Sometimes bold entrepreneurial companies are not born but remade. Take the case of Taiwan's Simplo Technology. Through 1998 it was losing money selling battery packs to low-end domestic computer houses. Then a fireball named Raymond Sung purchased his way into the chairmanship.
That only cost him a $600,000 cash injection, but it was a third of the company's equity back then. Today its market capitalization is $1.4 billion.
Sung started as an engineer in Taiwan for American outfits AST Research and Kingston Technologies and had high expectations. Under him--he is also chief executive--Simplo has met them. It has the world's leading market share, 23%, for the power modules of notebooks and handheld devices.
The world's largest computer makers--
Under Sung's 12-year leadership Simplo's net income grew more than 300-fold to a recession-proof $76.7 million last year, with record-high revenue of $1.07 billion, which analysts expect to increase by a good 20% this year. That growth means the company will outgrow our Best Under A Billion roster, where it has appeared since 2007.
By advancing further into the device market and by tapping into the emerging electric vehicle (EV) battery business Simplo looks to triple its revenue to more than $3 billion within the next five years. Sung hopes 30% of that will come from batteries for electric bikes and automobiles.
The 61-year-old boss hasn't lost his edge. "Being number one isn't good enough for me. Super number one is what I'm after," Sung says.
And he views every business opportunity as if he and his 7,500-employee outfit were warriors, with a conviction that a small "smart enough" commando team can take down an impregnable fortress. That's how it went in his favorite war movie, The Guns of Navarone.
Sung also is inspired by his three most-admired executives: Terry Gou of Hon Hai Precision Industry (with a nearly 9% stake, Simplo's biggest shareholder), Morris Chang of Taiwan Semiconductor Manufacturing and the deceased Y.C. Wang of Formosa Plastics Corp. "I am as aggressive and hardworking as Gou, as familiar with Western-style management as Chang and as down-to-earth and grassroots as Wang," boasts Sung.
In 1999 Simplo wowed Compaq (later merged into its biggest client, HP) with a presentation in Houston, besting what were then much larger rivals in Taiwan and Japan. Sung had his first over-seas deal.
The critical day told a lot about how Simplo was now being run. It arrived for a test run armed with better report data than the other vendors, Sung recalls. His working sample, however, didn't engage in the clinch. "You know why? It turned out Compaq made a mistake on its own specs by misplacing the positive and negative terminals. Our sample worked just fine after the mistake was corrected, which slightly embarrassed its executive," he says with a bitter smile.
Simplo has a hands-on leader who has since come to be known as Mr.
He has also initiated automation projects to minimize man-made errors. Simplo thus sees a limited impact from rising labor costs in China, where it does all its manufacturing. After landing in Shanghai in 2002, Simplo has situated most of its mainland plant work in Changshu, Jiangsu province.
Sung says the company's proprietary labs, certified by Underwriters Laboratories in the U.S. and tuv Rheinland of Europe, have cut product-testing phases by two-thirds.
But not all events can be controlled. In 2007 a fire broke out at the Jiangsu plant, and Mr. Frontline was soon helping to man the recovery operation. After three weeks without air-conditioning Sung succumbed to fatigue. He recalls being "recharged" that night by having a "back scratch" (or "spooning")--an ancient Gua Sha medical treatment--and being back on the line the next day.
He knows how to land on his feet. "Sung believes no one in the world understands batteries better than himself, which is probably right from the perspectives of notebook suppliers," says Alex Peng, until lately chairman of the Taiwan Battery Association. "And to migrate to the electric vehicle battery field with that strength, he would remain one of only a few who understand the niche market."
The underling tasked with the new EV battery sales, 47-year-old Jason Yen, can only agree about his chairman. "He is a dynamo and outspoken," says Yen.
Taiwan automaker Yulon is the first EV customer and thereby an entry point into the big mainland market if cross-strait relations flower. Simplo also is partnering with state-owned Potevio to supply batteries for an electric bus and taxi program in Shanghai. Potevio, in turn, has teamed with state energy giant cnooc to hammer out a user-friendly strategy that allows EV buyers to lease their expensive batteries and pay by the mile whenever they plug into a public charging system. Simplo has an initial understanding to work on passenger cars with saic, the big state automaker there.
Sung forecasts a 70% replacement rate of gasoline-fueled public transportation in a decade following the Potevio/cnooc New Energy & Power initiative. "[The pricing strategy] will work in China because the Chinese government has the fortune to build the infrastructure and is determined to win in the clean-energy race," he says.
Sung is also excited about the new business, which represents a thousandfold revenue booster, given that each EV battery pack contains 6,000 cells with a $10,000 to $25,000 selling price, compared with an average 3 to 6 cells in netbook and notebook battery packs.
But sometimes Sung's quick and sharp tongue can rub others the wrong way. During a cross-strait trade event in Taipei in November Sung reprimanded a roomful of representatives of electric-vehicle-related businesses from China, warning that half the businesses would collapse if they failed to improve their product quality. "He speaks his mind frankly, but his language is often unpolished, which may offend some people," says Peng, the former trade association head.
Few would dare challenge Sung's memory, which seems precise down to one or two digits after the decimal point. "I'm not good at remembering names or faces, but I crunch and recite numbers like a computer," Sung confesses.
This aids a bent for cost control. Sung "pinches every possible penny that can be saved," says Peng. A decade ago Simplo was already making use of electricity that others were wasting during tests of battery cells, now a common practice in the sector. And he plays off battery-cell suppliers, helping to ensure a steady supply in a business known for its fits and starts.
No number defeats Sung except the company share price, about which he appears to care the least. (His own stake has been watered down to 2% by subsequent equity offerings.) The over-the-counter stock took a year to recover to its precrisis level in August before surging another 30% to $5.90 in mid-May, which Eve Jung of
Before the four-wheel market takes off, the mainland has already become the focal point for two-wheeled electric transport. The e-scooter market in China has sales of 20 million units annually, says Jie Ni, chairman of Luyuan Investment Holdings in Jinhua, Zhejiang Province, parent of a big scootermaker.
E-scooters took off only after the SARS epidemic in 2003 kept commuters out of public transportation. With better batteries, their sales reached 10 million by the next year and have been at the current level since. Simplo only in April began to make battery shipments to its Taiwanese light vehicle partners, which export both e-scooters and e-bikes to Europe. It expects $6.3 million in whole-year revenues from battery sales to two-wheel EVs.
"Taiwanese battery makers, in general, have an edge in the new energy battery supplies," said Ni after a visit to the island's Autotronics Taipei trade show in early April.
Ni thinks the electric cars will be tougher to introduce, but as in the device market, Sung refuses to take no for an answer when it comes to building sales. He says he learned from his days at AST and Kingston to never say never to his bosses before giving something a trial, even if 99.9% of what his superiors asked for was impossible. Likewise, he says, Simplo sales staff stay nimble and rarely say no to clients.
His upbringing taught him about willpower. His father, a retired shovel-truck driver, quit mah-jongg and a five-decade-long smoking habit overnight, Sung says. Mr. Frontline isn't done with anything yet.
The 2010 selections for Best Under A Billion, Asia-Pacific's top listed companies with less than $1 billion in revenues, will appear in our September issue.