BEING tech-savvy and having a keen understanding of markets have helped XMI - a local company that creates pocketsize audio devices for various multimedia players - grow their start-up capital of S$30,000 to annual revenue in excess of S$10 million in just three years.

To date, the company has sold over 1 million units of their capsule speakers in 50 countries and 6 continents, as well as garnered numerous awards for their capsule speakers.

But it certainly was not easy starting up in a country with a small domestic market. Scalability was limited by the small market size and there was little economies of scale - which is particularly important in the technological sectors with steep learning curves.

Thankfully, through the Internet, Ryan Lee, CEO of XMI, was able to engage the global market even before establishing a foothold in the Singapore.

In fact, the Internet is still offering Mr Lee a tonne of information on potential markets and a platform to reach out to new consumers.

Mr Lee said, 'At the click of a button today, we can spot opportunities and new technologies faster, research the feasibility of any given idea and search for clients or suppliers in any given continent on earth. We live in an age where entrepreneurs are well-equipped to build a global brand from a single computer.'

Through reviews on websites such as CNet and Hardware Zone, Mr Lee is able to raise the brand awareness of XMI. To effectively manage the global distribution channels concomitant to building a global business, Mr Lee had hired a team of very experienced regional managers.

However, he also recognised the important role the distributors play in raising brand awareness. Thus, he stressed the importance of selecting the right partners and offering the right incentives.

He said, 'If you're at the top of the supply chain, ensure the right incentives are in place at every level. Be willing to sacrifice your initial margins for the sake of market penetration.'

His right product price points - ranging from US$35 to US$70 - have not only helped him crack foreign markets, but, he reckons, is helping him weather the crisis.

Mr Lee said, 'I think our product price point is still reasonable even in bad times and that is probably why we are still selling through now. Consumers might delay their purchases of big ticket items like laptops, multimedia players and mobile phones, but it is unlikely that they will delay the purchase of a US$35 speaker if they really wanted it.'

And indeed, consumers are still buying XMI - their revenue to date for the first two quarters have reached S$5 million.

Responding to the crisis, the company has delayed the launch of its new wireless Bluetooth speakers due to its high price. Instead, it is focusing on more price competitive capsule speakers as the consumer belt-tightening continues.

In terms of growth strategy, the focus has shifted from marketing and branding to research and development (R&D), with an aim of shortening the product development process and increasing revenue across channels.

R&D expenses now feature prominently in the budget, accounting for 40 per cent of the budget, up from 15 per cent previously. For this year, the company is targeting $12 million in revenue, and in spite of the crisis, sales looks poised to increase by another 150 per cent, from $4.8 million last year.

Business remains very much focused on external markets, with revenue from Singapore contributing to less than 5 per cent of the overall turnover.

XMI aims to expand into another 10 more countries this year and ink tie-ups with 10 more airlines.

This article was first published in The Business Times.