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Venturing out and up the value chain for steady earnings: Memiontec

Mr Tay says he has been pleasantly surprised by the depth of IE Singapore's knowledge and continued support throughout the process of transformation for Memiontec.
Mr Tay says he has been pleasantly surprised by the depth of IE Singapore's knowledge and continued support throughout the process of transformation for Memiontec.ST PHOTO: DESMOND WEE

Trapped in an endless cycle of competitive tenders, Memiontec took the plunge and revamped its business model, diversifying to move up the value chain. Fiona Liaw discovers how the move helped the firm break new ground.

After more than two decades of expansion for water engineering system firm Memiontec, chief executive officer Tay Kiat Seng realised that the endless cycle of tendering for projects was unpredictable and unsustainable.

"We were not happy with the performance, so we had to think out of the box. If we had kept doing what we were doing, we would stay the same today, the same as a year ago. Sales might go up, but it would still be unstable," said Mr Tay.

In 1991, like many engineering firms, Memiontec began with an engineering, procurement and construction (EPC) model. It designed and supplied equipment for water technology and also helped to run and maintain water treatment plants.

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As an early player in the market, this model helped Memiontec to grow quickly. The firm soon increased its capabilities to handle large-scale jobs, with sales worth up to $10 million. It supplied products to the oil and gas, pharmaceutical, palm oil, food and beverage, and semiconductor industries, building a strong track record in Indonesia and China.

But the company remained trapped in the cycle of tendering for jobs, completing the projects it secured and then tendering for the next. Revenue levels fluctuated based on each project's start and completion dates.

Driven by a desire for greater growth and revenue stability, Mr Tay decided to change Memiontec's business focus in order to move up the value chain.

Rather than doing only EPC work, he began exploring avenues for asset ownership - to partner developers and co-own water treatment systems.

Doing this meant that Memiontec would go beyond designing and supplying technology to also profiting from the sale of treated water. Each project would span up to 25 years, allowing the firm a steady flow of revenue throughout.

But this transformation meant Memiontec needed to adjust its key performance indicators and revamp the way it handled returns on investments, loan structures and market benchmarking. It was an added hurdle to also change the mindset of its staff and get their buy-in for the new vision.

"Everything you do will have some problems. Once you listen to excuses, you'll fail," Mr Tay said of how he approached the challenge.

He added that as a good leader, he felt it was essential that he showed full confidence and understanding of the steps in order to motivate the team. Taking the time to work with his staff through the new systems and erase their doubts was an important part of the process.

 
 
 

Another obstacle was to find suitable partners. Although Memiontec had an excellent track record with existing clients, the shift in focus required it to tap an entirely new customer base.

Trade agency International Enterprise (IE) Singapore was crucial in helping Memiontec do this, Mr Tay said. In addition to advising the firm on its new plans, the agency helped to identify and introduce companies that would be a good fit for it.

This assistance resulted in Memiontec's first breakthrough in Indonesia. Today, the firm is partnering a state-owned enterprise in Jakarta on two projects.

IE Singapore's Global Company Partnership grant helped Memiontec to fund new training opportunities and build in-market capabilities across Indonesia and China.

And now that Memiontec has gained its first foothold in those overseas markets, the agency continues to support the company by identifying strategic investors it can partner and helping it to gain access to experts for legal and consultancy services.

Before approaching IE Singapore, Mr Tay said, he was uncertain what assistance the agency could offer - and likewise, the agency was not aware of what needs his company had. But he has been pleasantly surprised by the depth of the agency's knowledge and continued support throughout the process of transformation.

"If we want to do well, we must communicate, approach them and find out," he concluded.


Looking to expand overseas by going digital? Tap IE Singapore's Global Company Partnership Grant for support. Find out more here.

Find out more about other companies that have transformed their businesses overseas and how IE can help: #SgGoesGlobal.

A version of this article appeared in the print edition of The Straits Times on April 20, 2016, with the headline 'Venturing out and up the value chain for steady earnings'. Print Edition | Subscribe