Finding Profit in Solving Problems
STAR SMEBIZ
STAR SMEBIZ
Posted on 9th July 2018
Pushing research: Ooh (left) and Ho spend time looking into design processes and industrial solutions.
Solutions provider aims to build more pillars that will support growth of group
ONE of Dr Ho Wai Loon and Ooh Wei Chee’s favourite idioms is “Rome wasn’t built in a day”. They use it liberally to support all their efforts in building Abbe Group.
Being in the business of providing solutions for other companies, they understand the importance of taking the time to craft sustainable solutions for their customers.
And they take the same approach in building Abbe Group, the company they founded together in late 2015.
Ho and Ooh, both 30, are all for building a strong foundation and establishing each pillar of the business before expanding into the next pillar.They even poured over countless case studies of long-standing companies to understand what it is that really sets them apart.
“We found that most of the companies are run by a philosophy. That’s why they can last long and not only depend on their key man. Philosophy drives the company and they have a well-established management,” reveals Ho.
Vast catalogue: Abbe supply materials and instruments from some 100 brands.
“Compared with traditional companies here (that don’t last as long), you can see that Japanese and Western companies can last about 300 years. Values are important,” adds Ooh.
So although small in size and new to the business world, both of them took the time to lay out their company philosophy as well as business targets for the next five and 10 years to ensure that Abbe Group is set on the straight and narrow path.
The aim is to grow Abbe Group into an established group that will be ready for an IPO in its tenth year.
Their almost academic take on the way a business is run is understandable. Ho, who earned his doctorate degree in theoretical physics at the age of 25, was immersed in research work for quite a number of years. Ooh, meanwhile, holds a master’s degree in economics.
What started Ho off on the entrepreneurial path was an academic observation.
While participating in research projects in other countries, he noted that most developed countries had their own private research institutes. In Malaysia, research institutes were mostly government-funded.
“Their private research institutes have long histories and they can develop their own innovations, R&D and publications. Most of them are funded by private companies where their research help in product development and technology innovations,” says Ho.
Starting a private research institute in Malaysia then seemed like the next logical thing to do.
But it also requires a lot of money.
Aiding progress: The group consults and develop solutions for its customers automation needs.
So Ho and Ooh turned to business in hopes of generating enough profits someday to start a private research institute.
And they have done well for themselves.
The company even took home the Rising Star award at The Star Outstanding Business Awards (SOBA) 2017.
Abbe Group specialises in providing research, development and consulting services to a wide range of industries including semiconductor, automotive, pharmaceutical, oil and gas, manufacturing and automation, education and research. They help address their customers’ needs to build a great product, speed up processes, enhance automation, improve efficiency and reduce cost.
In the first two years of its operations, the duo focused on engaging suppliers and distributors to secure an impressive portfolio of brands so that they’d be able to tap into a large catalogue of materials, instruments and equipment, which they can offer to their customers and integrate into their solutions.
“We are the sole distributors in Malaysia for some of the brands we carry. What we do is, we gather some brands and we do value-add for some of the products like modifying and integrating them into systems that we are developing for our customers. We offer customers a few brands and specifications so that they can choose based on their budgets.
“We also collaborate with other companies and universities to come up with different methods and solutions to solve the industry’s problems,” Ooh explains.
Abbe Group currently carries more than 100 brands including Japan’s AS One.
Dreaming big
“This is the year for expansion,” declares Ooh.
He believes they have established their base as a solutions provider and Abbe Group is now ready to move on to its next pillar of growth: information technology (IT).
They started a new subsidiary, Abbe IT, a few months ago to focus on its IT development works. At the moment, their IT arm is mainly selling hardware and simple software products.
“Most of our software development now is to support our solutions and engineering business. But after this, we will start to develop more IT-based business like building websites or commercial software,” Ho shares.
In keeping with the times, Abbe Group will also look into the development of its own e-commerce portal which will allow purchasers to browse products, request for quotations and place orders.
Ho notes that companies currently still request for quotation and place orders through email.
Relying on manpower: Ong says a lot of process at local manufacturers are still done manually.
But as the market matures, he says these exchanges and transactions will be done directly through the website.
Abbe is preparing itself for the trend. However, Ooh says it will take a while for its e-commerce portal to be ready as it needs some time before their vast collection of products can be fully catalogued online.
The group is also seeking its first funding round of about RM15mil to expand its operations.
