Small and medium-sized enterprises are planting the Singapore flag in distant markets around the world. In the first instalment of a four-part series, Annabeth Leow looks at home-grown baby bottle-maker Hegen, led by managing director Yvon Bock, 38, and her husband, Leon, 41.
Q: What did the road here look like?
Ms Bock: We have grown from two people in 2015 to more than 10. From launch to the end of this year, our turnover will have had a 400 per cent increase, and next year, we're looking at four times what we made this year... So we're looking forward to breaking even by next year - that's three years into the business.
Mr Bock: Please bear in mind that we've spent millions of dollars on our whole IP (intellectual property) journey, on our product development, on tool links, and on machinery. It's an investment that will take us a couple of years to try and break even.
Ms Bock: The investment we have pumped in so far is close to $5 million.
Q: Which markets have you identified for entry?
Ms Bock: We are already in the United States, Russia, (mainland) China, India and Indonesia. We are launching in the Philippines, Hong Kong and Macau, and South Korea. We have already earmarked more than 35 countries to enter by 2020. We are focusing mainly on the countries near us, then we will spread outwards.
Q: What is the role of overseas markets for your company?
Ms Bock: Singapore is our flagship. However, there are, on average, (only) 30,000 babies born a year (here). It is important, but the sales percentage cannot compare with our overseas demand. So far, we are growing very rapidly overseas.
Mr Bock: Those markets are China, Indonesia, the Philippines. This is where we're experiencing the greatest growth right now.
Q: When you expand, what do you take into account?
Ms Bock: Because our target audience is tech-savvy mums, when they research us, they really do their market research about how this product is different. Our marketing team has to make sure we can walk the talk on what we say about our product's safety. Our intellectual property management is also important to reassure end- users that the product they are getting is authentic and genuine.
Mr Bock: I think it's very important, whether overseas or in Singapore, that we control the manufacturing process. That's the only way we can guarantee that every single Hegen product is made with the care and quality commitment that we have towards the brand.
Q: Venturing abroad, is intellectual property protection a concern?
Mr Bock: It's a major concern. I think the whole process of registering and enforcing in each country takes years. It's not as fast as some would think. In every country we go into, we have to make sure intellectual property protection is all in place, our design registrations are all in place, (our) patents and obviously our trademarks, (too), before we can launch in a market.
Sometimes, when we identify a market and we start going through that process, it would be two or three years before we can get to the point of commercialisation. So it's a major consideration, yes.
Ms Bock: Registration is step one. After that, we're already doing surveillance and enforcement. We have already seen copycats. For a new brand like ourselves... imitation is a form of flattery. We're on the right track. (But) this is a concern and a challenge as well for an SME, because it's really quite an expensive investment - consuming time and resources.
Q: Do you run into out-and-out counterfeits?
Mr Bock: Yes, complete copies, right down to the details on the packaging.
Ms Bock: Usually, they will show themselves at trade shows that we're not in and go to lesser-known markets. But the goodwill of our brand is that we've worked with so many partners - retailers or potential distributors, or even friendly customers or competitors - that they will inform us.
Q: What other challenges do you foresee yourself running into?
Ms Bock: I think with the demand that we are foreseeing, especially because we have entered several major markets, capacity expansion is a very happy problem.
Mr Bock: Baby products are not the same as other products. For example, if you're a mother who's currently using Hegen and you need to replace the teats but you can't find them, or they're sold out in the country, the next logical step is to change your bottle brand altogether. So for us, it's very important... we (don't) let it run out.
So what we've been doing, especially for a big market like China where we're in 300 retail outlets as of today, we're holding back the launch of new retail outlets until our partner distributor has built enough stock in his country to sustain the growth in the Chinese market.
Our target is... more than 1,000 outlets by this time next year.
Q: What's one of the most memorable experiences you have had?
Ms Bock: When we first started out, we had this wonderful idea that IE Singapore bought into - that's what they gave us a grant for... Then we went to a US trade show, and there the (same) concept sat, right in front of us - and (it had) won an award. We were really dumbfounded. I didn't know whether to laugh or to cry. It held us back for at least half a year; we went back to the drawing board.
Q: How did you bounce back?
Ms Bock: (The original concept) was like an intravenous drip system - a collapsible bag in a bottle. When we looked at the materialised product, there were too many components.
Mr Bock: Not only that, disposable bags are not environmentally friendly, so we're... quite happy we didn't go in that direction.