From small business to strong survivor
Business Times - 27 Jul 2006
POPIAH king Sam Goi knew from the word go that he had to conquer more than the domestic market.
'For companies to grow and compete with multinationals, they must go overseas, if not there is no way to survive,' said the entrepreneur who built Tee Yih Jia Food Manufacturing into the well-known frozen food business it is today. That was the rationale behind its drive into international markets after Mr Goi, who is its executive chairman, acquired it in 1977. Before that, Tee Yih Jia had only served the Singapore market.
Today, the privately held company exports more than 90 per cent of its products. Eighty per cent of its revenue comes from export sales, although Mr Goi is reluctant to reveal the total sales figure.
But as important as it is to expand overseas, companies can't just attack foreign markets willy nilly. 'If your company wants to go overseas, you must first have a strategy,' said Mr Goi. 'There's no point going overseas if you're too small. Try concentrating on your local market first. Expand into the neighbouring countries after your company has grown.'
To Mr Goi, the company's success boils down to the three Ss - being small, specialised and strong.
'I started out small so that I could handle and understand everything myself. And I specialised in popiah skin. I don't do too many things at one time. We're also strong in markets, quality and know-how. That's very important in winning the market.'
For Tee Yih Jia, as with many companies, venturing overseas was not all smooth sailing. Financing was difficult at the start. Mr Goi recalled how banks here had turned him down when he needed to borrow $8 million to build a factory in Macpherson in 1985. 'The local banks didn't lend me any money. They couldn't come to a decision even after two to three months. That was quite a tough time for me.' He cited another example of how a bank reduced his loan in the early 1980s while he was building up his Indonesian business.
'When you start out as a small company, they question your need for so much money. When you need help, not everybody wants to support you. But when you don't need them, everybody comes to you.' It was against this backdrop that Mr Goi became all the more determined to venture overseas and open up distribution channels for his company's products.
Tee Yih Jia started exporting its products in 1980. One of Mr Goi's earliest triumphs was convincing restaurant owners in Sydney's Chinatown to switch to his company's brand of spring roll pastry.
His first opportunity to open an overseas factory came in 1988 when he acquired Main On Foods, an established food manufacturing and distribution company in Los Angeles, for US$20 million. That same year, he made Tee Yih Jia's first investment in China. Through a joint venture with the China Pacific group, the company built a two-storey factory in Fujian province to manufacture spring rolls, samosas and biscuits.
While the US market appeared tough to crack, Mr Goi saw the opportunities it offered. However, he had to deal with the different mindset of the American worker. 'The union is very strong. I had a worker who cut his hand - it was a small cut but he sued us for a lot of money. That is America. You must be very careful. Everyone must protect themselves.'
'The people, market, thinking and taste are different. So you must accept the new things,' he added.
Joint ventures are essential for companies wanting to head overseas. Stressing the need for a local partner, he said: 'When you are not there, do you think your employees will put in their full effort to build up your company? Some will but not many. If they are really successful, they may want to set up their own business.'
However, he warns that it is unrealistic to think of joint ventures as a long term solution. 'You must know how to control the company. If anything happens, you can buy it over or sell (your stake) to your partner. If you know the business when you buy it over, you can help the company grow. If you choose to sell it, you will know the right price to sell.'
As for venturing into the China market, Mr Goi acknowledges that it is no easy feat. 'Fifteen years ago it was easier. With some knowledge and capital, you would be treated like a god. But today (the Chinese entrepreneur) already has his own capital and knows more than you.'
However, he believes there are still good investment opportunities for companies to tap in the second-tier cities like Wuhan and Hangzhou. 'Survey the market first. The opportunities are great. But people in China are very intelligent, so why would they need you? There must be synergy in the joint venture. You must also have your own money, market and know-how and you must have capable people stationed there.'
Many Singapore businessmen, he added, have two advantages which they should use to attract Chinese partners: their bilingualism and their passports. Both of these open doors to international markets like the US, which Chinese companies may not have easy access to.
But he warns that businessmen should not have a herd mentality and jump into China without preparation.
He also thinks it is better to venture overseas as a private company than a listed one, as the former allows for greater flexibility. As for his own company's plans to list now that it has achieved success in both local and overseas markets, Mr Goi is keeping an open mind.
While Tee Yih Jia - with a 2005 turnover of $56 million in Singapore alone - may seem like a success story, Mr Goi is unlikely to slow down soon. He aims to constantly improve the quality of his products. Good connections can open doors for a company, but success depends on how well it wins and maintains customers, said Mr Goi, who emphasised the need for quality products and smart pricing.
With the frozen food business on strong footing, Mr Goi is casting his eye on new ventures. He plans to diversify into the environmental market which he sees as promising, as emerging economies like China and Russia place growing emphasis on air and water treatment.
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