Start-ups create niche in mature markets

  • Economy
  • Thursday, 30 Oct 2014

KUALA LUMPUR: Budding businesses participating in the Alliance Bank BizSmart Academy SME Innovation Challenge 2014 are carving a niche in already saturated markets.

DF Automation and Robotics Sdn Bhd (DF Auto) and K-Pok Sdn Bhd are among 20 finalists contesting for cash prizes of up to RM600,000 in the programme, which provides business coaching and workshops.

Johor-based DF Auto came into existence when a multinational electronic manufacturing company approached Universiti Teknologi Malaysia for some automation solutions for its plant two years ago.

Subsequently, 34-year-old lecturer Dr Yeong Che Fai joined forces with industry peers Ricky Yap Wee Yang and Tan Ping Hua, a design engineer and programming and system designer, respectively, in identifying several potential projects – one being the automated transfer of a trolley from one location to another.

The machinery is an automated guided vehicle (AGV), a programmed mobile robot that moves by tracking pasted magnetic tape on the ground.

Each AGV does away with the five to 10 operators hired to push a components trolley from the store to the production line in a plant.

As the first AGV they built was just a prototype, Yeong, Yap and Tan set up the company to focus on designing and manufacturing the product to industry standards.

“Greatly improved, we sold a unit of the AGV to that first client,” Yeong told StarBiz.

After repeat orders from the same company, DF Auto began to understand the real business need.

Although the AGV market in Malaysia is mature, it is only manufactured overseas.

“That made us the first AGV manufacturer in Malaysia,” Yeong said.

“Importing means expensive costs and poor local support. Our AGV is two to three times cheaper than those,” said Yeong, who was deeply involved in the international automation and robotics Robocon competition from 2002 to 2006 and subsequently guided UTM students representing Malaysia in the competition.

Since marketing its product early this year, DF Auto now services 12 multinational companies and has exported its products to Singapore.

“We have requests from Thailand, Indonesia, New Zealand, Europe and the Middle East, but currently, our team is rather overwhelmed by the orders that are coming in.

“We are fortunate to have support from Cradle Fund CIP500 to support our operational costs and our joining this competition is to learn how to scale up,” Yeong said.

“We will put in some effort to create awareness such as working with universities as their syllabus and participating in exhibitions.”

Similarly, for cracker manufacturer K-Pok, identifying and creating a niche in an already saturated food and beverage market has been key.

“There are signature dishes from other states such as the Klang bah kut teh, Penang laksa and Malacca sate celup. So, to put Kuantan food on the map, I came up with the Kuantan keropok,” said K-Pok co-founder Don Quek, who co-founded the business with college mate Prem Kumar, who works in an advertising agency.

“It had to be a local product and something relatively easy to prepare. Naturally, I thought of our local snack, the keropok ikan with sambal. Supermarkets are packed with snacks and crackers, but there isn’t one known brand of keropok ikan,” added Quek, who works in his family property business in Kuantan, Pahang.

“The waiting between contracts that come in can be very long, so I started considering business ideas that would move faster.”

A relative would prepare the sweet-and-spicy fish keropok, and Quek and Prem would market it.

As soon as the idea was conceptualised, they booked a little business booth at a bazaar in Desa ParkCity in Kuala Lumpur, selling all 300 packets of keropok they had brought.

“We rode on the World Cup season, as that’s usually the time when people get together and snack a lot,” Quek said.

By word of mouth, his business grew among friends and their circles and K-Pok broke even within its first two weeks of operations.

K-Pok is available in 18 restaurants and cafes around Kuala Lumpur, Selangor, Johor Baru and Kuantan.

In the last four months, orders have averaged 900 to 1,000 packets per month – that’s about 100kg of product per cooking session, twice a week. K-Pok’s target market is the urban middle class

“As we progressed in the last few months, we have ascertained the absence of a snack that defines Malaysia. We have treats such as the muruku and pineapple tarts, but these do not have a special identity per se that ties them to Malaysia. The same applies to the countless brands of locally manufactured chips,” Quek said.

A short-term challenge in the business – as with all products in general – is its brief shelf life due to its ingredients.

“We need funding, that’s why we joined the challenge. In order to hit supermarkets, there will be other investment costs such as changing our packaging and machines to extend the shelf life of the product,” Quek said. “In the long run, with strict quality control and careful and consistent branding, we are confident that K-Pok will open up a brand new segment that can compete with Lays and Kettle Chips. We will put Malaysia on the map once we start exporting.”

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Business , df auto , alliance , sme challenge , kpok


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