This article by Jennifer Tan (left, Director, Research & Products, Equities & Fixed Income, at the Singapore Exchange) was published in SGX's kopi-C: the Company brew series on 29 December 2017. The article is republished with permission.
At 77, Yao Hsiao Tung cuts a sprightly figure. Beneath his unassuming demeanour lies an indomitable will and razor-sharp mind.
For the graduate of National Kaohsiung University of Applied Sciences, an old Chinese proverb about one's fighting spirit - 没有不景气, 只有不争气 (mei you bu jing qi, zhi you bu zheng qi) - resonates deeply.
Twists and Turns
Hi-P, which listed on SGX Mainboard in December 2003, has a current market capitalisation of over S$1.5 billion. The Group has evolved into an Original Design Manufacturer (ODM) and Electronics Manufacturing Services (EMS) provider, with expertise in both plastics and metals.
With a staff strength of nearly 15,000, it owns 13 manufacturing plants across six locations in China, Poland, Singapore and Thailand. It also has marketing and engineering support centres in China, Taiwan, Singapore and the US. Product categories span the wireless, computer peripherals and consumer electronics segments.
According to analysts, the Group's key customers include Seagate Technology, Colgate-Palmolive, and Keurig Green Mountain. It has been listed as one of Apple's top 200 suppliers globally since 2012, making buttons, keypads and SIM card trays for the US tech giant.
|When a crisis hits, worry and anger will not solve the problem - it's important to be able to calm down and assess the situation that has developed.
- Yao Hsiao Tung
The road ahead, however, remained bumpy. Over the years, Yao had to grapple with cashflow issues, delinquent customers, and in 2000, the loss of several hundred staff in China from poaching.
"When a crisis hits, worry and anger will not solve the problem - it's important to be able to calm down and assess the situation that has developed," he said.
"Once you have thought through the key issues, you should be able to find the relevant answers."
In 2015, Yao's fortitude was again severely tested when a joint venture to design and manufacture dual-screen smartphones for the Yota brand collapsed after the Russian firm failed to take delivery of inventories.
Hi-P, which suffered losses to the tune of S$100 million that financial year from large write-downs, initiated arbitration proceedings against Yota. The chapter was finally closed in January 2017 with a US$17 million out-of-court settlement.
The episode taught Yao many valuable lessons. He reshuffled Hi-P into four business units to diversify its client base, stepped up internal controls, as well as implemented systems to manage and limit risk exposure.
"Your customers may lose confidence, your suppliers may lose confidence, your employees may lose confidence. But it's critical that you do not lose confidence," Yao said.
"In each situation, I was able to overcome the challenges without succumbing to anger and despair."
|Building a Legacy|
Yao has a three-pronged strategy to keep Hi-P on a growth trajectory - developing the right values, determining the Group's goals and direction, and exercising self-discipline through the execution process.
Looking ahead, Yao expects Hi-P to grow at a fairly rapid clip, driven by increased projects from new customers, as well as existing customers, in the wireless and Internet of Things (IoT) segments.
The Group's biggest bugbear, however, is finding and retaining good talent. "We need to have the right talent in place to grow quickly. We have enough resources to maintain our existing businesses, but we need to develop our talent pool to meet future growth targets," he added.
Last month, Hi-P promoted its Vice President of Business Development, Yong Inn Nam, to Chief Operating Officer. Yong, 56, joined Hi-P in 2015.
For its succession planning, the Group has devised a talent development system using a bottom-up approach. "We want to quickly promote good employees that perform well, and put in place a pipeline of successors - not just one successor," Yao noted.
This dovetails with the Group's culture, which celebrates a people-oriented, as well as results-oriented, spirit.
|We want to quickly promote good employees that perform well and put in place a pipeline of successors - not just one successor.
- Yao Hsiao Tung
Above all, Yao values integrity and honesty - principles that were indelibly etched in his mind by his father, who passed away at the age of 94.
As a child, Yao remembers his father taking him on a long journey on foot to buy walking shoes. "My father bought two pairs from the shoemaker - I wore one, and he carried the other pair. Halfway home, we realized we had only paid for one pair. Without blinking an eye, my father turned us around, and we walked all the way back to pay for the second pair."
The key principle is never shortchanging others, he added. "Someone may take advantage of you, but you should never be the one to take advantage of him."
When he's not managing the day-to-day operations of the Group, Yao enjoys his daily swim and tucking into a Japanese or Italian meal. "My passions in life are exercising and working, so my wife complains we never go on holidays," he grinned.
He remains in good health despite his age. "It all stems from my ability to manage stress. During the day, my full concentration is on work, but when I go home, I release my mind," he added.
"Many often speculate I may not be able to get through another year, but so far, I've proved them wrong, and have been able to turn around each and every crisis."
|Year ended 31 December
|Net profit / loss attributable to owners||54,525||-45,427||10,464||6,398|
|Quarter ended 30 September ($ '000)||3QFY2017||3QFY2016
|Profit after tax||38,368||30,713||24.9%|
Source: Company data
|Outlook & Risks|
Hi-P International Ltd
Hi-P started out in 1980 as a tooling specialist in Singapore, and has since grown to become one of the region's largest and fastest-growing integrated contract manufacturers. The Group provides a one-stop solution for customers in various industries, including telecommunications, consumer electronics, computing & peripherals, lifestyle, medical and industrial devices, ranging from design, electro-mechanical parts and modules to complete product manufacturing services.
The Group has 13 manufacturing plants globally, spanning six locations in the People's Republic of China (Shanghai, Chengdu, Tianjin, Xiamen, Suzhou and Nantong), Poland, Singapore and Thailand. It has marketing and engineering support centres in PRC, Singapore, Taiwan and the USA. Its customers include many of the world's biggest names in mobile phones, tablets, household & personal care appliances, computing & peripherals, lifestyle, medical devices and industrial devices.