Manufacturing a better future

Hi-P International’s self-made billionaire founder and executive chairman Yao Hsiao Tung keeps two lists: one he readily shares, while the other he jealously guards.

Both lists are instrumental to achieving the grand ambitions of the Singapore-headquartered contract manufacturer, which offers production, assembly, testing and packaging services to a diversified multinational customer base. Global top-tier companies Amazon, Meta Platforms (owner of Facebook, Instagram and WhatsApp), Colgate-Palmolive, Dyson, Keurig, Procter & Gamble are among its customers.

The list that Yao is open to sharing is his unique management philosophy, concepts and tools. The 85-year-old naturalised Singaporean, born in mainland China and raised in Taiwan, would often apply his management philosophy, concepts and tools in managing the sizeable Hi-P.

Yao’s management philosophy emphasises delegation with control. His senior management executives are entrusted with responsibilities but have to regularly update him and be accountable.

For instance, being purpose-driven with action items set out would help to improve one’s efficiency.

The list the helmsman keeps under wraps is a “shopping” list of merger and acquisition targets for his privately held firm.

Apart from diversifying Hi-P’s customer base and across industries, as well as enhancing competency, mergers and acquisitions also play a key role in Hi-P’s future as they are expected to improve its turnover by 20 per cent annually, Yao says.

Serving premium customers, Hi-P’s own operations diversified across mainland China, India, Singapore, Malaysia, Thailand, the Philippines and Vietnam should account for another 20 per cent increase in revenue annually.

These would bring Hi-P back to its earlier pace of its revenue skyrocketing by 10-fold every seven years.

While Hi-P’s revenue increase has slowed these two years, its profit has been improving.

Hi-P’s roller-coaster ride

It was a stark contrast to Hi-P’s early years when the outfit incepted as Hi-P Tool & Die in 1980 with six employees was on the brink of bankruptcy.

Yao had been posted to Singapore from Taiwan as a technical support manager by his employer DuPont a year before he founded Hi-P as a sleeping partner with several fellow Taiwanese.

“Hi-P stands for ‘high-precision’ in short,” Yao says of the genesis of the name. “Its Chinese name transliterated as ‘赫比’ is the abbreviation of ‘显赫无比‘.” The Chinese term means “unparalleled super-eminence”.

The venture, manufacturing moulds for plastic components, had wanted to take advantage of the booming manufacturing scene in Singapore, after Yao observed that many multinational corporations including General Electric and Philips were then setting up factories here.

“I felt that these companies would surely need to make moulds, and the business environment was also quite good,” he says.

However, Hi-P did not take off as envisaged, and profit was elusive.

Three years later, the partners roped Yao in to turn around their venture.

Giving up a job at a US conglomerate, a steady monthly income of S$6,000, a housing allowance and his car, he quickly rolled up his sleeves as he embarked on his entrepreneurial journey – at the age of 43.

In the next five years, Hi-P not only remained in the red but had also racked up bad debts, with Singapore’s first recession since independence in 1985 compounding the firm’s challenges.

Hi-P was hanging by a thread – even the utilities provider had threatened to cut off its power supply.

Yao was the only one holding the fort after all his partners exited the sinking ship. Made of sterner stuff, he never thought of calling it quits – unless and until the creditors wound up Hi-P.

Hi-P’s big break came when Molex threw it a financial lifeline. The American electric component manufacturer was so impressed with the quality of Hi-P’s moulds and its manufacturing capabilities that it invested S$140,000 for a 35 per cent stake in Hi-P in 1987.

Molex became Hi-P’s customer as well.

Hi-P’s fortunes took a turn for the better thereafter as revenue increased exponentially – by 10-fold every seven years – surging from S$1 million in 1987 to S$10 million in 1994 to S$100 million in 2001 and to over S$1 billion in 2008.

Yao had meticulously and miraculously engineered the trajectory, striving for a 40 per cent jump in turnover annually to achieve the 10-fold surge.

