INNOVATING TO STAY AHEAD

Knock on wood for success

Innovating in tandem with today's changing market conditions is necessary for small and medium enterprises to stand out. The Business Times looks at what three Singapore SMEs are doing to shake things up in their various industries - through innovation.

Singapore

WHEN Jason Chang started his venture into the wood business, all he had was a table and a typewriter - and "no money".

Life was tough back in 1988 when he started Pacific Forest Products, a small and medium enterprise engaged mainly in the trading of timber. Mr Chang remembers having to go around begging for a S$30,000 loan for his very first order which he eventually secured.

"Trust is the most important thing in life for business. If you don't have trust, everything is gone. Trust is the bigger wealth," he told The Business Times in a recent interview.

Twenty years after setting up Pacific Forest Products came Onewood, an invention that took a decade of testing to come together.

Onewood, which was patented in Nov 2013, is a product that can substitute natural hardwood entirely, the company said. Made up of 75 per cent cellulose wood fibres that are widely available and 25 per cent binder, an agent that holds the fibres together, the timber substitute is set to revolutionise the industry.

It is termite- and water-resistant, can be reused, has a low flame spread, can solve warping issues and looks and feels like natural timber. The company said that Onewood's properties have an equivalent density to tropical hardwood, and is dimensionally stable.

While it takes about 100 years for a mature timber tree to produce quality and premium sized hardwood, Onewood needs only about six years for plantation trees to grow fully for the fibres to be extracted.

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Mr Chang, who runs the business with his two daughters and more than 20 employees, said that the future of wood got him thinking about making a new product.

The supply of timber is being threatened by factors like diminishing sources, durability issues, deforestation, and illegal timber trading.

According to the World Bank Group Forest Action Plan FY16-20, the demand for timber products is growing rapidly, with the demand for global industrial roundwood predicted to quadruple by 2050. This increase surpasses the supply growth by a big margin, deepening the projected yearly supply deficit from one billion cubic metres in 2012 to 4.5 billion cubic metres in 2050.

Diminishing natural sources also mean that Pacific Forest Products now has fewer suppliers. When it started timber trading some 25 years ago, it had about 20 suppliers from Indonesia, Malaysia, Myanmar, Vietnam, and Cambodia. Today, the number of suppliers has halved.

Mr Chang said: "The trading business depends on who you know, the suppliers and the buyers. You have no control of the information in between. The business is vulnerable. It's easier to get our own wood than to go to the forest to cut. The quality (of Onewood) is better than natural timber, the cost of production is on par, and sale of the product is the same."

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Some notable Onewood products the company has made are benches at Chijmes and lift cladding and handrails at Raffles City Shopping Centre. Other products that can make use of Onewood include staircase railings, flooring, decking and furniture.

Tapping the business networks built over the years, Mr Chang and his team have been introducing Onewood to various clients. Demand for Onewood is coming not only from Singapore, but also from Australia, Malaysia, and the UK.

Currently, the company is producing about 150 cubic metres of Onewood in a month but it is planning to expand production to up to 2,000 cubic metres. Onewood's only factory, which is 100,000 sq ft in size, is now in Johor Bahru (JB). Four years ago, Mr Chang sold a factory in Sungei Kadut in Choa Chu Kang, and used part of the cash to start the JB factory.

He said that the company has spent several millions in investments in technology which included machinery design and R&D over a decade. "When you design, you also don't want to design one big machine because it costs millions so you design a small one, a hundred thousand dollars. You test out and you make a big one. The road is very tough," he said.

Like most SMEs, Mr Chang's biggest pain point is lack of funding - and there have been countless times when he wanted to give up. But with his daughters' encouragement, he pushes ahead.

"For an SME to do research, it is very tough....If an SME makes a few million, would it also spend a few million in research? Unlikely. I am the crazy person," he said.

He intends to take Onewood global. Mr Chang said that interested parties from Switzerland, the UK, Australia and Germany have contacted him about the product.

Going forward, Mr Chang said that he wants to grow profits. But the focus now is to build awareness and ensure that users of Onewood understand its total value proposition - not only for the user's specific needs but also for a sustainable future.

On what lies ahead for the business, Mr Chang said: "The future is the young people. I have one idea but it can grow bigger than that. The young people have energy, foresight and do things better than the older people."