Lee Seng Shoy_SOE Awards 2013

155SIMPLE PEOPLE WITH EXTRAORDINARY FORESIGHT

HongGuan Logo.pdf 1 13/6/13 10:32 AM

Lee Seng ShoyManaging Director

Spirit of Enterprise Honouree 2013

Website

www.pioneertackle.com

EstablishedYear 1942

Industry

Fishing Equipment

Hong Guan (Tackle) Pte Ltd

154

page

157SIMPLE PEOPLE WITH EXTRAORDINARY FORESIGHT156 GROWING A VISION WITH BUSINESS LUMINARIES OF SINGAPORE

“It all started with my great grandfather in

1942 as a general trader of ropes, fishing nets and

hardware. We also did ship chandelling,

supplying even the simple things

needed on vessels like soap bars and

shampoo.”

Background

Hong Guan (Tackle) Pte. Ltd was established in 1942 distributing ropes, hardware and fishing nets. The company started as a modest retailer and distributor operating from a shop in Beach Road prior to adding the fishing tackle retail business in the 1970s. ‘Pioneer Tackle’, the company’s proprietary brand is well known amongst fishing enthusiasts in South East Asia for it’s high quality range of fishing equipment. Pioneer Tackle, with its core business in design & product development, export, distribution and wholesaler of fishing tackle and equipment was launched in 1997. With a dedicated design team and tests products in-house, Pioneer Tackle breaks new grounds in producing robust and innovative products. Fueled by the strength of the designs, the brand has grown rapidly over the last fifteen years and is now sold in 25 countries and counting across South East Asian region.

The headquarter is located in Singapore with its own subsidiaries in Malaysia, Thailand and Indonesia cruising towards the South East Asian market leader in fishing tackle distribution.

A very pragmatic and reliable businessman, Lee Seng Shoy, a fourth generation businessman, believes in doing business honestly and sincerely. He has made Hong Guan (Tackle) into one of the premier fishing tackle distributors in Southeast Asia with overseas presence in other regions and very determined to ensure his company can contribute to be a shining example of SME in Singapore.

Historic beginning

Hong Guan (Tackle) had over three generations of family history when Lee Seng Shoy took over and became the Managing Director of Hong Guan (Tackle) Pte Ltd in 1997. The brains behind Pioneer Tackle, Seng Shoy launched the brand at the age of 23 years old. “It all started with my great grandfather in 1942 as a general trader of ropes, fishing nets and hardware. We also did ship chandling, supplying even the simple things needed on vessels like soap bars and shampoo. The business was inherited first by my grandfather before my father took over the helm in 1977 upon my grandfather’s

158 159GROWING A VISION WITH BUSINESS LUMINARIES OF SINGAPORE SIMPLE PEOPLE WITH EXTRAORDINARY FORESIGHT

demise. Hong Guan (Tackle) had accomplished a steady business and provided Seng Shoy’s father with the means to provide him a comfortable middle class upbringing. They were not rich but neither were they financially strained.

Over the next three decades, Hong Guan (Tackle) traded in general ropes and hardware fishing nets with the bulk of their sales going to Indonesia. However, diplomatic tensions in the 1970s between Singapore and Indonesia forced Seng Shoy’s family to juggle around with their operation. Deciding to capitalize on the market of hobbyist fishing in Singapore, they began to also supply fishing tackle - the gear needed by weekend fishermen.

Innate entrepreneurial talent

The thought of being a businessman has always been the deepest aspiration of Seng Shoy. Even during his childhood Seng Shoy had already felt the calling to become an entrepreneur. “I can clearly remember back at the age of 14, I definitely wanted to become a ‘businessman’, which was more recognized idiom at that time, not ‘entrepreneur’. I can’t really explain why. I did not have any specific trade in mind as I did not have any idea but there was this drive that says I want to grow up being a businessman and make lots of money. At that tender age, we may be more innocent and have wrong impression that businessman can make lots of money. But all I know was I want to live in a big house and drive big cars. Those were the thoughts.”

