Finnish Vacon’s case is a typical scenario showing the important role as the hub for the region that Singapore is increasingly playing. With its pole position in attracting such corporate hubs, it becomes a necessity – and advantage – for most businesses to follow suit. Vacon, with on-site support from FinPro, set up their regional center in 2012 and did so for good reasons.
Vacon is passionate about developing, manufacturing and selling the best AC drives (the device that is used to control the speed of an electrical motor) and inverters in the world – and provide customers with efficient product lifecycle services.
Hub at the heart of major growth area
A lot of their existing major customers, but also other potentials they do not yet do business with, have presence in Singapore as a regional hub, says Olli Tevä, Vacon’s Vice President for Middle East, India, SEA, Pacific. Singapore is at the heart of one of the major growth areas.
The new centre will ensure that Vacon’s entire product portfolio and service network offering are available to customers in the region.
Vacon also plans to tap into Singapore’s rich supply of skilled and experienced workers, in order to continuously improve their customer service and build their presence in the region.
“We are looking also to staff Singapore with sales personnel, so that we can look into those potential customers, and also other countries where we see big opportunities to be in a better position to attract them.”
“As many of Vacon’s global customers have their regional offices in Singapore, it will help us in building seamless cooperation with them. This also reflects Vacon’s values: keeping customers and partners at the heart of Vacon’s operations,” Olli explains.
“I was involved in the decision to set up the centre here, which was based on things I was able to observe from back in Finland, plus existing knowledge. Now I know more and was happy to find out only afterwards that for example one of our key companies globally, Kone elevators, have their Middle East/South Asia/Asia Pacific head office here. So they are actually managing their business for the exact same region from Singapore. And then customers like Rolls Royce, a big global account for us, have established their global marine centre here in Singapore, shifting people and the experts from the U.K, so also to be able to coordinate the business with Rolls Royce, it makes sense.”
“It is to give to our company here a face and make sure we understand our global customers’ needs locally since they are heading their businesses [for the region] from here,” Olli describes the purpose of this Regional Center.
For service and sales they currently use ten different partners.
“That’s our business model today, but increasingly – since our global customers are focusing on this area – we’ll need to start changing that way of working for some select customers and establish ourselves also in the region so we can support those that require direct factory contact.”
However, they plan to continue with their partners and only go directly with certain customers.
Synchronizing the operations
Vacon also has an office in Bangkok looking after the Southeast Asian region in Bangkok, reporting to him.
“They have been doing a great job in establishing Vacon here in this region but a lot of things happen in Singapore – and it’s far easier to manage all the relations and the projects that are going across the borders from the place where our customers actually have their hub.”
For example Vacon is seeing a lot of projects coming to Southeast Asia from India and Olli is coordinating the cooperation between these areas.
“Southeast Asia is a potential market for their industrial system integrators and so forth. It really pays off to synchronize the operations in these different locations so that if India is making sales of integrators, exporting the goods to this region, we need to make sure that the end user buying from them approves Vacon as a vendor. We need to work locally here with our partners and own staff to convince the end user that they will accept us so that the guys in India can get the deal.”
“It also goes in the opposite direction: there’s some system integrators in this region who then export to India, so there’s a lot of cross-country cooperation that we need to do. And today Australia is looking more to Asia as their strategic partner.”
“So more and more we can see joint efforts from our people to actually collaborate and get the deals done. So actually that is a big part of the role that I want to do here. And a lot of the people who are working on this kind of cooperation are actually in the countries, so the work done here in Singapore is quite limited.”
Local presence and centres of excellence
Vacon’s plan is to establish certain expertise in the region. Olli is not yet sure whether those people will be based at the Regional Center or in the respective countries. It is the next step he is working on.
“We want to establish our own local presence in the major countries here and be sure that we have our own network of people. Within the next year we will increase the number of people supporting the region.”
But one thing is certain: Olli wants to find people who are from this region.
“I would like to see people who are actually already integrated and understand the way business is conducted in this region.”
The Finn is humble about his role on the Asian market.
“For me it has been a learning experience to come here and it helps me to understand how things are done, but I cannot expect myself to know it as well as those who have always lived here. I can never reach that level.”
The other purpose is to be in charge of effective sharing of best practices, know-how and the professional personnel that the company already has in the same areas. This will open up new opportunities for Vacon to gain market share and increase volumes in this region with its huge population and great market potential.
Olli elaborates: “Vacon operations have centres of excellence; in some countries we are very good in marine and offshore, in some places we are good in pulp and paper, in some in building automation and so forth. To further grow we really need to ensure that in every country we take the full potential of all these segments. And to me the fastest way of actually accessing a particular segment in a country where you are not active today is to learn from your colleague in the neighbouring country who is successful in that business already. We want to be one of the top players in every segment that we are in.”
“The most unique thing about Vacon is that we are by far the biggest player in the drivers market only doing drives. All our main competitors are known for multiple products and industries, whereas we make only one product but we want to be present, and over time strong, in every industry that is using AC drives.”
Saving energy is key for all customers: “I’d say the biggest common nominator for all our customers is the energy-saving. Energy cost is high and availability in some locations, like in India, scarce. Electrical motors consume about 30 per cent of the global electrical energy. 30 per cent of that could be saved if AC drives and high-efficiency motors were used.”
Software-oriented product future
Vacon’s products are also used for generating power to the network from renewable sources. The main role of AC drives in these applications is to secure power quality and compliance to safety regulations.
“Wind mills, for example, are connected to the national electrical grid, but the output voltage and generator frequency do not match the national grid so with our product you actually purify and comply to the strict requirements.”
Future differentiation will be about the software.
“We feel that the developments of the products onwards will increasingly be software-oriented; how you can customise the product to be more efficient and more easy to use and adapt to different customer processes, and address even smaller companies with a dedicated type of product for them. That has been one of the strongpoints of Vacon that we have had a programmable logic inside the drive,” ends Olli.