Keeping the wheels turning

LIKE many second-generation business owners, Joe Ling, 37, was somewhat reluctant to return home to shoulder the next phase of the company’s growth. He had a cushy job in Australia and had already earned his permanent residency there.

But continuity at Linaco Group became a concern.

And on hindsight, Ling says it was time to repay the sweat, blood and tears of the first-generation owners.

Linaco was founded by Ling’s father, Richard, in 1992.

Richard, the ninth in a family with 10 siblings, came across an opportunity to become a contractor after various odd jobs upon completing his secondary school education. Business was brisk as he was among the few contractors who spoke English in the 1970s. At its peak, Richard had 26 excavators under his command and was pulling in a monthly income of RM20,000.

Back in the 70s, it was a big fortune.

However, Richard was weary of the lifestyle of a contractor and was looking for other options to earn a living.

His eldest brother then introduced him to a new technology from the Philippines to commercialise dry coconut powder, which seemed a decent opportunity to explore. He decided to give it a go, chipping in RM400,000 in the venture. Being the youngest shareholder in the company, Richard was entrusted the task to drive the business. He learned everything about the coconut business from scratch and made do with a salary of RM3,000.

The profits eventually came rolling in and in the early 1990s, when IPOs were all the rage, the shareholders of the company decided to list the company.

But Richard was only in his 30s and wasn’t ready to lead a company under the scrutiny of the public eye. He sought the blessings of the shareholders to exit and start Linaco. Now familiar with the coconut business, Linaco was a breeze for Richard.

Linaco started diversifying into other coconut-based products such as coconut water and acquired herbs and spices brand Claypot to grow. It also started carrying out packing works for Ayam Brand’s coconut-based products.

After two years, Ayam Brand expressed interest to take up stake in Linaco’s manufacturing plant but was concerned about the company’s lack of succession plans.

“That was when my father started asking me to come back. You know, you hear stories about the second-generation and how you can never resign and things like that. After a year (of my dad asking), I finally decided to give it a try,” says Ling.

His three-year trial period went on and on.

“I realised I’ve been conned for 11 years,” he laughs.

Ling came home in 2007 and learned the ropes of the manufacturing business based in Batu Pahat, Johor. Meanwhile, his older brother, Jimmy, who joined the company a month earlier, took up his seat at the headquarters as group managing director.

Business started growing after that following synergies from its partnership with Ayam Brand and with new customers from the US and China.

Tweaking growth plans

When Ling and his brother came into the picture, they brought with them a fresh approach to managing a business. They pushed for newer technology and a more casual culture.

“For example, when I first joined, we were using an external email server. I can’t explain how bad it was. Then I decided to use Office 360.

“Previously, we’d only pay RM200 per year for the email. When I took that up, we had to pay RM4,000 per year. Or course, it didn’t go down very well with accounts.

“This year, I’m pushing very hard for a full-scale ERP to come in. Time is very valuable for us now. I remember my dad telling me, last time, he’d write to Europe and only get a reply two weeks later. In between, he could play golf. But you can’t do that now. You have to reply immediately,” he explains.

Ling, the managing director of Linaco Manufacturing (M) Sdn Bhd – the main subsidiary under the Linaco Group – would like to think that they brought a fun side to the company. They did away with coats-and-ties and employees were allowed to dress down on Fridays. This also helped with bringing in new blood into the company.

The company now also organises more family-based activities and encourages the participation of families at its head of departments’ retreats.

Ling says his early entry into Linaco has enabled him to observe the growth of the company and its impact on the people associated with the business. This, he says, is where the real growth of the company will be focused on over the next few years.

“The value system of the founding family has not changed. My dad has always had a heart of giving.

“But we formalised a lot of these things. We came in as more of a stabilising factor. We really hope to grow the building of society on our CSR side. Right now, for any partnership that we go into, we inform our partners that 10% of the income will go to the welfare of the community,” he reveals.

But it’s not just growing on the humanities side. Ling says Linaco is also looking at growing its brand reach into new markets.

Currently, the company exports its products to some 40 countries. Exports make up about half of the group’s RM400mil revenue.

Coconut-based products currently make up about 80% of its revenue. But Linaco is also looking for opportunities to expand its portfolio into other products.

“We are doing studies on other products. But to get things moving faster, we will go into merger-and-acquisition more than start a new venture from scratch. If we are ready, we’ll start to hunt for such businesses, building synergies with others,” he says.

While Linaco is looking at more possible food-related products to market, he says coconut-based products will remain its core products for the time being.

Its plant in Batu Pahat, measuring 24 acres, is 80% utilised at the moment and processes about 500,000 coconuts a day.

It will be expanding into Indonesia by tapping onto its partner’s operations. This will allow Linaco to focus on marketing its brand there.