By G. Sharmila
In this article, Exabytes founder Chan Kee Siak shares his views on the e-commerce scene in Malaysia today and his big plans for the company.
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When Chan Kee Siak started his web hosting company Exabytes Network Sdn Bhd in 2001, the Internet scene in Malaysia was still very green and there was much to be learnt and discovered. E-commerce players were few and far between locally and the dot-com bust was still fresh in many people’s minds.
Perhaps it was fortuitous then that Chan did not enter the e-commerce business then, but built his web hosting business, which remains the company’s revenue staple. He began offering e-commerce solutions in 2010 and has said that the business is growing rapidly.
The e-commerce scene in Malaysia, however, is still rather backward.
“It’s very sad, Malaysia is 20 years behind that of China in terms of e-commerce. E-commerce penetration is currently 1% of the total retail market.
“China has probably 6% or more e-commerce penetration, the US has 6%, and Taiwan has 10%. So Malaysia has a lot of room for potential growth, we do see the demand is there and that people are ready with them being connected to the Internet and owning smart devices. However, the supply side is the issue, there are many things you still can’t buy online,” Chan told KINIBIZ.
What does he think of the country’s digital infrastructure, is it advanced enough for the country to support e-commerce?
“I think we meet the standards, but for the years to come, we’ll have to upgrade to at least 10 times the (current) speed. There’s no point in just doubling the (Internet) speed, it is still way too slow. With the speed and connectivity being upgraded by at least 10 times, the experience (for the customer) will be more seamless. This should be done within the next two to three years,” he opined.
He added that 10 megabits per second (Mbps) speed is a luxury for most homes now.
“Imagine if you had 1Gbps speed at home. If you have more bandwidth, you’ll hunger for more content and more experiences, and solutions can be delivered to your home. A lot of things can be done online. We have to increase the speed by 10 times but remain at current prices or even cheaper,” he explained.
We asked Chan what Malaysia can learn from neighbouring Singapore, where Exabytes has an office. This is what he had to say:
“First of all, their broadband is far ahead, at home you can get 1Gbps speed at the price of S$100 (RM278) or so. With that you can have a lot of content, entertainment, and apps. It’s a small island, so for e-commerce you can deliver everything within the same day.
“Of course consumers over there (Singapore) are savvier and more matured in terms of e-commerce consumption and cloud adoption. Singapore is a good gateway for those wanting to launch their businesses outside of Malaysia and a good learning ground. It’s business friendly and easy to access,” he said of the neighbouring island state.
When asked if it’s easier to operate a business in Singapore or in Malaysia, Chan admitted that it (Singapore) is easier in the sense that everything is transparent, clear, and efficient.
“The only downside it is quite costly due to labour costs. If you can sell in the Singapore dollars, then it is not so bad. Otherwise, you can sell remotely by leveraging on the lower labour costs in Malaysia and operating out of Malaysia. That’s what we do; we outsource a lot of back-end support back to Malaysia,” he explained.
On his plans for Exabytes this year, Chan said quite frankly that product-wise, nothing much will change for the moment. Hosting remains their bread and butter, he said, and they will continue expanding their e-commerce solutions.
However, the company will grow with market acquisitions, said Chan.
“For example, we plan to expand into Indonesia, we already have a team operating out of that country, supporting our customers in Singapore and Malaysia. We plan to introduce the hosting services to the Indonesian market, then build a client base and later offer the e-commerce products,” he said, adding that they aim to launch web hosting solutions in the country by year-end.
Is he eyeing any acquisitions?
“Right now, the Singapore dollar is very high, so I don’t plan on acquiring anything in Singapore. We’ll probably try to do some acquisition in Indonesia or Malaysia. We recently completed an acquisition, which we will announce soon,” Chan said.
(Note: On July 13, Exabytes announced it had acquired Signetique IT Pte Ltd, a Singapore-based web hosting provider. With the acquisition Exabytes now has a 15% share of the Singapore hosting market. Through the acquisition of Signetique, Exabytes has gained an immediate presence in Indonesia.)
Commenting further on Exabytes’ regional expansion plans, Chan said that within the next three years, they are looking at having a footprint in all major Southeast Asian countries.
When asked if is eyeing a listing for Exabytes, Chan said that while it’s an option, it’s not the primary option.
His reasons? “The financial market doesn’t really understand our business, especially in this region. From what I see internationally, they appreciate tech businesses, but I don’t see local bankers or investors appreciating our business. We are happy to keep it private, and keep on generating positive cash flow. Most investment banks for instance, are still very asset-focused,” he explained.
“I think it’s a chicken and egg situation, there are a lack of success stories but if the financial sector doesn’t support us, there will be no success stories. Look at Jobstreet for example, they have been acquired by an Australian company,” he added.
Has there been any point that made Chan feel that he has “made it”?
“First of all, it depends on how you define success. We see growth every year, so every year is a better year. Within our organisation, every year we’re either expanding or adding on headcount, so these are small successes along the way,” he said.
Chan Kee Siak
He shared that he has enrolled in Wawasan Open University, but has yet to finish his degree.
“I still have three semesters to go, the last two years were really busy. But the funny thing is, although I didn’t finish my college degree, I always get invited to speak at colleges and some have even invited me to advise on their syllabi!” he laughed.
When asked if he has ever had a student come up to him and say, “I want to quit college and be just like you”, Chan coyly replied: “I always have a disclaimer, saying it doesn’t apply to everyone. And I started a business first, then quit and not the other way around.”
What kind of mindset does it take to be an entrepreneur?
Chan said it is all about “thinking big and doing small”.
“You must have a big dream, but carry it out one step at a time. As a business owner, you need to be 10 times more hardworking than everyone else. I always say, when you work for somebody you only have one boss. But when you run your own business, every customer is your boss,” he explained.
Does he have any other advice for budding entrepreneurs?
Chan said that it is important to stay focused.
“Generally new business ideas will take around three years before showing positive results. The first year, you’ll probably waste a lot of time finding your direction and building your team. The second year, you’ll find that you do a lot of corrections and third year, you’ll see more stable income.
“But the problem with most startups is, they can’t wait for three years and so they quit halfway. It is also important to remain humble,” he concluded.
Yesterday: Growing an international presence
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