Hana Microelectronics might never have become the industry power it is today if Richard Han had done what his father had told him to do some 20 years ago.
His instructions had been to sell the struggling family-founded busi¬ness in Bangkok, and while he tried, he was unhappy with the price offered. In the end, Mr Han took it upon himself to keep the business going.
At the time, Hana was a midsized company employing about 400 workers and its main business was assembling wristwatches. Today it is one of the leading independent electronic manufacturing service (EMS) producers in the region with facilities in Bangkok, Lamphun and Ayutthaya in Thailand, another plant in Shanghai and an R&D centre in the US state of Ohio.
The SET-listed company employs more than 12,000 people and provides a wide scope of assembly processes serving a diverse range of electronic industries, including top smartphone producers Apple Inc and Research in Motion Ltd (RIM), the BlackBerry maker.
“My father was a great visionary, he always thinks about what is the next big thing; back then he chose electronics, and I guess he was right,” said Mr Han, who is currently the chief executive officer of Hana Microelectronics.
Having grown up done his schooling in the United Kingdom, Mr Han stayed there until he finished his MBA. While there, he dedicated himself to pursuing his dream as an entrepreneur, importing artificial flowers as well as assembling and selling low-cost watches.
“I remember seeing some flowers in my house and it made me wonder why they always looked so nice,” he recalled. “I found out later that they were artificial flowers, so I decided to import them and sell in the UK.
“I also managed to engage in the watch business, as my dad’s business was selling watch parts, so I thought it would be nice to sell a complete watch in the UK and the result turned out amazingly.”
Still in his early 20s, Mr Han spent most of his time carrying on the business he set up by himself in the UK and visiting other parts of Europe. However, the real challenge started when he came back to Thailand as his father had assigned him a very difficult task, which was to sell Hana’s business, as it was doing poorly at that time.
Hana started out in Bangkok in 1978 as a small maker of watch parts and gradually expanded into watch assembly, integrated circuits, coils and electronics for watches and other products. But by the early 1990s it had started to struggle.
“I had to work with a financial advisory firm but instead of selling the company, I managed to convince them to buy a 10% stake in our business,” says Mr Han.
“It was a very difficult time and I needed to run around and borrow money. The whole point was that we needed the cash; the company needed to get some breathing space.”
In the electronics industry there are two trends that every player needs to be aware of: short product life cycle and mass customisation. Given these conditions, having ample capital on hand is always essential.
Mr Han, young and energetic, was unfazed by the challenge; it got his adrenalin pumping.
The turnaround did come and by 1993, he got the company listed on the Stock Exchange of Thailand, though he had to wait out a political upheaval.
“The time when we decided to sell the IPO was during the same period as Black May 1992, when the country was having serious protests against the government and the bloody military crackdown that followed; it was such a terrible time.
“I did manage to sell the IPO but we couldn’t get traded. Eventually, things got sorted out. And the first day the shares were traded at 59 baht and they have never gone below IPO price ever since.”
When the shares were trading at 59 baht apiece they had a par value of 10 baht, while today they trade around 21 baht after a split to one-baht par value.
More challenges loomed, however. In September 1997, just two months after the baht was floated and Thailand’s economy tanked, the Hana Semiconductor plant in Bangkok suffered a serious fire, causing property damage of about 300 million baht.
“Another good lesson learned for me from the fire was about the insurance,” says Mr Han. “It was a very bad accident and a critical time for us. We had insurance but it was only for six months. After the incident, we increased the insurance to 18 months which did help us to mitigate our losses from last year’s flood. There’s really no point having insurance if it is inadequate.”
Hana’s Ayutthaya factory was among thousands shuttered when floodwaters spread across Thailand at the end of last year. Even worse than the company’s heavy financial losses, however, was the impact on customers’ confidence. Mr Han himself visited factories and tried to salvage machinery from inundated buildings with the help of the Royal Thai Navy. The disruption led to a 3.8% decline in Hana’s sales and a 41% slump in net profit for the full year.
“Some of our customers delayed orders because of uncertainty over the outlook for demand due to the global economic crisis, as well as the doubts they have about the capability of Thailand’s government to undertake water management,” he explained.
Tensions in the company were high as executives debated what to do to mitigate the losses. However, in order to lead the business forward, Mr Han said he had to remain calm and try to be optimistic.
“In life, it is always about lessons. You have to face many experiences and there will be some bad experiences that you hope haven’t killed you, so you can live another day — but you will need to have them anyway.”
Looking to the future, Mr Han declares that he still sees Hana as a small company that is still growing. His plans are to face all the challenges carefully and creatively.
“The past five years have been tough for our industry, mostly to do with the rise in wages,” he says. “Our industry is dollar-based and the currency has been very weak. Rising exchange rates and rising wages have been great burdens for the company. How to figure these out and how to take Hana to the next level is our main challenge.”
One possibility is to do more manufacturing in lower-cost countries such as Cambodia and Myanmar. He believes Hana could have a new factory up and running by mid-2014, most likely in Cambodia.
“We need to be as close as possible to where we have our base. I think Cambodia may be a better bet, but we haven’t made the decision yet. However, the problems in these two countries are the inadequacy of telecom infrastructure, logistics, lack of skilled labour and power.”
Besides Hana’s success, Mr Han also draws satisfaction from spending time with his family. The father of three says he refuses to have an office in his home.
“Family is of course the most important thing. My kids are still young, I just want them to do what they will be happy doing.”
Does he want his children to follow his path?
“If they want to come here and work with me in the future, and if they are capable and if it is appropriate, then why not?” he replies.
“However, it’s important to note that Hana was a much smaller company when I got into the business. But right now it is a public company. As such the priority must be the business and the shareholders that we need to take care of.”
About the author
Writer: Nithi Kaveevivitchai