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Mon, May 10, 2010
The Straits Times
   

A household name by design

By Francis Chan
 

Singapore's furniture manufacturers racked up $4.7 billion in export sales last year - about 0.92 per cent of the world market. But in such a competitive market, local firms, which are mainly SMEs, need to stand out. In the second of a six-part, fortnightly series sponsored by Spring Singapore, FRANCIS CHAN takes a look at two leading SMEs and how they win recognition through branding.

SCANTEAK boss Lim Pok Chin got off to a flying start in the furniture trade, but he still needed some fancy footwork to save the firm when the pressure of competition grew.

The firm he set up in 1974 - Hawaii Interior Decoration, later renamed Hawaii Furnishing - was reaping millions in revenue just five years into its operations.

Annual turnover for the home furniture trader and retailer amounted to about $10 million during the late 1970s.

But increasing competition in Singapore's small domestic market almost killed off the fledgling business.

Mr Lim, 56, responded by creating distinctive teak furniture based on Scandinavian designs and marketing it under the Scanteak brand.

He and his family now oversee a global network of six branch offices and almost 100 Scanteak stores in Singapore, Brunei, Japan and Taiwan.

More than 500 staff, up from 330 last year, work in the retail outlets in Asia and corporate offices in Germany and the United States.

Revenue last year was more than $50 million, up from about $40 million in 2008. Mr Lim said the company remains on course to reach his target of $60 million in sales this year.

Yet the road to success in the furniture trade was not an easy one, recounted Mr Lim.

In the early days, rivals competed mainly on price as most furniture bosses did not have a hand in the design process.

Still, the budding entrepreneur - who was in his 20s at the time - managed to expand his business from a single 400 sq ft store in Joo Chiat Road to two furniture showrooms by the early 1980s.

Operating large showrooms in land-scarce Singapore meant the business had to deal with increasing rents.

That, and the influx of prominent overseas furniture retailers such as Actus, Habitat and Ikea, made Mr Lim rethink his business strategy.

"I realised that if I had continued, the returns from the business would not be worthwhile in the long run," he said.

"So I thought perhaps it was time I established a brand name for the business to differentiate it from the competition."

Mr Lim had rarely been involved in the design of the furniture sold at his stores, but trips to trade fairs in Europe exposed him to new designs that he thought might be popular with customers here.

The furniture pieces that caught his eye were mainly from Scandinavia, characterised by their simple, minimalist and functional designs.

"I remember furniture designs which I saw in Germany and Scandinavian countries like Denmark, and thought they might look good if we matched them with tropical teak wood, which has a darker tone," said Mr Lim.

"And that was how I came up with the name Scanteak: 'Scan' from Scandinavia, and 'teak' would be the wood we used to manufacture the products."

Mr Lim, who has a business diploma, did not let his age or lack of knowledge on branding hold him back from learning more about how to optimise his business with a strong branding campaign.

"I attended seminars and workshops on branding to learn from the experts so that I could build up my own brand," he said.

But lessons learnt from his own experience as a young upstart in the furniture trade also taught him that branding was not just about having a nice logo.

"To excel through branding, we also need to ensure that our brand values revolve around the quality of products, service and even packaging," he said.

The business formally took on the Scanteak brand name in 1990.

Fast forward 20 years, and proof that Mr Lim's focus on the holistic branding process has paid off can be seen in the number of awards Scanteak has won.

Walls and shelves at Scanteak's 50,000 sq ft corporate headquarters in Sungei Kadut are adorned with rows of Singapore Prestige Brand Award trophies and other business accolades.

Scanteak was also recently voted the most well-known lifestyle furniture brand in Taiwan, where its largest network of more than 90 stores operates.

Another critical turning point for Scanteak was Mr Lim's decision not to go the route of acquiring costly manufacturing plants.

Instead, he signed deals with manufacturers, mainly in Indonesia, where teak is cultivated, to produce the furniture.

"I wanted to focus my energies on creating a boutique retail chain that would cater to a niche market instead," he said.

Mr Lim said he will continue to expand overseas, with a new franchise opening in Vancouver next month, and possibly two in Honolulu in the second half of the year.

He has also unveiled plans to list

Scanteak on the Taiwan Stock Exchange some time in the middle of the year, where he hopes to raise about $100 million over two years to finance his new growth plans.

"The plan now is to think of new ideas on how we can take our brand, a Singapore brand, to the far corners of the world, so that people will know that Scanteak is a Singapore brand," said Mr Lim.


For more information on how to grow your companies, visit http://www.spring.gov.sg or call 6278-6666.

 
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