This article first appeared in Corporate, The Edge Malaysia Weekly, on June 13 - 19, 2016.
THE saying, “One man’s trash is another man’s treasure”, could not be more appropriate for Jason Chen Kuo-Chin, the founding chairman of Singtex Industrial Co Ltd, a Taiwan-listed textile manufacturer that was the first in the world to produce fabric out of recycled coffee grounds.
Statistics show that in Taiwan, which has a population of 23 million, about six million cups of coffee are consumed every day, creating close to 30 tonnes of coffee grounds. This already large quantity is growing at 4.5 times every year.
Not many are aware that the grounds from the roughly 1.6 billion cups of coffee consumed globally each day can be used to make clothing. The coffee waste is not only eco-friendly and ultraviolet-resistant but it also absorbs odour and dries quickly.
“A cup of coffee, when consumed, has only a miniscule 0.2% of the beans, with the remaining 99.8% becoming grounds. By applying coffee grounds to yarn, we put a once-disposed-of 99.8% to good use,” Chen explained at an international media briefing in New Taipei City, Taiwan, last month.
According to Chen, the idea came to him and his wife in early 2005 when they were drinking coffee in a café. The couple noticed someone collecting coffee grounds at the café and found out that it was for the manufacture of deodorant.
Chen’s wife then wondered whether the grounds could be used to produce clothing, which motivated him to explore the idea. After several failed attempts, Chen successfully weaved coffee grounds into interlaced fibres to create fabric in 2009.
Coming from a family with three generations in the quilting business, Chen had spent his childhood playing among piles of cotton. He recalls his father once telling him, “Create a business that brings warmth to people.”
With that in mind, Chen founded Singtex in March 1989 at the age of 27. Starting off as a traditional textile company, Singtex morphed into producing functional textile materials.
After a quarter of a century, Singtex is today a supplier to more than 100 apparel brands worldwide, including adidas, Nike, Esprit, Kappa, Nautica, New Balance, Puma and Brooks. Its main products are eco-friendly fabrics for use in functional, fashion, leisure and protective clothing.
A quick check on Bloomberg shows that Singtex’s net profit more than doubled to NT$69.8 million in its financial year ended Dec 31, 2015 (FY2015), from NT$34.4 million in the previous year, while revenue grew 6% from NT$1.39 billion to NT$1.48 billion.
“On average, Singtex generated an annual revenue of more than US$45 million, and thanks to our innovation, Singtex has been enjoying a [gross] profit margin of around 23% to 30% over the years,” Chen tells The Edge.
Its revenue has been growing steadily over the last five years, from NT$1.17 billion in 2011 to NT$1.37 billion in 2013 before reaching NT$1.48 billion in 2015.
However, the earnings performance has been lumpy. Profit grew from NT$38.3 million in 2011 to NT$45.8 million in 2012, followed by NT$65.7 million in 2013. It fell sharply to NT$34.4 million in 2014 before recovering to NT$69.8 million last year.
It is learnt that Singtex spends about 1% to 2% of its annual turnover on R&D compared with an average of 0.67% by its competitors.
“We try to lead the trends. We invest a lot in innovation and R&D so that, basically, we are competing only against ourselves,” remarks Chen.
Singtex, which was listed on the Taiwan Stock Exchange in 2014, has a market capitalisation of NT$979.9 million. Year to date, its share price has fallen 7.5% to NT$31.75.
“Since Singtex was founded, we have been developing all kinds of eco-friendly and multi-functional textile products. Our vision is to become a leading functional, eco-friendly textile supplier in the world and to satisfy all of our staff, stakeholders and customers,” remarks Chen.
Currently, Singtex has a dyeing mill in Taoyuan county, Taiwan, as well as a garment factory in Ho Chi Minh City, Vietnam. Both plants are running at full capacity. Headquartered in Xinzhuang district, New Taipei City, the company also has offices in Japan, the Netherlands, the US and Shanghai, China.
“Our business is based in Taiwan and we export to the global market. The US, Europe and Asia make up 45%, 35% and 20% of our sales respectively,” says Chen. “We did have some exposure in the Malaysian market. And we are glad to extend our business in Malaysia if there is any further business opportunity.”
Moving forward, Singtex is building up a “one-stop shopping service” for its clients, from R&D, yarn, fabric and garments to the final product design and brand, he adds.
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