By Francis Chan

WHAT a difference eight years make.

In 2001, Mr Eddie Chng was an ousted chief executive, left out in the cold by chipmaker Serial System, a company he had co-founded with a Navy buddy.

Today, the 47-year-old helms a new ship in the form of Catalist-listed diversified investment firm Equation Corp, where he has been CEO since 2004.

Equation, the former Heshe Holdings, has registered losses of late - except in 2007. But Mr Chng believes he has a good thing going and that the tide is beginning to turn for the firm.

He is particularly optimistic about an anti-theft device for electronic gadgets he invented.

'I believe that the next five years will be when we can finally enjoy the fruits of my labour - barring any W-shaped recovery,' he said.

Since he took over at Equation, reportedly with an injection of almost $10 million of his own cash, he has been hard at work transforming the firm.

'I started to rationalise the assets of the company and then spent the first two years divesting away the business but at the same time also setting up new businesses, because I don't know anything about managing an apparel and property business,' said Mr Chng. 'If I can't grow it, then there's no point in hanging on to assets which I don't know how to generate income from.'

Heshe was primarily in the apparel, property and food and beverage sectors, but under Mr Chng and its new name, the firm now runs an even wider range of businesses.

These include construction materials, recycling, energy audit and electronics, but getting there was no easy task.

'Whether it was in '06, when we were starting our German operations, trading electronics and digital products, or in '07 when we went into the construction materials business and energy audit, it was a real challenge divesting and starting those new businesses,' he said.

'And then unfortunately, we were hit by this major financial crisis.'

Despite the crisis, Mr Chng continued to explore and invest in new areas to position the company for the upturn.

'For example, I still believe that the recycling business will return once the economy starts to grow again. The technology business will also recover soon and of course (there are) other sunrise businesses such as energy audit, so you can see during that period I really invested to make sure I generate income moving forward.'

Much of the criticism of Mr Chng when he resigned from Serial System, was that he was too keen on plunging into the unknown, but that remains a trait he makes no apologies for.

'If you're not willing to change in today's business environment, you'll end up being mediocre and I'm a risk-taker. Ten years ago and 10 years on, I still have the blood of an entrepreneur... but the lesson I learnt from the past is that (I) should have also sought better advice,' he quipped.

Regarded by many in the semiconductor sector as a self-made technopreneur, it is no surprise that one of Mr Chng's favourite projects is something he invented in a research laboratory.

Working with Equation's research engineers and technicians, he developed and launched a first-of-its-kind anti-theft system through DiSa Digital Safety (DiSa), Equation's German-based associate.

Mr Chng said the DiSa system is an end-to-end solution which encrypts a security code at the point of manufacturing onto small electronic devices such as memory cards, mobile phones and MP3 players. A coded device would not work unless it is 'decoded' at point-of-sale after the customer pays for it.

'Currently, retailers use huge plastic boxes to encase small electronic items to deter theft and the process is also very labour intensive and expensive, especially in Europe,' he said.

'We believe the huge cost savings that are brought about by using the DiSa system would be a key attraction for many major retailers in Germany, and possibly later, in the rest of Europe, to adopt this system in all their stores.'

The business model for the DiSa system works like this: First, manufacturers of electronic devices are charged for every device that is encoded at source.

Retailers, on the other hand, will be charged for the decoding at the point-of-sale to unlock the device.

The encoding device will cost between 50 euro cents (S$1) and five euros, depending on the type of device. While the unlocking process would cost retailers a one-time fee of about 200 euros.

Responses from trials by major retailers in Europe, like MediMax in Germany, have been positive and Mr Chng expects the DiSa system to be implemented with some retailers by next year.

Mr Chng said the system, which has already won two awards in Germany for innovation, will be key to Equation's growth, although he declined to offer estimates of the potential profits.

But to give an idea of the potential application of his invention on a global scale, Mr Chng said more than two billion SD memory cards and four billion USB memory sticks are sold globally.

'What we are sitting on here is many billion dollars worth of retail business and that is exciting to me,' said Mr Chng.

'I don't have to get down to manufacturing to compete, but (with the DiSa system) I get myself involved in a very, very important perimeter in the entire retail sector... so I think the DiSa business can be a very big business.'

He added that the system may also find its way to the United States soon as initial discussions with retail giant Wal-Mart last week were positive.

'So it's a matter of time that you will see the system in the US and maybe even in Asia, once we begin to proliferate the system in about two years' time.'

Banking on sunrise industries

• What is your greatest ambition?

A small, tiny, kacang puteh (peanuts) company like us has to compete based on intellectual property and innovations.

We must be able to create our own niche, value and intellectual property, so the motivation I have for my people is that we have to innovate and think big.

What we have done over the last five years was to position Equation for growth in the next five years with our new business, especially in sunrise industries.

We also want to capitalise on our construction material business...we got involved in it because we think infrastructure build-up in Singapore is going to be enormous over the next 10 years if our population is to grow to seven million.

• What do you need to achieve it?

We hope the credit crunch will go away so that banks get less apprehensive in lending.

Of course, we want to see global consumption improve as our business does depend on how the economies in the US and Europe perform.

This article was first published in The Straits Times.