Believe what they do, not what they preach

We are looking at this part of the region very closely ... at businesses with international exposure.

"We definitely like energy and resource-based sectors and we also like consumer and retail because these sectors reflect the growing affluence of the population and the growing economic base...

BTimes, 13th August 2008

Invest because of China, but not in China

"Invest because of China, but not in China" Cho Yan Chiu, Hong Kong Economic Journal


envision the vast opportunities created as a result of billions of middle class' demands and consumptions in China and its implications

VC funding - Comparisons btw Singapore and Malaysia

originally posted at
http://bleongcw.typepad.com/simple_is_the_reason_of_m/2008/07/barcamp-malaysi.html

To make this discussion really interesting, I still draw out the three sections of "Invest", "Value" and "Fund" and broke it between Malaysia and Singapore, so that I can sketch out some notes from the discussion. Of course, since I am here to learn more about the Malaysian venture funding for technology companies, I started off with asking William questions about various funding schemes available and the features of funding in Malaysia, then supplement the significant differences between both countries. Of course, the same discussion extends to seeking the funding sources and finally the valuation of the companies. Of course, together with feedback from the floor helps to mold the discussion that can be of value to everyone. Here are some of the interesting points of discussion:

• The nature of funding for technology start-ups: First of all, the funding situation in Malaysia is slightly different from Singapore. In Malaysia, there are designated funds for the ICT entrepreneurs namely, (i) Cradle Investment Program, (ii) MIRC - MCA ICT Resource Centre and (iii) MDEC Technopreneur Pre Seed Fund. The range is from RM$50K to RM$150K. A good summary of these funds can be found in this blog. It is pointed out that these funds except for (iii) are on reimbursement basis. In fact, it is difficult to get access to the funds with only the ideas. While the nature of the micro-financing fund run by IDM office (MDA, Singapore) together with the business incubators (for example, Thymos Capital LLP which I am part of) is focussed on turning ideas to prototypes, the direct disbursement of funding to the entrepreneur gives us a different perspective from our Malaysian counterparts. The interesting note is that in Malaysia, funds can be easily accessed through networks where the entrepreneurs have access to prominent Chinese businessmen. One interesting thing about the Malaysian funds is that they used the physical infrastructure from CyberJaya to support the ICT entrepreneurs. For Singapore, the upcoming Fusionopolis will have incubator for the entrepreneurs to seed ideas as well.
• Criteria for investment: Venture capitalists from both countries share very similar sentiments about funding a company. The Malaysian investors preferred companies which are profitable, pegged with a good team but with the additional notion that the entrepreneurs are also good at selling. I don't think the Singaporean side defers that much except that in most of my encounters with the venture capitalists, the profit margins & business models are extremely important. In fact, contrary to the opinions of developers and technologists that an idea is worth a million dollars, investors from both countries thinks that the execution of the team for the business is more important. As I put it later after the discussion to a group of young Malaysian entrepreneurs, I prefer less talented entrepreneurs with good execution and passion to complete a project than talented entrepreneurs with a bad dose of not meeting deadlines and poor execution.
• The mindset for seeking funds past and present: I thought that one investor from the audience made a very good point about the past and present views of young entrepreneurs about venture funding. I have encountered similar comments from older private investors in Singapore, but this investor made a very astute observation about the difference in attitudes between young and older entrepreneurs. Perhaps, two to three decades back, an entrepreneur will seek funding from their family, gathering funds from their parents and relatives, and then go all the way with the notion that they must succeed. Today, the younger entrepreneur do not seek funding from family but from external sources and put it in a way that they are less liable if they screw up. It is almost like the investors bearing the risk. In some sense, this is attributed to the rising affluence for the well-educated people in countries. In fact, I press the argument that the ways of seeking financing in Silicon Valley do not work in southeast Asia, and talking to a few investors in Malaysia reinforced my point, even the more established foreign venture capitalists who prefer to go for companies looking for growth financing rather than something innovative that can change the world.
• Rapid strategies for start-up growth: Young entrepreneurs can be talented and driven, but they don't think hard enough to ensure a positive cashflow. In fact, a more experienced entrepreneur will attempt to find ways of raising capital that is outside the traditional venture capital format. I have been talking about finding ways to list companies in places like AIM which is more commonly used in the West. Of course, a lot of entrepreneurs I have encountered have no idea of how to transition the start-up into a growth stage company or even make attempts to acquire or merge with their competitors. Both investors from Singapore and Malaysia lamented that the entrepreneurs only think about their domestic markets but not further out. I find this quite ironic but I think that expanding the horizon of entrepreneurs in southeast Asia is important for a robust entrepreneurial scene to grow.
  

Books prices and marketing strategies in Singapore bookstores

originally posted at
http://practicallife.wordpress.com/2008/07/24/books-prices-and-marketing-strategies-in-singapore-bookstores/

I have been observing prices on two largest chain of bookstores in Singapore - Borders and Kinokuniya. Read more to find out what I have found.

Borders

Borders in singapore once achieved the most profitable store by area size in the world. It generated more revenue dollars per square meter or square feet than any other stores. I personally like Borders as they have a large store and allows most of the books to be browsed.

While some people do try to exploit the goodwill e.g. stacking many books and read them at one corners for hours or whole day long, it provides many genuine customers an opportunity to read and evaluate if they want to buy the book. Sadly, recently, they started to wrap some of the books but this is still quite minimal compared overall numbers of books.

It also concentrates on English books and no Chinese or Japanese books are on sight.

For many years, Borders did not have any discount or membership cards. Last year, they launched Borders Preferred card. The card holder is entitled to have 10% further discount from book price or after any ongoing store discount. This is pretty unique.

It entices customers to come to their stores. Almost every month, an email would be sent with a e-coupon for a big discount on purchase of one book. Yesterday, I just bought 1 book with 25% discount voucher and additional 10% with the card. I also bought two more books at a normal discount (see how it works to attract customers with big discount of one item and customer tends to purchase more?)

Kinokuniya

It has the largest bookstore in Singapore by area and located in Ngee Ann City (Takashimaya). Many o fthe books are wrapped so one can’t really browse the content to evaluate. Larger and more complete collections are offered here ranging from non-English books to less popular interest.

Kinokuniya has a long-running membership program that entitles the members to have 10% discount of normal book prices or 20% during certain promotion period (over the weekend usually). The books they have is more complete while borders usually stock 1-3 copies and stop selling if it has slow turnaround time.

Facts

Book prices in Singapore from those two bookstores are excessively expensive. A book that sells for US$ 29.90 (~ S$ 42) would be listed at S$ 60.00. This mean most of the books are have 50% over their RRP in the US. Compare this with Amazon price, you’ll know that even the RRP is already high. Amazon never sells at RRP, simply because RRP (Recommended Retail Price) already have a significant margin included for bookstores to make money.

Typically, a book can provide at least up to 30% margin for the retailers. So in this case, the bookstores grossly increased the price by 80% to Singapore local price. It can even be higher margin if the publisher provide a special or higher discount for the retailers for buying in bulk.

Now, provided that the bookstores provide 10% discount, they store still earn at least 70% in gross profit margin. I would believe they earned a hefty amount of money even after substracting all operating expenses. No wonder Borders in Singapore can achieve the most profitable store in this small-population country.

So the next time you buy books even with 35% discount, think that you may be still contributing 50% of your book to the bookstore. It is a good deal but not a great deal.

One may argue that buying from Amazon is cheaper but become more expensive when added with shipping cost. True, but I still feel that companies should maintain a reasonable profit margin and no higher than that. Obviously reasonable could be different from consumer and seller point of view.