Made in Sri Lanka
Kushan Kodituwakku aged 22 was placed at the helm of Clipsal Lanka (as it was then known) following his father's demise. Today, Kodituwakku is the Managing Director of Superbrand-certified, Orange Electric, and tells of his journey to the top, and his continuous effort to market Orange as Sri Lanka's first truly global electrical brand.
By Harin Fernando
The roots of your father's business enterprise?
My father began his business life working for my grandfather who hailed from Matara. My grandfather had his roots in the automotive business and was one of the pioneers who set up a spare parts trading establishment at Panchikawatte, in Colombo.
Prior to dealing in spare parts, my grandfather would purchase oranges from the Bibile township and transport these to Colombo. His truck would often suffer breakdowns, and because of a lack of spare parts in the town of Matara, my grandfather soon established a booming spare parts enterprise in the town.
"We decided to re-brand because we knew that, if Clipsal was bought out, it would mean that no Sri Lankan electrical brand would ever stand to make a global presence."
Given the eclipse of the spare parts trade over his transport business, my grandfather soon moved to Colombo and set up shop in there. He also got his friends and relatives involved in his business activities, and before long, a string of shops along the south coast up to Matara was operating under his auspices.
To quench the thirst of his network, my grandfather also began importing spare parts directly from Europe.
Following the demise of my grandfather, my father took over the helm and faced an increasingly competitive market when it came to automotive spare parts. With a bleak future ahead, my father decided to diversify and thus entered the arena of electronics with the acquisition of Morris Roche & Co (then agents for Phillips).
The Phillips factories soon shifted from Holland to China and the products began to have many issues especially relating to quality. It was at this point that my father di-vested from appliances and moved into electrical accessories using the then existing Phillip's dealer network.
Clipsal Lanka was thus born some 25 years ago as an Australian/Sri Lankan joint venture. It began with a small assembly line and then the company evolved over time.
I studied industrial engineering in the USA and upon my return worked under my father in the manufacturing section, a passion of mine.
At that time, we were doing very little manufacturing with only assembly work taking place. Thus, since my passion was manufacturing, I wanted to begin downstream manufacturing. But unfortunately, three months after I joined the company in 1995, I faced up to the passing away of my father. Following his demise, I took over the com-pany having just graduated from university.
This was a big challenge for me as I was not prepared to be entrusted with this form of responsibility. I have always been involved with the manufacturing element of this business but never the business side. I was 22, and with little or no managerial experience, there was a lot of pressure coming from a number of stakeholders who were concerned with the company on the brink of collapse.
The ‘one man show' my father had begun was soon running out of steam and many senior managers left the company within a year, doubting our stability. I was charged with setting up a vision for the company, and after some contemplation, the vision was established that we were going to manufacture ‘from the light meter to the light bulb and everything in between.' In essence, ‘total electrical solutions.'
We were then only dealing with a limited range of switches and sockets that made up 15 or so products. This was mainly an assembly operation with some basic moulding as well. Our process of localisation began and by 2000, the company had grown ten-fold and we had a portfolio of products that was in line with our vision, ‘from the light meter to the light bulb and everything in between.'
This was a period of great success as the company shared many innovations in the market and also gained market acceptance as a strong brand. Crisis hit us once again when Clipsal Global decided to sell their business concerns to Schneider of France, a decision taken almost overnight.
At this juncture in time, we had two choices, either sell to Schneider like the majority of others were doing, or go it on our own and create a powerful local brand. An element we had to our advantage was that, unlike many other Clipsal subsidiaries overseas, we had a majority shareholding in Sri Lanka, thus we were not legally obliged to sell overnight and not subject ourselves to a hostile takeover.
By this time, I had decided that we should go it alone and create a brand that would retain the market share that was held previously by Clipsal and challenge the whole market in general. To change a brand that was established in the market for over 20 years overnight was a huge task.
We decided to re-brand because we knew that, if Clipsal was bought out, it would mean that no Sri Lankan electrical brand would ever stand to make a global presence.
Apart from tea, we are not known for our engineering and manufacturing capabilities, and thus, we saw this as an ideal opportunity to place Sri Lanka on the map. We felt that if we were to sell, we would be betraying the country.
With the support of our dealers, electricians, the general public, and other stake-holders, Orange - a local brand, became an overnight success. Within a month of trading we had managed to capture the original market share that was held by Clipsal, pre-re-branding.
With a background in Industrial Engineering, how did you manage the day-to-day ad-ministrative functions of running Orange, especially after you were thrust to the fore following the demise of your father?
When I first joined the company we could not see into the future. Initially we could only see one or two days ahead. So I shared with everyone my thoughts: ‘Let us do the best that we can, given the situation that we are in.' Every time when you wake up in the morning, you have things that you have to achieve for that day, and we cannot say what is going to happen tomorrow. Because a day was too far for us to see, so we must do the best we can for that single day and take it from there.
With this approach in our minds, after a month or so we began to be able to see more into the future. Following six months, we had gained confidence within ourselves and we could easily foresee up to a year ahead. The brand kept growing with our dealers and the consumer as well and all this was possible because we took one day at a time.
