUTL Enterprise. But he's also talking business.
Mr Tay believes today's Singaporean entrepreneur needs to be thinking beyond Singapore's shores, from the get-go.
"If you focus on Singapore, it's so small, you'd be vulnerable. The market is big when you think beyond. The world is up for grabs," he says.
These are words backed by experience. From the 20-man ship chandelling and trading company that Mr Tay's late father founded in 1968, SUTL has grown into a diversified group with an annual turnover of S$800 million, a presence in 18 markets globally and a total headcount of 5,000.
Before it began owning and operating marinas, SUTL had built up a reputation distributing fast-moving consumer goods and operating lifestyle brands in Asia. Today, these range from global brands such as Evian, Tsingha and Elizabeth Arden to homegrown ones like Yeo's and Super, running outlets for Nike and KFC, and owning its own brands including wine labels Arthur's Reserve and Heritage Vale.
Venturing beyond Singapore's shores
And Mr Tay himself had an active hand in the company's various overseas business pursuits.
He recalls having had to eat humble pie to win the trust of global brands. "With KFC in Vietnam for example, at first, their boss said, 'You're not ready for this.' But then, later on, they asked, 'Are you ready to build it up at a loss for five years?' "
SUTL leapt at the opportunity. "Was I willing to sacrifice, take the loss? Yes, because, otherwise they would have given it to someone else," he says. That was in 1997. Today, SUTL runs 137 KFC stores in 37 locations across Vietnam.
For SUTL's consumer goods business, heading abroad has been about chasing larger sales volumes and being the first-movers in less mature markets. But there have been missteps too.
Bhutan, where Mr Tay was once Singapore's honorary consul, is one market that did not work out as well for SUTL. "I gave up in the end, there was not enough business. With a population that small, how many tubes of toothpaste or toothbrushes could they buy from me? We're a volume player for consumer goods."
They have thus focused on markets with large and urbanising populations across South-east Asia, South Asia and North Asia. "Take Mongolia, we've been there for 20 years. We were front-runners, when there were very few players. There are challenges, of course, but then you reap the rewards," says Mr Tay.
SUTL does work with and get support from government agencies such as Enterprise Singapore, but Mr Tay's view is that, as a business, any help is a bonus not a pre-requisite. "We have to make sure we are able to deliver on our own. Don't ask too much of the government - they have so many businesses to take care of, from hawkers to MNCs."
More brands and more vans
The group is growing in other ways too. "We are proud to maintain our old business. Consumer goods - it's the cash cow," says Mr Tay.
In Singapore alone, SUTL is expanding its fleet of vans from 38 to 60 as more international brands tap on their distribution channels to reach end-consumers. With growth, embracing technology has become a priority - whether to optimise manpower, make better use of its database of distribution partners or transform the customer experience.
For instance, Nike Jewel Changi Airport - which SUTL opened in February and is the largest Nike store in Southeast Asia and India - offers Singapore's first "Nike-by-You" service, allowing shoppers to customise their purchases.
As Mr Tay tells it, SUTL hadn't always been the sole operator of Nike-only stores here but outlasted competing Nike franchisees with its focus and ability to read local consumers well and thus add value to the brand. Last month, it acquired a majority stake in the company that operates Nike stores in Kuala Lumpur, Ipoh and Penang, making it the largest operator of Nike-only stores in both Singapore and Malaysia.
His goal, however, is to go beyond facilitating the success of other brands, to have SUTL build brands of its own. "Owning brands is the most exciting. If you don't own brands, you're just one of a dime a dozen," he says.
This can be tricky. "We want to make sure that we own brands that don't antagonise, but complement, our principals' brands. If they supply high-end, we'll supply the lower-end," says Mr Tay.
The group is considering whiskey brands as well as a brand in the natural organic foods space. "I'm always moving, because the world is changing. The next generation will, willingly, pay more for what is natural, organic. The natural organic foods market is very sexy."