In the late 90s a lot of people believed that if you didn’t have a paper you were doomed. I didn’t want people to think that I joined my family business just because I wasn’t educated and had no options.” Seng Shoy had his education at Anglo Chinese Primary School (ACPS), Anglo Chinese School (ACS), Ngee Ann Polytechnic, Distance Degree in Bachelor of Business, Curtin University, Western Australia.

The fourth generation think-tank

When Seng Shoy finished his National Service in November 1996, he had originally planned to study overseas but the Asian Financial Crisis had made the prospect too big a financial strain for his parents. Instead, Seng Shoy joined the family business on his accord and concurrently signed up for distance degree upon knowing that his

Deep inside me, I can always remember back clearly at the

age of 14, definitely I wanted to be a

businessman, which is more known as a businessman at

that time, not as an entrepreneur. I can’t

really explain why.


“I said to my auntie and my dad that we

have to get out of Singapore. Firstly, it’s

too small a market and secondly, we

can’t do ropes and nets. We must stay

focus on one core range of products. And so we chose

fishing tackle.”

parents do not have the means to further support his overseas studies. At that time, the store was still doing modest revenue and fishing tackle made up most of their inventory and sales. Evaluating the structure of the business, the innate entrepreneurial attribute in Seng Shoy had him envisioned bigger prospects for the company. He had no ambition to continue running the retailer in a status quo collecting a small stream of profit. Instead, he knew he could energize the business by streamlining their inventory and expanding internationally. “I said to my auntie and my dad that we have to get out of Singapore. Firstly, it’s too small a market and secondly, we can’t do ropes and nets. We must stay focus on one core range of products. We can’t go around like selling or trading almost anything and everything nowadays. I shared with my dad that we need to stay very focused and professional in a specific trade if we want to survive. And so we chose to focus on fishing tackle.”

Seng Shoy began looking into setting up distribution networks of the brands they carried in neighbouring countries, pushing the reach of their sales. “South East Asia was the most pragmatic place to expand. Distances are short which means traveling costs are low and more or less everybody shares a similar cultural background which allows us to maneuver a little bit easier.” Seng Shoy expanded their network first into Malaysia and then into Thailand, making new contacts and

securing business around the region. “I cold called every country I went to. But before I embarked into the country of my destination, I went to the IE Singapore library and open up the Yellow Pages and look up the importers and wholesalers. I took everybody’s address, fax them and ask to visit them.”

The business picked up and hungry for more, Seng Shoy has decided to take things further. Being fluent in Mandarin, he saw an opportunity to act as middleman between his contacts with distributors in South East Asia and manufacturers in China. Seng Shoy tapped on existing orders from customers, loading with additional 10-15% of its total orders with remaining quantities to be sold to other markets like Malaysia and Thailand.

“That means I had an edge. I borrowed their orders of large volumes and sell the extra pieces in Thailand or Malaysia for a profit. I was leveraging on someone else’s volume.” Though Seng Shoy’s expansionist was showing results, it was putting him increasingly at odds with his father, who wished to run the business more conservatively. “There were a lot of fights and it strained the father-son relationship at times. On my grandfather’s deathbed my father was asked to take care of his extended family. His promised was that no matter how, he would hang on to make sure that the business survives and that his siblings could live from it. He was a very filial son.”


His father’s promise meant that part of the company’s fixed expenses went to supporting members of the extended family. The drain made it hard for Seng Shoy to contain operational costs so he could have the net profit needed to grow the business. “I don’t believe in sharing the last dollar which is not going to be sufficient to share amongst all of us. Leave me alone and let me find a thousand, ten thousand or even a hundred thousand. If we have to split that at least the amount becomes a little more substantial and we’ll all be more comfortable. You can imagine the sort of resistance.”

Branding milestone

The idea to start his own line of fishing equipment came in 2001 from what Seng Shoy describes as a big wake up call. It was a bold idea which promised long term pay offs if successful. Not even his larger competitors had really tried such a thing. “In the early 2000, no one cared about branding. Everyone was more about trading. They bought and sold with an attitude of ‘let’s make money today, forget about tomorrow’.

