Second generation takes family's seafood business global and online while overcoming challenges and adding value to clients' businesses
By Ace Cheah, Bing Hongjian, Lim Li Ly and Malcolm Cheng
Supervising Professor - Nitin Pangarkar
Foreword
This article was first published in the book Enterprise 50 - The best SMEs in Singapore 2019/2020, which serves as a comprehensive exploration of the transformation and innovation efforts by our local companies.
The intense competition and evolving market trends of the seafood business present challenges that Mr Loh Guo Pei, 40, Managing Director of HSF Global Pte Ltd, faces on a daily basis. Under his charge, the company has overcome these issues by building competitive advantages and a closely-knit team.
Within the first few years of its incorporation, HSF Global won the Enterprise 50 Award, with its key success driver being the ability to adapt quickly and differentiate itself from competitors.
A family business
In the 1980s, frozen seafood started to gain acceptance in Singapore. Mr Loh's father, Mr Loh Par Hong, established Hong Seafood Pte Ltd in 1986 to capitalise on the growing trend
Hong Seafood began as a local business with only two chest freezers. It purchased seafood from local importers and distributed them to local restaurants and hawkers. When the business grew rapidly, Mr Loh's mother, Mdm Ang Suan, joined the company in 1992. Today, the couple runs a company that operates a modern ISO 22000-certified seafood processing facility with its own fleet of refrigerated trucks to meet the strict food safety standards of their customers.
With its own integrated cold chain logistics, Hong Seafood provides clients with reliable service from order capture, inventory management to delivery. This allows customers in the food and beverage (F&B) sector, which face manpower shortage and limited space for food storage due to expensive rentals, to focus on their core business.
Given its reputation for reliable service and expertise in frozen seafood, Hong Seafood is now a leading seafood importer, processor and food service distributor in Singapore, servicing a diverse group of clients, such as major restaurant chains and hospitality groups.
"We supply all types of frozen seafood to most five-star hotels in Singapore," said Mr Loh.
Returning to the roots
After graduating from the University of Toronto, Mr Loh junior worked in multinational corporations for more than five years before he joined the family business in 2009. "To start something on my own and to continue the legacy of our family business," said Mr Loh, on why he joined the family business.
He spent the next few years learning the ropes of the seafood trade under the careful guidance of his parents and did job rotations to understand different aspects of the business. Mr Loh eventually concluded that he could not add much value to the existing business as it was already well-managed and led by a strong management team. That was when he set his sights on discovering new ventures for the company.
While the business was well-managed, Mr Loh realised it depended on local importers for supplies because of its limited experience with international trade and supply chains. Not only did this hurt price competitiveness, the company was unable to ensure its products' quality and supply stability.
Birth of a new company
Mr Loh decided to venture abroad and source directly from overseas seafood producers. This new strategy allows the company to have greater control over the supply chain and provide ocean-to-plate traceability, which is increasingly important for consumers interested in the provenance of their food.
The company started sourcing frozen seafood at highly competitive prices through successful partnerships and joint ventures with leading seafood producers around the world. However, Mr Loh recognised that business growth would still be limited if the company continued to focus solely on the small Singapore market. There was an urgent need to expand overseas.
Mr Loh decided the timing was right for his next business venture and established HSF Global in 2015 as an international food trading business that markets frozen seafood to overseas customers by leveraging on the strong supply chain network developed for Hong Seafood.
Expanding overseas
Although Hong Seafood was already well-established in Singapore, HSF Global had no presence in the targeted overseas markets. Mr Loh and his sister, Ms Loh Shell Yee, worked tirelessly to gain traction for the new international business in its early days. They participated in trade shows and cold-called potential customers to get new sales leads. They also personally visited overseas customers to gain in-depth understanding of their business operations and find ways in which HSF Global could add value to them.
Mr Loh recalled that they did not secure orders for many months after HSF Global was set up. It was only two years after its establishment that the siblings achieved a breakthrough. With hard work and perseverance, they managed to snag their first order - from a customer in Taiwan. Although the customer initially did not want to work with HSF Global, Mr Loh and his sister stayed in constant contact with him. Impressed by their perseverance, professionalism and expertise in frozen seafood, the customer placed his first order and has remained a loyal customer ever since.
With Singapore as its global hub, HSF Global was able to expand its international trading business exponentially in a relatively short time while growing its product portfolio steadily to include frozen meat and vegetables. HSF Global now has offices across the region and manages a team of professional buyers and highly-trained quality control inspectors, providing a complete suite of services including procurement, quality assurance, order management and new product development to overseas customers. HSF Global is certified with Marine Stewardship Council (MSC) and Aquaculture Stewardship Council (ASC) Chain of Custody, a testimony to its commitment to the sustainability of its seafood products.
"How to add value to my customer?" - HSF Global's Mission
HSF Global has a diverse group of customers and remains focused on finding ways to add value to their business.
For example, Mr Loh and his sales team would approach restaurants which have limited or no seafood offerings. Such restaurants may not have the expertise or the capacity to source for seafood themselves. By leveraging on its expertise in seafood and strong supply chain network, HSF Global works closely with the restaurants to come up with seasonal seafood menus, thereby creating value to the eateries by increasing their menu offerings and revenue.
Keeping a close eye on changing trends
As Mr Loh put it, "Seafood is a very interesting trade." The industry is always evolving, and one needs to constantly learn and adapt to stay ahead of the competition. This is especially true today because consumer habits and technology are changing at a very rapid pace.
The increasingly mobile and fast-paced lifestyle of customers have changed the F&B sector's landscape. F&B establishments have to continuously re-invent themselves as the younger generation is always seeking new tastes and different dining experiences.