"I was placed in the deep end and I had to sink or swim."
What lessons have you learnt?
I was placed in the deep end and I had to sink or swim. We had a very open and trust-worthy culture and it was this trust that saw many individuals standing by me in order to achieve our goals. The values of the company coupled with a transparent attitude ensured we always prevailed whatever the situation that was facing us.
The uphill task I had to shoulder provided me with two steep learning curves, and looking back I see these as opportunities that were valuable in that these allowed me to learn, grow, and understand what it takes to survive and prosper.
How are the other Clipsal subsidiaries faring post-Schneider?
I guess they are all doing well, as they have all capitalised, just like us, on the market share that was held by Clipsal. Schneider, as the world's largest electrical manufac-turer, has invested a lot in regenerating those former Clipsal subsidiaries.
Your local manufacturing operations ?
Today, we have six manufacturing plants employing close to 1,000. My passion and our core strength remain in manufacturing thus there is a large emphasis on the development of this.
The key to our success is our R&D. Previously we invested heavily in tool design and manufacturing of components that would eventually comprise of a switch. Under Clipsal we only produced a limited range whilst the rest was produced in manufacturing plants around the world, with each plant specialising in different products.
Following our re-branding, we had to urgently bridge this gap with our own manufacturing capabilities. In this regard, our R&D worked tirelessly, in order to fulfil this requirement for locally designed and manufactured products.
With this capability we were able to innovate with a number of products. Today, we import mainly plastic powder and brass strips and coils, given the lack of these raw materials in Sri Lanka.
For manufacturing we have set up two joint ventures, to manufacture in Sri Lanka and re-export. PCE is a leading global industrial plug and socket manufacturer, and this was one of the first joint ventures I set up following my assumption of this business. It was a learning opportunity and it took time, but we eventually got it right, and today, our joint ventures are all reaping the benefit of my learnings during this period. Today, the PCE products manufactured in Sri Lanka are destined for European markets.
We are, today, also involved in a joint venture with a British concern where we manu-facture switches and sockets for the UK market. We also manufacture for the brands like Hager as well.
OS Projects is a subsidiary that is a dedicated unit that handles all of our large-scale special projects, and in addition to this, we have a separate subsidiary that deals with our distribution operation.
We are presently trying to unify all of these subsidiaries under the umbrella of ‘OREL' (Orange Electric) thus ‘OREL Power' will be the holding company under which we will have ‘OREL MFG' - for manufacturing, ‘OREL SLK' - handling the Sri Lankan operation (including projects and distribution), and also ‘OREL International,' focusing on the export market.
Your experience going overseas?
In the beginning it was challenging to enter overseas markets because when we said it was ‘Made in Sri Lanka,' people wanted it cheaper than China. A good example of our problems was in the Middle East markets, where the consumer refused our product because their domestic aide was also from Sri Lanka, thus they had a very poor opinion about products made in Sri Lanka.
There were also numerous requests from our agents and dealers who insisted that if we were to register our company in the UK or Europe, we could overcome this stigma and gain more market acceptance.
But I was of the opinion that even though we might find it hard to succeed in those markets at first, our endurance would enable the next Sri Lankan business entity to make it easier.
However, within the SAARC nations, we have found it increasingly easier to gain ac-ceptance as our products are regarded as ‘high quality.'
"It is my view that you need to adopt a customised strategy depending on the market you are targeting. If this means losing some money in the short term, so be it."
Why do Sri Lankan brands find it hard to succeed overseas?
Put simply, because they never try. Lots of Sri Lankan companies do not give a shot at going international. When we chose to look beyond the shores of Sri Lanka, we had to experiment with a number of trading models because there was nobody to guide us.
In Malaysia, for example, we acquired a company and then set up office (our own company/direct presence) there. But this was a costly exercise that demanded a lot of capital. We then adopted another cost effective approach, where we would appoint distributors and this turned out to be cost effective.
It is my view that you need to adopt a customised strategy depending on the market you are targeting. If this means losing some money in the short term, so be it. After many attempts, we have mastered what we need to do.
I advise all those out there to venture overseas and not to be disheartened by short-term losses but instead be determined and go ahead. Each and every industry/sector will have a unique entry model and this can be perfected via trial and error alone.
We have even used above-the-line advertising in order to raise awareness and the seeds that we planted a couple of years back are only beginning to sprout now. Going overseas is not easy, and certainly you must be committed to be involved in the long term, because if at least your generation does not benefit, the next one will.
The design of products to match lifestyles of the future?
We are doing a lot of work in this area and a new generation of our switches has al-ready been released. The new range is electronic-based, and thus, the switch is loaded with intelligent power and safety features.
We are currently also undertaking electrical installations using imported automated switches from Australia and we are in the first phase of developing the first generation of switches that talk to each other through power lines.
What advice do you have for budding entrepreneurs?