Seng Shoy’s vision was prompted when his supplier of a certain brand of fishing line told him after four years that they were taking back the brand and will give it to a distributor in Malaysia. “Suddenly, it triggered in me that if I sell brands for others then I will always be at their mercy and my immediate neighbours will be bigger than me. If I could move 50,000 units, he could move 300,000. It was very easy for them to gobble my business and that’s apparently what happened. So I thought, if I had my own brand, nobody could dictate how, when or what I do with it. The world becomes my stage. In fact, if I get volume going, factories would be after me. It’s simple, if you have volume and you’re a good paymaster everyone will want to work with you.”

The more Seng Shoy thought about the idea, the more determined he became. He began researching the market and did the groundwork needed to set things in motion. However, there was resistance at home, Seng Shoy’s father wasn’t convinced. “He was concerned because at that time, going regional with your brand was not really heard of. He argued that if so many competitors had not dared to do this, what made me think I could succeed? He thought I was young and just trying to show off. My thinking was otherwise if they don’t see opportunities then I have to grab them. If I see the way they see I’m going to be a step or two behind them. Not even on the same level. I had to jump into the lead.”

It’s simple, if you have volume and you’re a good paymaster everyone will want to work with you.”

“My thinking was otherwise if they don’t see opportunities then I have to grab them. I had to jump into the lead.”


Seng Shoy went ahead with the brand and Pioneer Tackle was launched. The operation started small. His competitors questioned what Seng Shoy doing trying to build his own brand when everyone else was doing rapid business distributing multiple brands from other suppliers. “I had a very strong competitor then telling straight in my face that we’re such a big company and we wouldn’t even do that, let alone you. Frankly speaking, that hurt. But not negatively because it made me push myself all the more.”

By starting his own brand, Seng Shoy was making a gamble that could have cost him his business, his reputation and the respect of his father. But failure was not an option he dared to consider. “There was no Plan B. If there’s a Plan B in someone’s business plan then he or she is going to fail because they have told themselves that it’s alright if they fail. They’ve allowed themselves to take the easy road. Forget it. You tell yourself that you’re locked in battle till the end and then you fight till death. There is no exit clauses, no exit plans.”

Seng Shoy went full steam ahead with the brand, using both the Beach Road shop front and his regional distribution network to make his products available to consumers. Part of Seng Shoy’s desire came from the fact that he had always wanted to do things his way. “Deep inside me I knew I wanted to run my own business because

“There was no Plan B. If there’s a Plan

B in someone’s business plan then he or she is going

to fail because they have told

themselves that it’s alright if they fail.”

“If you think like everybody else you’ll have a business like everybody else’s.”

“A lot of people say we should diversify, but if there’s room to improve within your trade, why touch on something unfamiliar?”

“Deep inside me I knew I wanted

to run my own business because I’m not someone who can conform

and do things without questioning

or knowing why.”

I’m not someone who can conform and do things without questioning or knowing why.” His headstrong determination paid off and within two years Pioneer Tackle had a steady stream of loyal customers. His father started to change his mind about Seng Shoy’s business strategy. “In 2002 he started to believe in what I was saying and started to see where I was going. He knew then that I wasn’t just doing it for the purposes of show. It took five years to prove myself.”

By designing the products in-house as compared to their competitors who sold existing brands or did Original Equipment Manufacturing (OEM), Seng Shoy was putting a differentiated product into the market that gave him an advantage over the competition. “If you think like everybody else you’ll have a business like everybody else’s.”

Quantum leap

Remaining dedicated to a core product has allowed Pioneer Tackle to maintain quality. “A lot of people say we should diversify but if there’s room to improve within your trade, why touch on something unfamiliar? Why try to be a jack of all trades in today’s market when you already know what you are doing.”

