DIVERSIFICATION in business is when a business develops a new product or expands into a new market as a growth strategy or a way of managing risk.
It is not only a strategy adopted by many modern firms for a competitive advantage over others, but also for risk reduction and resource integration – resulting in a “one plus one is greater than two” effect.
Sunzen Group has diversified its business into five major segments – human health products, export of clean raw bird’s nest, animal health products, branding and new development of healthcare products, and money-lending service.
Sunzen Biotech Bhd officially entered the money-lending business with the acquisition of Finsource Solution Sdn Bhd.
Group managing director cum group chief executive officer Teo Yek Ming said the RM6.8mil acquisition was passed in an extraordinary general meeting recently.
“The acquisition will be satisfied by the allotment and issuance of 41.21 million new ordinary shares in the group at an issue price of 16.5 sen, ” he said.
With the support of shareholders, Teo hopes Finsource Solution backed by Sunzen Group could contribute to the group’s future earnings by expanding its operations and setting up branches in every state.
He said that other than building a business moat and investing in product research and development, the group might also integrate supply chains to expand its operations as part of its diversification strategy.
“The group can further expand into new markets through diversification. For instance, our subsidiary which produces bird’s nest and collagen drinks will soon introduce bird’s nest coffee, bird’s nest mooncake and an upcoming collaboration with Black Whale (bubble milk tea), ” he said.
He added that the group also has Tomofat and Orgacids – green animal feed products that replace antibiotics growth promoters.
“Besides that, the group’s subsidiary Ecolite specialises in bird’s nest, tonics, essence, traditional Chinese medicine and other health supplements, ” he said,
Teo said that with products and services that appeal to different markets, the group could better manage risks and improve its overall flexibility, profitability and increase investment opportunities.
“Take the acquisition of Finsource Solution for example. We are able to provide financial solutions and professional financial planning for corporates and small and medium enterprises, ” he said.
SMEs the lifeblood of economy
Finsource Solution director Ching Chee Pun said SMEs account for a significant portion of the nation’s gross domestic product (GDP) and have provided numerous employment opportunities.
However, the contribution of SMEs in promoting economic growth is often overlooked by traditional financial institutions as they do not meet their minimum financing threshold, he said.
“Sunzen, through Finsource Solution, can play a role in this by offering commercial loans.
“The Covid-19 pandemic has also caused many SMEs to struggle to keep their operations running.
“We provide lenient and simple financing packages, including up to 100% margin financing that can be approved within seven working days, ” he said.
Feed additives production
According to Sunzen Biotech Bhd animal health unit assistant general manager (marcom) Chen Yen Fang, her unit’s main aim is to produce science-backed animal feed supplements and nutritional products to cater to the different market needs.
She said the firm is currently focused on the development and promotion of Tomofat, produced from natural and high-quality palm oil. Tomofat 300 Gold and Tomofat Eggs are supplied to clients with swine and egg-laying hens respectively.
Next, it will provide Tomofat Functional Oil and Powder varieties for aquaculture, broilers and high-end meat products.
Chen pointed out that the group developed Orgacids in 2002 – a green product consisting of six acids, used to replace antibiotic growth promoters.
Sunzen Biotech Berhad has exported this product to China, Taiwan, South Korea, Thailand, Vietnam, Indonesia and other countries in the region.
She said the company has been actively working with its overseas partners to develop anti-viral and other non-antibiotic feed additives that enhance animal’s immunity.
“Our research and development team is working on products to promote better intestinal health and the prevention of diseases caused by salmonella as well.
“Together with the monitoring of the environment, feed and drinking water, we can reduce and prevent bacterial contamination of agricultural products. This is an integral aspect of food safety, ” she added.
Clean bird’s nest export growth
Group subsidiary Yanming’s chief operations officer Fam Jian Yap pointed out that its clean bird’s nest has been approved by the Certification and Accreditation Administration of China (CNCA) for export.
The product also uses the Quarantine Test Innovation Malaysia Service Centre (CAIQ) inspection and traceability label, which acts as an identification document for the bird’s nest.
“By scanning the label with a smart phone, consumers can trace the bird’s nest origins, factory information, weight, production and storage dates as well as distributor information for peace of mind, ” he said.
He added that Yanming carefully selects its bird’s nests using only handpicking and wet picking methods without brushing glue on the goods.
Yanming is committed to ensuring safety of its goods every step of the way, from the raw materials and the technology used to sterilisation and packaging, he said, adding that the company is also Health Ministry-certified.
He added that the group is the market leader in clean bird’s nest export and its factory in Puchong, Selangor, exported 4.5 tonnes of bird’s nest in 2020.
“We expect continuous growth this year. The company has also established a bird’s nest brand in Guangzhou which is being sold via online platforms, ” he said.
Integration of resources
Sunzen International Sdn Bhd executive director Datuk Tan Chee Hong said the company is focused on exploring new markets domestically and internationally.
“In addition to our largest market in China, we are also looking at the Middle East, European and American markets to bring various health products and food and beverage products to more countries.
“Our health products are Good Manufacturing Practice (GMP)-certified.
“As for our bird’s nest products, we can utilise the existing raw materials and introduce downstream derivative products such as bird’s nest coffee and other food and beverages through cross-industry collaborations, ” he said.
Tan said that besides Malaysia, China also imports bird’s nest from Indonesia and Thailand, adding that their CNCA-approved EBN is an industry benchmark that assures quality and boosts consumers’ confidence.
“Sunzen International was established during the beginning of this year with the aim of integrating the group’s resources, improving its competitive edge and exploring new and emerging markets.
“Black Whale has agreed to collaborate with Sunzen International in a long-term project on special beverages, ” he added.
Ecolite Biotech Manufacturing Sdn Bhd sales and marketing director Lim Wee Chun said the company has expanded its product range to 300 varieties – bird’s nest, tonic essence, healthy drinks, among others.
Ecolite’s products are sold in both modern trade and traditional retailers like chain pharmacies and Chinese medicine halls.
“We hope to introduce more commercialised packaging for our products such as convenient and lightweight packaging, especially for online platforms, ” said Lim.
The manufacturing of its OEM and ODM produtcs are carried out at its plant in Yong Peng, Johor, that is compliant with GMP, HACCP, MESTI, VHM and halal standards, he added.