Careful steering through the market
Manufacturer eyes regional growth and returns from its diversified business
WHEN Ong Chee Tat started a company to distribute car care products, little did he think that he would end up producing products for his own brands for the international market.
He was, after all, from a different industry.
“But we’ve been in the auto business for so long. I like this industry,” he says.
Ong was previously a medical research officer. He left civil service after many years of enduring its bureaucracy and after a brief stint in direct selling, decided he could start a distribution business of his own.
In 1979, he founded Goodlife (M) Sdn Bhd with a partner to distribute car care products for international brands in Malaysia, including the US-based brand Perma Glass (PG).
But over the next few years, Ong found that some of these brands were changing hands more frequently than they’d like.
“There wasn’t good ownership of the brands. The policies changed every time they were bought over by a new party,” he says.
So in the late 1990s, Ong and his partner decided that they’d had enough. If there was going to be another change of guards at the brands, it would be because of them.
Goodlife bought over PG not long after, making it a locally-owned brand.
The company then carried out its own research and development (R&D) works to concoct their own car care formulations and expand PG’s product range. They wanted their own unique range and not just rely on PG’s existing products.
You can’t be a “me-too” product, says Ong who is the executive director of the company.
“R&D takes time. You need to test your products and gather feedback and then improve on them over time,” he says.
He describes R&D as its key weapon in growing sales. Goodlife allocates about 5% of its revenue on R&D.
This has helped the company add to its stable of products and become less reliant on mass market items, such as car shampoo, alone. Among its unique products are car clay, polymer sealant and oil lubricants.
“You need to specialise in your own niche products. You must have foresight and believe in what you are doing,” Ong shares.
Additionally, margins are better on such products.
Apart from PG, Goodlife also expanded its brands, adding PG Pro, Tupps, QPlus and TurboVac to its portfolio.
Goodlife then started looking at the export market in 2007.
Ong explains that one of the factors that pushed the company to look abroad was the free trade agreement (FTA) between Asean and China. While it opened the China market to the region, the FTA also brought in a lot of Chinese goods at low prices, making it hard for local companies to compete here.
It participated in trade exhibitions in Europe and tried to establish some form of presence there.
Why set its sights on the European market first, one may ask.
“If we can gain traction there, it would be easier for us to sell in Asean or Asia because we’d have a track record in the developed market.
“It’s an Asian mentality. Consumers always think that products that have been accepted by Europe or the US markets are better,” he says.
However, it wasn’t easy trying to sell their brand overseas. The market in these parts of the globe are matured and have their own glut of brands and products.
So the company focused on contract manufacturing for larger companies in these markets instead. Ong adds that contract manufacturing also helps the company boost production and keep to strict standards.
It managed to push the PG brand through small-scale distributors or to smaller markets.
Currently, export makes up some 60% of the company’s RM10mil revenue.
In 2009, Ong’s son, 34-year-old Ong Chuan Yuan, joined the company to lend him a hand while his partner slowly took a backseat before going into retirement.
Chuan Yuan, who has a background in IT, has been taking on an active role in expanding its export markets and in growing the company further.
Regional plans
Now that the company has done a fair bit of business in the US and Europe, Chuan Yuan says Goodlife will focus on Asean in the coming years.
“We have done some branding in the US market and made some revenue there. So now we can use that revenue to invest into the regional market.
“We are looking at Asean and also the smaller, suburban areas in Malaysia,” he says.
While most of its export business have been in contract manufacturing, Chuan Yuan hopes to push their own brands in the region. The company will be working through distributor networks to grow PG, PG Pro and QPlus’ footprint in Asean.
This will not be an easy task, he notes, as cheap products from China are still a threat.
“The key to overcome that is to bring cost down. We need to be able to do things cheaper, better and faster,” quips Ong.
The team is expected to put in a lot of effort in branding, which could prove to be a challenge particularly in trying to get their message across the many different cultures in the region. They will also need to educate the market that products produced locally are not necessarily inferior to imported goods.
“We did their contract manufacturing. We know the quality,” says Ong.
Nonetheless, Chuan Yuan expects sales for the company to grow some 20% to 30% over the next five years as it invests in branding and business in the region grows.
That said, Goodlife is still eyeing growth for its brands outside of Asean through e-commerce and in the Middle East.
Diversifying growth
In recent years, Goodlife has also diversified into manufacturing rubber moulded products for the automotive, oil and gas and poultry industries under its subsidiary Goodlife Elastomer (M) Sdn Bhd.
As with its car care products business, the rubber products segment also employs an R&D team to produce its own rubber compound for in-house usage as well as for sale to companies in the dry rubber industry.
This, says Chuan Yuan, is another area of growth for the company and opens a whole new market of customers for them.
At the moment, its rubber products make up 20% of Goodlife’s turnover.
One of its most promising products is the rubber plucking fingers used by poultry companies to pluck chicken feathers automatically. Goodlife has secured considerable business for this product locally and will be participating in exhibitions overseas to also expand on its export potential.
Goodlife will look into developing more technology and products under this division over the next few years, he says.
Although its rubber products are sold to industries and not retail customers, Ong is proud to say that its rubber products, too, are sold under its own brand.
This helps build confidence in our products, he says.
While the overall market could see some challenges in the days ahead, Ong and his son believe the company has been positioned to also see growth, come what may.