Formula for success

PUBLISHED : Saturday, 03 May, 2008, 12:00am
UPDATED : Saturday, 03 May, 2008, 12:00am

Entrepreneur turns small ideas into profitable ventures

Managers and business leaders often conjure up a grand vision and talk in terms of globalisation, worldwide networks and fantastical rates of growth, and then try to dream up a strategic plan to make it all come true.

Daniel M. Cheng, in contrast, starts with a small idea. To that, he adds ingenuity, pragmatism and hard work, and then lets the power of multiplication take over. For the managing director of Dunwell Enviro-Tech (Holdings), the formula has proved successful numerous times over the past 25 years.

It is now allowing him to develop new ventures, find profitable uses in different industries for the latest engineering technology, and contribute in practical ways to preserving the environment.

Mr Cheng first struck gold in the mid-1980s. In far from ideal circumstances, with interest rates high and the stock market jittery, he took on a 2,000 sqft family-owned factory in a Mong Kok industrial building. Eschewing potentially grander projects, he focused on producing three small stainless steel components used to guide the tape in video cassettes. Soon, the company was supplying not just all the brand-name cassette manufacturers, but also the duplicators of movies, and had become the world's largest supplier of those particular components.

After the installation of high-tech stamping and polishing machines, production hit 100 million parts a month, attracting visits from overseas manufacturing engineers amazed at the output and efficiency.

However, foreseeing a gradual demise, Mr Cheng looked ahead and fixed his sights on applying breakthroughs in technology to improving the environment.

'When I analysed it in the early 90s, I said all products had a life cycle, but the environmental business was only just starting, so there were unlimited opportunities,' he said.

By chance, he came across a facility in Yuen Long, which had been treating used oil. It was bankrupt, had been idle for more than a year, and was rusting. Mr Cheng, though, saw it as the ideal place to start small and build anew. He invested about HK$10 million on renovations and undertook an extensive study of methods to filter used oil to enable recycling.

'I was determined we could make it work,' he said. 'But it was a financial motivation as much as an environmental one. I will not go into something where I will lose my shirt. There has to be a market and maybe a unique technology.'

The key turned out to be 'vibratory membrane advance treatment technology'. At different temperatures, and when set at different speeds, this acts as a highly effective system for separating various chemical components. With the membrane vibrating at up to 50 times a second, it can be adapted for numerous other processes such as waste water treatment, and the isolation and extraction of key ingredients in traditional Chinese medicines.

'It is tricky process, not to take out or leave in too much,' Mr Cheng said. 'But for different businesses, the technical development is almost identical, and we can optimise it for a particular product line.'

The original concept of recycling used oil has now spawned a group of environment-related subsidiaries, involved in everything from reusing chemical waste to manufacturing cosmetics.

'When I go into a business, I look at the upstream possibility and see where else there is money,' Mr Cheng said. 'But you need to find something outstanding, not just a 'me too' product.'

Inspired to take the environmental message to a wider audience, Mr Cheng launched the '111' project for the Hong Kong Federation of Industries in 2005. Its ostensible aim was to get a company to start one new environmental project once a year. It might be to reduce emissions, reuse materials or treat water.

True to form, the idea was to start small, not talking of ISO standards or penalties for non-compliance. And the multiplier effect is behind the scheme's success, getting manufacturers and service companies to sign up and take one step at a time.

'If you say 'save the world,' people say let someone else do it,' Mr Cheng said. 'If you say help your family and yourself, they are ready to act.'

This article is adapted from a speech delivered by Daniel Cheng in a recent CUHK EMBA Forum. The EMBA Forum is conducted regularly to provide a valuable opportunities for EMBA participants and alumni to interact with key leaders.

Personal file

One of my unfulfilled ambitions is to invest in a tea plantation in China. I think it would be calm and quiet, a place where you could produce tea organically and have the chance to run a sustainable business

I love detective or spy movies with a certain logic to the plot, and I watch all three of the CSI series. If I'm out of town, I make sure to record them on DVD

Like most businessmen, I feel guilty about not spending enough time with my family, but I now block off time for trips. About three years ago, 13 of us went to China for three weeks and took my father-in-law back to his home village for the first time in 60 years. Some people there still recognised and remembered him. You just couldn't beat the joy and excitement of something like that.