In 2003, when the Singapore manufacturer provided forecasts for its revenue and net profit in its initial public offering prospectus, the rare move by a listing aspirant made the market sit up.

The secret of Hi-P’s success, Yao let on, is expanding its offerings. It started producing only plastic mould components, now it manufactures the whole product from scratch for half its customers.

In the meantime, Hi-P’s Rolodex of major customers went beyond Molex to other blue-chip companies, gained through business development and word-of-mouth.

American lifestyle electronics juggernaut Apple’s published supplier list has for years named Hi-P as one of those that provided materials, manufacturing, and assembly of its products.

Scaling greater heights

In December 2003, Hi-P made its debut on the Singapore Exchange mainboard and it quickly became an investor darling.

In April 2021, Hi-P was privatised as Yao felt that the contract manufacturer had been undervalued by the market.

The counter went public at S$0.57 a share in 2003 but was delisted at S$2 a share. Yao and his wife Amy Wong made an unconditional voluntary offer for the 16.5 per cent of Hi-P that the couple did not already own.

However, Hi-P now has plans to relist, possibly in 2027, to raise funds to support its ambitions to scale greater heights.

As a contract manufacturer, Yao says Hi-P must be proactive in securing its future as its customers are from the highly competitive consumer products industry.

For that reason, Hi-P would update its slate of offerings to keep up with the times; for instance, Internet-of-Things devices are among its array of products.

As artificial intelligence (AI) becomes increasingly embedded in today’s lifestyle, Hi-P intends to develop its own brand of AI-related connectors, relays, switches, sensors, and antennas. This will allow Hi-P to ride the AI wave yet avoid competing with its customers as none of them sell those products. Furthermore, Hi-P is able to better support its existing customers with those AI-related products.

Hi-P is also using AI-aided automation that turns its production facilities into smart factories as it leverages technology to improve productivity, efficiency and cost management.

Yao, meanwhile, continues to seek to sharpen Hi-P’s corporate strategy.

He approached Temasek-backed investment firm 65 Equity Partners, hoping to leverage its expertise, as well as to develop new business and leadership succession plans for Hi-P.

The move also resulted in 65 Equity Partners investing S$100 million in Hi-P in 2024.

Rich rewards

That opportune investment by Molex in 1987 yielded a return of over 2,000 times for the American company when Yao re-acquired the stake at approximately S$300 million in 2017.

For Yao, his initial investment of S$50,000 in Hi-P and his tenacity have paid off handsomely, reaping him a financial return of 50,000 times. The boy who used to be so poor that he had to walk barefooted to school was ranked 37th on the Forbes 50 richest Singaporeans list in 2024.

100 years and beyond

“Hi-P is not for sale,” Yao says categorically, “although I could easily sell it for S$2.5 billion or S$3 billion.”

Instead, he wishes the firm he founded, painstakingly built up and steered through several crises, will continue to flourish to reach its 100th year and beyond.

“I want to leave behind a legacy,” declares Yao, who was named the Businessman of the Year 2023 in an award organised by The Business Times and DHL in recognition of his outstanding leadership and achievement.

He is still very much fired-up about his ambitions for Hi-P. Although long past the statutory retirement age, bowing out of the corporate world is not a term in the octogenarian’s vocabulary, yet.

Hi-P’s milestones

1980
Hi-P Tool & Die is founded by Yao Hsiao Tung and a few fellow Taiwanese. Yao is a sleeping partner.

1983
Yao takes over the reins.

1987
Molex invests S$140,000 for a 35 per cent stake.

1994
Revenue crosses S$10 million.

2000
Renamed as Hi-P International.

2001
Revenue exceeds S$100 million.

2003
Debuts on Singapore Exchange mainboard.

2008
Revenue surpasses S$1 billion.

2017
Yao buys out Molex’s stake for approximately S$300 million.

2021
Delists from Singapore Exchange.

2024
Temasek-backed 65 Equity Partners invests S$100 million.