Over the next decade sales continue to grow. Despite the global


economic challenges of SARS and the Great Financial Crisis, business remained steady. By 2003 Seng Shoy was ready to set up offices in Indonesia and Malaysia, something he describes as both a quantum leap for the company and in hindsight, the tipping point of his business. “That was a milestone despite the challenges. That was when I felt like we were way ahead of our competitors who a few years before had been in front of us. Our competitors then started to follow what we were doing. I took that as a compliment.”

Staying in a niche market helped shelter Seng Shoy’s business from the worst of the downturn. “As I think about it, we were like a small patch of grass beneath the big trees. No matter how the storms went it was the trees and their branches that would be shaken and blown but the grass remained unaffected.”

Motivational fears

The naivety of Seng Shoy’s youth in implementing a bold strategy was his greatest asset. “Up until 2005 or so I didn’t know so much about fears because I was too young to know anything much. All I knew was that if I got sales and sold above cost and contain my expenses then I had profit, simple as that. I just had to get up and go for it. That was my thinking. It was only in the last seven years that I started to really look at the financial statements and realized that things could be a little scary. Debt ceiling ratios and liquidity ratios are the things that I feel uptight about. I don’t have such deep pockets to pile our inventories or support what I think I should do to run the business.”

Challenges

The biggest challenges that Seng Shoy has faced in running an SME over the last ten years include human resources and keeping the costs of administration within the budget of what his company, as a low unit value vendor, can sustain. The ever-rising cost of doing business in Singapore is putting him in a difficult position of having to consider outside options for parts of the operation. Recently he moved the company’s logistics operations to Iskandar, Malaysia, following a 300% jump in the cost of warehouse rental and the cost of worker permits jumped from $50 to $440. While Seng Shoy would prefer to keep as much of the operation as possible in Singapore, he says that in business there will always be

“I didn’t know so much about fears because I was too

young to know anything much. All

I knew was that if I got sales and sold above cost and contain my

expenses then I had profit, simple as

that.”


certain things in the macro environment that are out of an individual’s control and that the entrepreneurs who survive are the ones who can adapt to changes. “Firstly, financial resources will always be one of the challenges that most companies will face followed by penetration of the marketplace.

Significant achievements

The definition of achievement may be equivalent to success or being successful, as defined by most people. At 39 years old, Seng Shoy has many years of business ahead of him and is reluctant to rest on the laurels of past achievements. “I have never dared to claim that I’m successful. Instead I prefer to think that I have done more rights than wrongs. If I can look back and say we’re doing better than last year that means I’m moving in the right direction and I try to just enjoy that feeling. I prefer to think that success is a journey and not the destination. There were proud moments that I liked to think about, but I would not take that as my final destination but rather a very fruitful journey”.

One of the break points of Seng Shoy was his determination to set up the subsidiary offices in the region. “We hardly knew what to expect when we started in Malaysia and Indonesia both in 2003 despite

very limited financial and human resources. Selling to a customer and getting payment was a different ballgame from going into the respective market yourself. The previous customers actually ended up being our competitors. We have to manage our own sales team overseas, so it’s a different set of challenges. But I would like to take that as probably one of our most significant achievement because the company is still here today despite the challenges.

Seng Shoy attributes his achievements in international business to always keeping an eye open for opportunities during his travels. “When I travel, I take all that I encounter as a learning process. For example, when I travel around the South East Asia region and see people moving a little bit slower, I recognize that as an edge to me. In some other countries, due to high labour costs I realized that if I serve customers better they will surely cushion five or 10% more in terms of prices. When I travel, I tend not to just watch my trade but the whole standard of living and the ‘pulse’ of the market as a gauge to business.”

The next milestone

There is no doubt that Seng Shoy’s aspiration for the company is to be recognized as the biggest fishing tackle distributor in the Southeast

“I have never dared to claim that I’m

successful. Instead I prefer to think that

I have done more rights than wrongs”.

“In five years, we would like to look at doubling our revenue from today and I don’t think we are very far away from that”.


Asia region. “In the next five years, briefly and broadly, we will continue to expand in depth existing markets that we are covering now and/or a combination of new emerging markets that we have been studying or targeting. In five years, we would like to look at doubling our revenue from today and I don’t think we are very far away from that”.

