8th May 2017
INNOVATION GETS THEM GOING
The founders of the company continually improve their products for different usages.
BUSINESS partners Benny Choy Kian Seng, 64, and Lim Lai Huat, 60, know the importance of constant innovation.
Both of them, Cycleworld Corporation Sdn Bhd managing director and deputy managing director respectively, are always looking at other ways of using the products they make.
Cycleworld produces insulated panels that are used as prefabricated materials to construct cold rooms.
By serving cold rooms alone, the company was securing regular projects worth RM100,000 to RM900,000 each.
But Choy and Lim believed that the panels could have other applications too and in 1998, they explored its usage in roof construction.
“We went to Taiwan and saw that the usage of these insulated panels for roofing was a trend. We then invested about RM2mil in the machines to mass produce it,” says Choy.
To Choy and Lim, a company has to invest to grow. Whether this investment would yield immediate results or not was a different concern.
Sure enough, Cycleworld’s new applications were very much resisted by contractors and architects who preferred conventional roof tiles.
To prove a point, the duo used the panels for roofing for their own cold room projects. Eventually, their clients saw that these panels did help to insulate the building from heat and gave them the nod.
They then looked into using the panels for larger buildings such as substituting the walls of a house.
In 2013, they came out with full-fledged Industrialised Building System (IBS) components that can be used to construct houses. The new panels cut down construction time and weighs only 10% of the normal concrete used for building. This also makes it easy to transport and reduces construction cost.
Cycleworld expanded its portfolio from cold rooms to building houses for plantation workers, army camps and even schools.
Choy says the decision to go into the IBS segment was the right one. The segment contributes about 10% to group revenue and is expected to contribute up to 40% in the coming year as they are in talks to supply their IBS components to developers overseas.
As of March 2017, the group has turned in revenue of about RM40mil.
“We do not confine ourselves to the local market. In 2015, we supplied these panels for internal partition and external wall cladding for a high rise development in Australia,” reveals Choy. They had avoided being in a ‘red ocean’ by constantly looking for new opportunities and through innovating.
In fact, Choy says their business was anchored on understanding clients’ needs first.
Price comes in at the end of the process.
“When we complete a project, we get the client to inspect it and they will find that we build according to specifications, nothing less. As we have done so many cold room projects of various sizes, the projects speak for themselves and clients continue to recommend us to their friends. We have a reputation for not cutting corners,” says Choy.
Choy might not have a business degree, but he knows the importance of doing something niche that clients value and could only get from him. It was something he observed when he started working in his father’s refrigerator and air conditioning repair business at the age of 16,
“In the 80s, air conditioning repair was quite common. But refrigeration repair specialist was not so common, hence, I paid special attention to understand how the whole refrigeration system works and how to repair them,” says Choy.
From doing copper welding to installation of compressors, Choy did all the nitty gritty while learning from his father.
He also eventually learnt that there was only so many air conditioning units and refrigerators that one could repair.
However, he saw that there was demand for cold rooms as manufacturers required them for perishable goods but there were not many who were offering such services.
“The equipment to maintain a cold room is totally different from air conditioning, but similar to refrigeration. When clients call, we must be able to respond quickly as there are perishable goods that would go bad without the cold room,” Choy says.
That is a lot of money going down the drain, he adds.
Making use of his knowledge in refrigeration, he purchased components such as insulated panels, compressors, condensors, evaporators and other piping and wiring materials and began tendering for cold room construction projects in 1979.
By 1986, Choy managed to grow his father’s business from about RM100,000 in annual revenues to RM4mil.
But Choy found it difficult to source for the panels at times.
“There were only about four manufacturers at that time and there would be delays every now and then,” he says.
That spurred Choy to contemplate manufacturing his own panels.
A practical partnership
Choy met his current partner, Lim, in 1986 when the latter was working with a manufacturer who supplied panels to Choy.
Lim had been in the industry since leaving school in primary six.
The two of them had gotten close over the years and when Choy decided to become a manufacturer in 1990, he bounced his ideas off Lim.
“When I heard of Choy’s idea, I knew we were capable of doing it as I have years of experience in manufacturing these products,” says Lim.
It was a business partnership made in heaven; Choy had expertise in refrigeration and Lim had the experience of manufacturing structural insulated panels.
They set up Cycleworld in 1993 in a 10,000 sq ft rented factory in Klang with 20 workers.
They invested RM300,000 in machinery and raw materials.
“Before we incorporated the company, we already had over RM2mil’s worth of projects to work on,” says Choy.
One year into the business, they found new demand for their structural insulated panels from the telecommunication sector.
“That was the year when mobile phones became popular and telco companies needed insulated cabins to store their telecommunication equipment,” Choy says.
Choy learnt that contractors would build such cabins with the usual brick walls and have the cabins airconditioned.
However, brick walls have lower insulation capacity and many of the telco equipment, which have copper materials, go through oxidation due to the humidity that seeps through the walls.
“We then offered our products. The insulated panels prevented the humidity from outside and we have another happy client!” Choy exclaims.
Business was good and in 1996 they invested about RM20mil to build their current factory in Kapar, Klang.
Battling a crisis
Then came the Asian Financial Crisis in 1997 which brought many companies to their knees, big and small alike.
For one who had always been in the blue ocean, they now found themselves swimming in the red ocean. The market became sensitive to pricing and contract values shrank.
“We were lucky we still had ongoing projects then, but we needed to look for new ones and only smaller jobs were available,” Choy says.
Prior to the finanical crisis, they had a clientele of large companies, ranging from telecommunication service providers to large frozen food manufacturers, and contracts were valued at RM500,000.
But in 1997, they had to contend with cold room jobs from smaller frozen food manufacturers and restaurants.
“Although the crisis lasted only three years, it was only in 2008 that we started getting big projects again,” Choy says.
But not one to sit and wait for things to happen, Choy and Lim ventured into new markets in 2007 to grow their business amidst a recovery in the economy. Fortunately, their efforts were rewarded with a US$500,000 cold room construction project in Vietnam.
Today, they have clients in over 16 countries including Australia, Singapore and Indonesia and have a workforce of 130 workers,
The company is currently on steady footing because they grew the right way – innovating to deliver customers’ expectations. As Choy puts it, “We have a reputation for not cutting corners.”
Original article (Published 8 May 2017, by TheStar): https://www.thestar.com.my/metro/smebiz/focus/2017/05/08/innovation-gets-them-going