Mr Loh actively engages his stakeholders to keep his finger on the pulse of new market trends. The company must also stay nimble and be ready to revise its business strategies when necessary.
Family-oriented culture
Together, Hong Seafood and HSF Global have more than 50 employees in Singapore and the representative offices located in China, Vietnam, Malaysia and Taiwan. They have a family-oriented culture, with people development and progressive employment practices. "We are an SME, so everyone has to help out sometimes," said Mr Loh.
It helps that some employees have been with Hong Seafood since its establishment in 1986. It has flexible working hours which allow for a better work-life balance. Regular get-togethers are held to foster team spirit and build camaraderie among employees.
Hong Seafood partners local polytechnics to recruit fresh graduates through the SkillsFuture Earn and Learn Programme (ELP), which prepares new hires for suitable job roles through a structured career pathway in the company. It also participates in P-Max, which is a Place-and-Train Programme that aims to help SMEs better recruit, train, manage and retain mid-career PMETs (professionals, managers, executives and technicians).
Hong Seafood invests heavily in staff by sending them for external training to further upgrade their skills. It has also recently engaged a HR consultancy firm to review and improve its systems and processes.
Crisis management
Mr Loh expects the current COVID-19 pandemic to be far more damaging to the overall food industry than the Global Financial Crisis of 2008.
While COVID-19 is a black swan event that no one could have foreseen, it is fortunate that Mr Loh had anticipated an economic downturn from the heightened US-China trade tensions. As such, he had taken a relatively conservative approach on expansion which allowed the company to stay financially strong to ride out the pandemic and be ready to take advantage of the eventual market recovery.
"It was a challenge because the business was down but at the same time, we have to keep enough stock in case there was a disruption in the supply chain," he said.
"Thankfully, we have our international business which has helped a lot. If one country is locked down, we can source the same type of seafood from another country. Our supply chain is actually quite robust and our revenue stream is quite diversified," said Mr Loh.
HSF Global has also implemented business continuity plans which allowed it to operate smoothly even when the COVID-19 safe management measures were implemented.
"We took the opportunity to upskill and train our staff towards customer service. It is very heartening to see that the business has grown so much," he added.
Giving back to society
Since the inception of HSF Global, Mr Loh has given back to the community, both locally and internationally. The company engages in corporate social responsibility (CSR) projects and partners with the local charity, SPD, to recruit and train employees with disabilities.
Mr Loh believes in the importance of education and has helped to build two schools in the rural parts of Vietnam where HSF Global has significant business. The schools were located in Quang Ngai province and Dong Thap province. The company has also donated to the E50-NUS Business School Undergraduate Bursary to help needy students.
Moving forward
HSF Global seeks to remain competitive by investing in technology and human capital.
The company is currently implementing a new warehouse management system that allows real time inventory status update and process automation through a barcoding system, which raises productivity while eliminating human error in business processes. It has also developed a proprietary Customer Relationship Management system to electronically record and categorise customer feedback and complaints, enabling the company to provide faster and better service. The system also provides data for further analyses to identify sales opportunities and for the company to take preventive measures to pre-empt complaints.
The future is bright and exciting for HSF Global. Being highly-attuned to the latest consumer trends, the company has invested heavily in R&D to develop healthy ready-to-eat products targeted at the retail segment under its own brand, Lau Yuen Tong. These products, such as essence of chicken and scallop congee, are made with all-natural ingredients without preservatives and can be stored under ambient temperature for maximum convenience while retaining nutrients and taste. The company currently operates retail outlets in Taiwan to create a seamless online to offline experience for customers.
In Singapore, the Lau Yuen Tong products are sold through the company's own e-commerce website at lyt.sg as well as various e-commerce platforms such as Qoo10 and Shopee because it currently does not have the right people to manage physical stores in Singapore. The company continues to innovate and develop new products, and has plans to launch Lau Yuen Tong products in regional markets such as Hong Kong, China and Vietnam in future.
In addition, the company recently started its online grocery business brand known as Food Explorer. The online e-commerce platform foodexplorer.sg carries various fresh seafood products such as Norwegian salmon and frozen cooked vannamei prawns in addition to Lau Yuen Tong products. Although Food Explorer was already established before the COVID-19 outbreak, the pandemic expedited the acceptance of online grocery shopping. Food Explorer's timing could not be better. While its growth was already encouraging, the pandemic accelerated that growth. HSF Global scaled up its operations rapidly to meet demand, made plans to increase the online product offerings and boost its marketing efforts to further grow the business.
"We see there is potential to sell to the consumers directly. Sometimes, it is logistically challenging to meet their requirements. Fortunately, Enterprise SG helped us with the implementation of a new warehouse management system that makes our logistics more efficient," said Mr Loh.
All told, these new ventures have allowed the company to increase its brand equity and build business resilience through revenue diversification.
"When COVID-19 occurred, we were affected quite significantly. Fortunately we have a diversified business," said Mr Loh.
Important milestone
Winning the Enterprise 50 Award in 2019 was an important milestone for HSF Global. The company's success was an affirmation of the team's hard work and dedication.
Conclusion
The journey has not always been smooth sailing for Mr Loh and HSF Global. There have been many challenges, for instance, during the initial overseas expansion and keeping pace with the ever-changing market trends. But as Mr Loh put it, the tough times will pass and the key to a successful business is to stay focused and persevere.
"While luck plays an important role in success, perseverance is the key as there will always be ups and downs in business," said Mr Loh.
We have to accept the fact that things are not the same. We need to change because the world is changing. If we can build a business from scratch, this is a crisis we can overcome.
Mr Loh Guo Pei, Managing Director of HSF Global Pte Ltd.