CEO diversifies company’s business from OEM to ODM and finally takes over ownership


Value-added: One of the designers looking at the various components used to build the FOBO Tire sensors.

Small and medium-sized enterprises (SMEs) have always been known as the backbone of the economy. Apart from their resilience during economic downturns, they are also collectively a sizable employer.

In the Economic Census conducted in 2011 for reference year 2010 by the Department of Statistics Malaysia, SMEs employed about 3.7 million out of a total of seven million workers or 52.7% of total employment.

James Lim Chong Shyh’s journey from manager to entrepreneur stemmed from an obligation to keep the company he was working for going and ensuring that the employees’ livelihoods was not jeopardised when the owners decided to opt out.

Now chairman and chief executive officer of Salutica Allied Solutions Sdn Bhd, Lim’s story is of a confident executive who introduced policies to keep a company on track to weather an uncertain business environment and then finding himself taking on further responsibility following a management buyout.

Instant updates: Readings for the pressure of all four tyres is constantly done and can be accessed on smartphones.
Instant updates: Readings for the pressure of all four tyres is constantly done and can be accessed on smartphones.
 

A trained design-and-process engineer in electrical and electronics, Lim climbed the corporate ladder in the electronics field and has experience in global multinational corporations such as General Electric, ABB, Maxtor and Seagate.

Now 57, he was already managing director of a multinational company’s (MNC) local manufacturing facility in Malaysia when he was 35, and has held positions as managing director and CEO in subsequent years in many MNCs.

Thus, it comes as no surprise that Lim embraces the “quality first” culture, saying: “If we do something, we have to be the best in it. Our culture plays a role in deciding who we can be, and we want to be world class.”

His involvement with Salutica began when he was headhunted in 2004 for the role of CEO of Balda-Thong Fook Solutions Sdn Bhd, a German joint venture with a local company that acted as original equipment manufacturer (OEM) of electronics and plastic components for consumer electronic devices, including feature phones.

“I was in a difficult position, always caught between the two owners, but I simply set out to do what was good for the company,” he recalled.

Stressing to the owners that the company had to move away from a labour-intensive model where the company merely charged for labour and assembly costs.

He likens this to “setting up hawker stalls”.

Keeping tabs: The Tyre Pressure Monitoring System, which uses Bluetooth technology to monitor tyre pressure, was launched late last year and had sold more than 5,000 units in the US, Germany, Japan and other countries within the region.
Keeping tabs: The Tyre Pressure Monitoring System, which uses bluetooth technology to monitor tyre pressure, was launched late last year and had sold more than 5,000 units in the US, Germany, Japan and other countries within the region.
 

Lim started a research-and-development department after sternly telling the owners, “You may own the company but I am the CEO.”

The R&D unit got them into the original design manufacturing (ODM) business.

Thanks to his foresight in starting the R&D department, the company was able to build and design almost any electronic item. They started getting clients who wanted to build things like headsets and speakers.

In 2009, the company’s OEM business took a hit as the use of smartphones became more widespread and feature phones became obsolete, along with the design and plastic moulding contracts for building them.

“The ODM business, which made us very good at bluetooth technologies involving headset and speakers, kept us standing, but the German owners, who in 2006 had bought out the local partners, were not interested in the electronics business compared the plastic moulding segment,” he says.

According to Lim, this was understandable as the margins for plastic mouldings could go up to 20% whereas electronic ODM could at most fetch 7%, .

“The German partners couldn’t accept this, and on April 2013, they proposed that we take over ownership via a management buyout (MBO). After deliberating a few months together with the top management, we signed the deal on September 2013 and changed the name of the company to its present name, beginning a new journey as new owners,” he says.

State-of-the-art: The company also invested in 3D printing machine to speed up the prototyping process.
State-of-the-art: The company also invested in 3D printing machine to speed up the prototyping process.
 

As he was 55 at the time, his wife asked him to retire and spend more time with his grandchildren.

Lim wanted to do this too but he knew if he did not take charge of the company, the future of its employees would be filled with uncertainty, especially if the company had new owners who did not understand the business.

“I was in the position to protect the jobs of the employees,” said the CEO who, last year, instituted a profit-sharing scheme with 30% of the distributed profits given to the employees via promissory equity issued after the MBO, on top of bonuses.

The company’s chain of command has also gone through a shake-up, with greater autonomy given to senior managers. Lim’s message to them from time to time is: “Just do what you think is best for the company”.

Today, the company operates a 30,000sq m one-stop design, sales, administration and manufacturing plant in Kawasan Perindustrian Zarib, Ipoh with about 1,000 employees, both contract and permanent. This head count has remained steady since the day of the MBO.

For bikers, too: FOBO Tire can also be used with motorcycles.
For bikers, too: FOBO Tire can also be used with motorcycles.
 

Having invested over RM5mil since the MBO on machinary and other technology upgrades, such as starting a mobile applications (apps) development division, the mid-tier company has also developed their own products, one of these being FOBO Tire — a tyre pressure monitoring system that uses Bluetooth technology to monitor tyre pressure that was launched late last year.

It has sold more than 5,000 units in the US, Germany, Japan and other countries.

“When we develop our own product, we make it very clear that there will be no conflict of interest with our existing clients, and that ethical issues will not arise.

“If you are wondering why FOBO Tire, which is so different from the usual consumer electronics? The answer is simple, because none of our clients was making this product,” he said.

Lim said he told his management team to let him know when he was no longer effective in leading the company, with full knowledge that after a company grows to a certain scale, the owners may not be the best people to run the company.

At the moment, there is no sign of him slowing down, and Lim said, “The day I can’t take the technology further, I’ll step down.”

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