So that will be the vision. Seng Shoy believes that forging ahead by setting up his own subsidiaries and joint venture overseas have allowed him to be where he is today. “The simple reason being is that we are in a better control of how we want the sales channel to be formed and how we want our products to reach to the end users through our retailers. As a wholesaler, it allows better control of how we want our products to be marketed in terms of branding and positioning as well as price point.

Seng Shoy is also currently doing the groundwork on his first move into the Chinese distribution market, a joint venture with a manufacturer he had in years of affiliation. China is a market he had a cautious eye on for over 11 years. “I stayed in Shanghai in 2002 for more than a year studying procurement because we were aggressively working on our brand. Even then I was thinking of business opportunities but I realized doing business in China is not as simple as one thinks. It’s too tough to do it alone. The condition is that they will be putting up a majority stake in the venture but we will be the ones leading it. I don’t mind having to work a bit harder for slightly less profit because with that huge a market we’re getting access to it’s a win/win situation for both parties.”

Though he’s become more cautious with age, Seng Shoy’s determination to realize his vision is as strong as ever. “Impossible is actually ‘I-am-possible.’ If I can break even and survive in China, then I can survive business in any corner of the world. Seng Shoy has an unlikely secret to working hard. “I tend to be hard working because I’m lazy. I want to relax in the evening and do nothing so I make it a point to get into the office early in the morning and have everything I can and done by six o’clock so I can get to the gym and be home by eight. I work as hard as I can until closing instead of dilly-dallying. Except for entertaining clients, I never step out of the office for lunch. I don’t believe in wasting time.”

“Even then I was thinking of business opportunities but I realized doing business in China is not as simple as one thinks. It’s too tough to do it alone.”


Entrepreneurship corner

In the fast changing world of business Seng Shoy cautions all entrepreneurs to always remember the importance of keeping pace. “There’s no room for complacency. While you are feeling at ease you must always think of the threats ahead. If you take a break today it might be okay now but what about tomorrow? Why give your competitors an opportunity? Go the extra mile because the extra mile has no competition. One has to be very driven, able to persevere and willing to work really, really hard. Because some people would describe it saying, “Oh, business is like running a marathon.” Actually, I don’t even agree to this statement for a simple reason. Even marathon has an endpoint, be it 21 or 42 kilometres or even 100 kilometres. At the end of it, that is still an endpoint. Business has no endpoint. You just have to keep going. Because the day you begin to slow down is the day you actually retreat. Today, if you stand still, actually, you’re already moving backwards. So the key is to be able to pace yourself as well and to move at a pace that you are comfortable. Be patient in an impatient way. You have to be impatient in a way that you want to get things done and it must be done, but patient in a way that you must always look at the big picture. And then it has to be a vision of, say, 30 years from now. Then you’ll break it up into very small pieces or small milestones – 10 years from now, 5 years, 3 years, next year. And then from there, we move up step by step. So a lot of discipline, a lot of determination, and willing to work really hard.

“People say that knowledge is power but knowledge without action is akin to a walking dictionary. Be hard on yourself and life will be easy on you. Keep your eyes wide open, your feet straight and your ears to the ground. Be very sincere and never compromise in terms of integrity. Last but not least, have fun on the journey of entrepreneurship.

In addition to making Seng Shoy a wiser person is the journey of entrepreneurship has taught him to be more modest. He draws inspiration from heroes such as local entrepreneurs like Charles and Keith Wong of Charles & Keith, who have made fortunes from simple beginnings. “I’ve tried to learn everything from a positive side and the beauty is that I’ve gotten to meet a lot of nice people. There are many businessmen out there that are bigger than me, but they are so nice and so humble, so who am I to be flaunting what I have? It only makes me want to be more humble.” Happiness to Seng Shoy is being able to be there for his loved ones, something fills him with a sense of gratitude.

“There’s no room for complacency.

People say that knowledge is power

but knowledge without action is akin to a walking

dictionary.”

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Lee Seng Shoy_SOE Awards 2013