Drawing the world's superyachts to Asia
Of SUTL's brands, ONE°15 Marina is by far the one he is most proud of. "It's a beautiful brand. It's the latitude location for Singapore - one degree and 15 minutes north of the equator," he says.
It has been over a decade since Mr Tay - convinced of latent demand for quality berths in Asia - faced down sceptics over Singapore's need for a second marina to put in a bid for the waterfront site and then invested over S$70 million to get ONE°15 Marina Sentosa Cove up and running.
The club has since picked up a string of boating awards, hosted international boating and water-sports events, and recently opened its own customs clearance facility. SUTL as a group, meanwhile, built up expertise in providing marina consultancy and development and luxury yacht chartering services.
These led the group to sell off the flailing IT peripherals business under its mainboard-listed Achieva in 2015, and inject its marina and yacht chartering businesses into the renamed listed entity, SUTL Enterprise.
SUTL Enterprise now holds management contracts for nine marinas across Indonesia, Malaysia, Thailand, China and the US - some still under construction. Apart from the one at Sentosa Cove, it holds a majority stake in the marinas at Puteri Harbour and Phuket, while SUTL privately owns ONE°15 Marina Brooklyn New York, USA.
Mr Tay's optimism over the growth potential of SUTL's marina business is not only due to Asia's growing affluence. He sees Asia as the new playground for the superyachts of the world, and hence dreams of stringing together a belt of quality ONE°15 marinas that will connect the most alluring of Asia's coasts and draw the who's who of the world's boating community to Asia.
"We're selectively looking for strategic marinas, good marinas to acquire. Our market cap as a listed entity is not big, but we have many models of fund-raising open to us, to fast-track joint ventures and buy," says Mr Tay.
"Where will boats want to land? Beautiful areas, so Phuket, Maldives, Colombo, Adaman, Penang . . . all the way to Japan. And we understand what boats need when they come in - safety, efficiency, comfort, ease."
Asia may be the focus, but he is eyeing marinas in Europe and America too. "I know which ones want to sell, I also know which ones are overpriced. It's shopping time."
That SUTL has built up the ONE°15 brand globally with relative speed was no surprise to OCBC Bank's Lim Ek Meng, managing director, business head, Enterprise Banking Industries, Global Commercial Banking.
"With Mr Tay's progressive and broad mindset, he is able to source for opportunities and capitalise on them," Mr Lim said. "SUTL's consumer goods and lifestyle retail businesses will similarly continue to see added breadth and depth, and we look forward to continue supporting their expansion at home as well as overseas."
To Mr Tay, being a businessman is his gift. "I love business, I really love to build. You ask me to do other things, I'm not very good. But I will continue building, for as long as I can."
Making a difference via entrepreneurship
That passion has also led him to mentor groups of young entrepreneurs at the local universities. Where he thinks these young people could really make a difference via entrepreneurship, over the next few decades, is to the environment.
"We've got to tackle the problems of waste, of climate change . . . it's a very sick world. I go out to sea, I can't see corals anymore. Fishermen have to go further out to find any fish," he says. ONE°15 itself has embarked on various eco-initiatives, starting a coral garden at its Sentosa Cove marina to restore the marine biodiversity in Singapore's waters and educating recreational boaters on how to minimise the impact of their activities on marine life.
Undaunted by the looming economic downturn, Mr Tay says, "You must be careful, of course. But there are ways to manage a business in a downturn: cost management, don't hire, cut salaries - even my own. And understanding the need to budget for rainy days, so that your company has holding power."
Reflecting on his many years steering the family business, Mr Tay names succession planning as one challenge that lies before him now - grooming a next generation of leaders to take the helm and beat the "third-generation curse" that some say regularly befalls family businesses.
"It's been a long journey of challenges, excitement . . . but one day, we're all going to go. You can't have 51 years of SUTL gone just because you think you're going to be around forever," he says.