The funds, says Ooh, will be used to develop its online portal, recruit more employees, invest in engineering machinery and to buy a warehouse.
“Although we don’t do retail business, we still need a warehouse to keep stock and do some automation work,” he says.
This will also give the group space to develop more of its own products in-house as it is currently leveraging on subcontractors and external labs to carry out fabrication and research works.
Abbe Group currently employs less than 20 people but Ooh hopes to grow its staff strength quickly to boost its sales and engineering teams. The company is also looking to open more offices in other parts of Malaysia to provide better support to customers outside of the Central region.
Within the next few years, the group wants to continue growing its customer base and catalogue of brands.
“In order to service corporates in Malaysia, we have to register as vendor. But it’s hard to become a vendor for a company because they have existing suppliers. So we must sell our value to the customer and let them believe that we can offer them something better.
“We have achieved more than 80 vendor accounts this year. We are looking at 100 by our fifth year,” says Ooh.
On the 10-year horizon, the duo is looking to start another pillar for Abbe Group – its financing pillar.
Ho explains that most companies have budget constraints when it comes to implementing new projects or systems. This not only impedes its customer’s growth, it also affects Abbe Group’s sales.
To solve the problem, it hopes to eventually start a subsidiary that would be able to extend credit facility to its customers.
The idea, says Ho, is fairly new to the market. Although there are some facilities that are available to companies to purchase machinery, there is hardly any available for the purchase of smaller materials or instruments.
When this pillar kicks in, Ho believes it will be a big boost to the group’s revenue.
The duo is projecting exponential growth in the coming years for the group to achieve its target revenue of RM50mil by 2021. Abbe Group turned in sales of close to RM2mil last year.
Ooh expects another jump around year 2023, when it aims to list the company.
Changing mindsets
One of the challenges for Abbe Group to grow as fast as Ho would like it to is the lack of awareness among local companies on the need for R&D and automation.
While foreign manufacturers are willing to spend money on new ideas and solutions, he points out that local companies prefer to invest in marketing and branding. Perhaps, this is so because there are no guarantees with the results of R&D, he says.
They might as well import developed technology, he adds.
However, he observes that local companies have a way of following trends.
“Usually the Western companies will take the first step. And after a few years, local companies will follow,” he laughs.
He opines that the automation trend will pick up in earnest here in the coming years, which will lead companies to look into R&D and innovation.
Ong Sian Jie, marketing director of Abbe Solutions (Central) Sdn Bhd – a subsidiary of the group – says a lot of the processes at local manufacturers are still quite manual.
“When they want to automate, the issue is they don’t have the knowledge, manpower or skill to do automation. Secondly, they don’t have the budget, which is why our financing idea with be a big help to them.
“So they will come to us and we will give them a few solutions. We are not only dealing with engineering but also their maintenance. We have to deal with downtime issues and quality issues as well,” says Ong.
Because Abbe Group caters to a wide variety of industries, Ong says the group has the knowledge, technology and skills to share solutions across industries or to customise solutions according to customers’ needs.
“Nowadays, companies want to reduce their manpower. Humans tend to have errors. So we have customers requesting for technology to improve production,” he adds.
Ho hopes to reach out to more local companies to encourage them to look into R&D to progress. He says it is all about communication and instilling confidence and trust in locally developed technologies.
He cites China as an example.
“Twenty years ago, people don’t like to use China products because of the quality. But now, they are proud of getting their own products. Now you see big brands from China like Huawei and their quality is good.
“So I believe the culture (of R&D) can be built here, but not in a short period. We have to be persistent and persevere,” says Ho.
The government also plays a role in building this culture by providing more funds and incentives.
Although their business plans seem to be holding up, Ho never forgets the purpose he founded Abbe Group, which is to start a private research institute.
“This is my ultimate goal. The private research institute can play a role and be a platform to gather local talents. We actually produce a lot of good local talents in terms of technical knowledge, innovativeness and creativity.
“This effort can contribute to the country’s growth. I believe a developed nation depends on these innovations, science and technology,” he says.
Once Abbe Group is on firm footing with stable growth, they will look into the setting up of the research institute.
The plan, says Ooh, is to channel 30% of the group’s profits to the research institute. The group, in turn, can benefit from the research work churned out by the institute.
“Our business strategy is not just about doing business to earn income, we also want to strengthen our position and build value for our company.
“We started our company from nothing. That’s why we must have a well developed strategy to build the group. We can’t build Rome in one day,” says Ho.