Powering ahead into global waters

Focus on quality and service drives engine and generator business to success

By Jonathan Kwok

Mr Tan has built on his days as an old-school apprentice to turn his father's small-time repair shop into a global distributor. -- ST PHOTO: ASHLEIGH SIM

WHILE his pals were making the most of their school holidays dining out, taking in a movie or engaged in sport, Mr Elvin Tan was knee deep in grease and oil helping his dad repair generators.

It wasn't much fun to say the least, but it did lay some pretty important foundations.

Mr Tan, 49, told The Straits Times: 'If customers came, I would have to attend to them, and I also did simple odd jobs like equipment-washing.

'Over the years, I slowly learnt the ropes of the business.'

Those days of having to give up time with friends for the family business have paid off handsomely for Mr Tan, the fifth child in a family of eight children.

He has built on his days as an old-school apprentice to turn his father's business, Xin Ming Hua, from a small-time repair shop into a global distributor of engines and generators.

Annual revenue has ballooned from less than $1 million in the late 1970s and early 1980s to over $60 million today.

The transformation started in 1981 when Mr Tan completed his secondary school and National Service and plunged head-on into the business.

He recalls that it was a natural decision for him as his interest had already been piqued during his days helping out.

One of his first acts was to change the focus of the firm from repairing and modifying equipment to buying and selling it.

'I wanted to change the business model. With the focus on trading, business would be able to increase and grow more quickly,' he said in Mandarin.

By the end of his first year in charge, Mr Tan was in Japan sourcing second-hand engines and generators that he could import and re-sell. Japan at the time was emerging as the global leader in machines and electronics and he wanted Xin Ming Hua to ride on that wave.

It was also in those early days that he decided to focus on supplying generators and engines for the marine industry.

Although Xin Ming Hua diversified into industrial generators and engines for trucks and tractors in 1986, distributing engines for ships still forms the cornerstone of the company's business.

About $60 million of annual turnover of $67 million comes from its marine unit. 'There is more scope to value-add in the marine industry' said Mr Tan, a father of two teenagers.

'Other industrial generators are used only as back-up suppliers of electricity, and are hardly used. Thus, there is less of a focus on reliability and competition is based on cost.

'However, ships need their propellers and generators to run all the time. We can make a name for ourselves and create a distinctive advantage, as long as the quality and reliability of our engines, as well as our good customer support, show through.'

To distinguish itself from rivals, Xin Ming Hua trains engineers of its shipping clients on engine maintenance. The engine makers and Xin Ming Hua sometimes co-sponsor shipping staff to go to Japan for direct training on maintaining the equipment.

'When our customers see that we are committed to being responsible for the care of their engines, they will return to us and this will help to build our reputation,' said Mr Tan.

The firm's attitude to service is well-appreciated by long-time customers like Mr Alfred Tan, a project manager who procures equipment and parts for foreign shipbuilders. He first started buying from Xin Ming Hua in 2003 and has now purchased engines supplied by the firm for seven ships.

'Xin Ming Hua is energetic in its sales, and gives us confidence in its products,' said Mr Alfred Tan. 'It will advise us on the types of engines that should be fitted and even after we make the purchase, the company will continue to give us technical advice on the maintenance and use of the engines.'

Xin Ming Hua's focus on quality and service has helped it to amass a substantial market share in the field of distributing marine engines.

It reckons that it is one of the top two distributors in Indonesia as well as having markets across South-east Asia, India, China and the Maldives.

It distributes for major engine and component brands like South Korea's Hyundai and Doosan, China's Weichai Power, Denmark's Korsor and Spanish firm Sole, while its relationship with Japan's Mitsubishi goes back to 1996. It has also launched its own in-house brands, such as e-Gen, a line of generators it designed that can be used in the commercial, industrial and marine sectors.

Xin Ming Hua has already earned a wealth of accolades from industry watchers: The company was on the Enterprise 50 list from 2006 to 2009 while Mr Tan was a finalist for the Entrepreneur of the Year award in 2007.

It is now aiming higher by trying to move up the value chain. The firm is in talks with equipment makers to pursue joint ventures in manufacturing while also exploring the feasibility of alternative energy projects.

Source: Straits Times, 20 Jan 2010.