CUTTING COSTS, SAVING JOBS - Kenny the Fish stays buoyant

April 2, 2009 (ST by Yang Huiwen)

Boss of ornamental fish group Qian Hu has imbued staff with culture of cost consciousness

THE global economy is in troubled waters, but ornamental fish group Qian Hu is well-placed to swim against the tide thanks to extensive measures to scale back costs.

Having a boss known as Kenny the Fish who leads from the front and pledges no layoffs helps as well.

Kenny Yap - executive chairman and managing director - told The Straits Times: 'In Chinese, there is a saying that business is half earned and half saved. That very much applies to us.'

He has made the firm highly cost-conscious over the years and the culture has become so accepted by staff that it has allowed the firm to get even leaner during these times.

Mr Yap, 43, who has won numerous entrepreneur awards, is credited with transforming a small time specialist breeder into an integrated group exporting ornamental fish to over 80 countries, with retail stores in Malaysia, Thailand China.

The downturn has certainly hit the firm but the numbers still stack up pretty well.
Revenue dipped 7.2 per cent in the fourth quarter last year, but better cost controls meant net profit rose 10 per cent over 2007's to $1.74 million.

'We've had a low-maintenance company lifestyle all along. It's all about building good habits when it comes to managing costs,' said Mr Yap.

Keeping costs down became part of the group's DNA after an ambitious but expensive move to expand and diversify from 2004 to 2006 sent the firm briefly into the red. There was a desperate need to control costs then, prompting Mr Yap and two other deputy CEOs to give up bonuses for three years.

It also taught valuable lessons in cost management that have left them in good stead to weather this global turmoil. Qian Hu is so cost-conscious it does not even engage a cleaner. Instead, staff draw up a duty roster and take turns to clean the premises at Jalan Lekar every day. This instils in employees the 'concept of ownership', said Mr Yap, who does his share of the work by cleaning the toilets.

Leaders have to lead by example, he added. 'If you are fair to your employees, they will make sacrifices during bad times.'

Good times or bad, senior executives fly economy class or even take budget airlines for business trips, and stay in two- or three-star hotels.

But the firm is stepping up its cost-control measures, after setting an internal target to further bring down total expenses from the previous year's. Measures include more aggressive recycling, conserving energy, a cheaper menu at its corporate dinner and improving productivity of its fish breeding process.
Staff have been assured no one will be losing his rice bowl, thanks to its 'corporate culture of being prudent in spending, even during good times', said Mr Yap.

Operations manager Ong Seng Ann, 41, said: 'All along, I think the company has been very conservative when it comes to spending. Everyone of us is doing his part and doing it well, and hopefully that will keep the company going strong.'

He and his operations team, for example, are doing their bit by aiming to reduce the death rate of fish through more inspections and quality checks.

The company has also become tougher on overtime claims. Operational staff, who take care of the fish, have been encouraged to 'clock out' when they have completed their day's work, said human resources senior manager Raymond Yip.

It recently converted all its lever-type turn-on taps to spring-activated push taps to save water. There is also a greater focus on recycling items such as plastic bags and styrofoam boxes.

Qian Hu is also cutting down on internal company events. Its recreational days for staff have been cut from three to two a year.

The Jobs Credit scheme is offsetting about $220,000 in wage costs a year. This helps mitigate a 2 to 4 per cent increment in staff salaries implemented last year. There are no plans to freeze or cut pay, although the firm is capping headcount at the current 137 for its Singapore operations.

Mr Chai Teck Yi, 24, who works in the export part of the business, said he was relieved that he was assured of his job. 'It helps that our bosses give us regular updates of how the company is doing and the plans they have in store.'

Said Mr Yap: 'Frequent communication with employees is extremely important during the
cost-controlling period. This is because we must constantly impart that concept and at the same time update them on the progress so that they can be assured there is a purpose for their sacrifice and there are results as well.'

Qian Hu is also taking a more cautious approach in managing cashflow. The finance department now monitors its debt collection on a daily basis to make sure customers are sticking to their credit terms, instead of a few times each month.

'I don't think the business is recession-proof, but it is resilient,' said Mr Yap. For this year,the group will continue to focus on containing operating costs and increasing productivity, he said.

Question:
Identify some of the ways Qian Hu is cutting costs