Business is a cycle. There are both good and bad days. You must not give up just be-cause of one bad day. You need to have passion, commitment, and a determination to never give up. Without that passion and a burning desire, you will never succeed. Also important is that you must never copy what someone else is doing. You must formulate your own path in order to achieve your personal goals, whatever they may be.
Identify the gaps in the market; discover what is missing between suppliers and con-sumers. It may be a gap in service or quality; once you identify that area, then act in order to remedy it to the best of your abilities.
How do you share your values and passion across the organisation?
This is very important, as the passion and drive cannot be simply from one person. Everybody has to be passionate about what they are doing. It is thus up to the leader to inculcate these qualities into the lifeblood of the workforce.
The best way of achieving this is ‘practising what you preach,' day in, day out, you must live and breath the values, philosophies, and ethos that you yourself promote.
What are you doing to improve electrical safety?
We have an electrician's club with over 10,000 members. In this regard we carry out regular development and training programmes where we reinforce the right practices that are to be adhered to when undertaking electrical installations. However, I must place on record the fact that, as and when compared with regional SAARC electrical safety standards, Sri Lanka is on a higher playing field, both in terms of safety and quality.
Because Orange today has some 80% market share, I can confidently tell you that the majority of the products being used in the field today are our products. Thus from the inception quality is already in built. All that needs to be done is installation in a profes-sional manner.
All of our switches and sockets are manufactured using unbreakable polycarbonate (plastic) materials, and thus, the open sockets that you may see elsewhere in the re-gion are a thing of the past in Sri Lanka. Orange is proud to have served the nation in this regard, as a promoter of electrical safety.
Your ‘Light for you; Sight for me' CSR initiative?
Orange switches are designed to last a lifetime, thus we will only sell to a customer once. However, light bulbs are a universal requirement and can be seen in almost every home today.
When we commenced our lighting business, we understood that it would provide the consumer an interaction with the brand on a regular basis (due to eventual replacement).
With switches, the consumer would buy just once in his lifetime, although he would use those switches almost everyday of his life and perhaps pay little attention to the brand.
For most, switching on a light will flood their vision with colour and detail. But for one group of people, switching on a light changes very little. These are the blind and visu-ally-impaired who live amongst us in society.
Today, we contribute a proportion of the sale of every light bulb to the Sri Lanka Fed-eration of the Visually Handicapped. In addition to this, we have donated two laser eye systems to hospitals in Kurunegala and Nuwara Eliya. We also undertook an awareness programme on the blind titled, ‘Empathy not Sympathy.'
In essence our CSR is a gift from those who can see, to those who can't.
Would the world be a better place, if everyone used CFL (compact fluorescent lamp) bulbs?
In theory, yes. But one major factor to consider is disposal, as all CFL bulbs contain mercury. Provided we change our habits of simply throwing away used CFL bulbs on the street or burning them, we could then benefit from the energy-saving advantages offered by CFL.
We need to develop practical methods of disposing CFL waste and then we could all avoid contamination and try and then help reduce the burden placed on the world's resources.
When re-branding Clipsal, how did you end up with ‘Orange' ?
Because our holding company was called ‘Orient' and we had a ‘range' to offer up to the market, we combined ‘orient' and ‘range' to result in ‘Orange.'
Orange was in place even during the Clipsal era, but it was a much smaller brand aimed at fighting Chinese imports that were flooding the market.
What about the future of Orange?
We want to build a Sri Lankan electrical brand globally. This is the challenge we have placed upon ourselves. It is my belief that if Sri Lanka, in the long term, is to salvage itself from this economical dip, we need to focus on increasing exports.
The generation of foreign exchange is the single most critical factor in upgrading our ‘developing nation' status. With this in mind, we must also shift from exporting our mothers and daughters as unskilled labour to the Middle East and other countries.
This tradition of going to the Middle East for employment is having a massive impact on the social make-up of Sri Lankan families.
Many families today will function without a mother role. Children remain unsocialised and pay a lax attitude towards education and the achievement of goals.
Instead they follow in the footsteps of their parents and try to ‘make some money' as soon as they can. Generation after generation is thus deserting their ‘way of life' for the promise of riches abroad.
Orange is just one of the very few business entities that attempt to shift the export fo-cus from labour to products. It is our hope that one day Sri Lanka will be a leading ex-porter of products and our efforts today will contribute somewhat to reducing the over-all trade gap.
Finally, your thoughts on those individuals who have left the shores of Sri Lanka seeking a prosperous future overseas?
It is very hard to become very rich in Sri Lanka. The opportunities are very limited. Many Indians, as a case in point, left India, amassed riches, and then in turn, pumped back investment into India.
Mega cities are currently being constructed in India, and it is my opinion, that over the next decade, Asia's growth will originate from such investments.
In the same vein, I would like to stress that those Sri Lankans who go overseas should develop themselves as entrepreneurs, make their fortune, and then reinvest back in Sri Lanka.
Someone from the ‘outside' has to ‘pull us out,' as we are stuck in the proverbial quicksand. Because if Sri Lankan businesses continue to sell only within Sri Lanka, we have already begun to ‘sink.'