Alor Setar Third-Generation Steel Family Business: Legacy Succession & Innovation for Sustainable Growth
According to 2018 ACCCIM Family Survey Report, only 13% of Malaysian businesses reach the third generation. In other words, on average, only one out of 10 is a third-generation family business.
Family businesses most often face the two major challenges – “inheritance” and “sustainable growth” – they must not only preserve tradition, but also keep pace with the times.
For the new generation taking over, the pressure is palpable. How do parents transition from asserting their experience to supporting their younger generation? How do siblings move from uneven profit sharing to a fair distribution of power and responsibilities? How does the company shift from personal relationships and favoritism to having clear systems, rules, and a separation of personal and professional matters?
Established in 1975 by Mr. Kang Ah Lek at Alor Setar, Sin Tah Sdn Bhd is now managed by the second generation, Mr. Kang Min Chur and Mr. Kang Min Thay, with the third generation, Mr. Kang Xinda, taking the reins. Over nearly 50 years, the company has navigated survival, expansion, reform, and innovation. Evolving from a lack of system to implementing performance reward systems, the company has stood firm in the face of a rapidly changing business environment, poised for the next 50 years.
Starting and Sustaining a Business: Navigating the Equally Challenging Paths
Kang Xinda’s grandfather, Mr. Kang Ah Lek, came to the Malay Peninsula from China with his great-grandfather to make a living. Since young, Mr. Kang Ah Lek worked many jobs, e.g., repairing bicycles, motorcycles, then transitioning to machinery, small hardware, and iron and steel. At that time, his boss wanted to move the business back to Penang, and decided to entrust the business in Alor Setar to his grandfather who was hardworking. The boss even provided him with supplies.
Adhering to the principle of ‘utmost integrity,’ his grandfather founded Sin Tah Sdn Bhd. With exceptional perseverance, the company went from a small hardware store, brick by brick, into a highly reputable steel supplier in Northern Malaysia.
“From my grandfather’s friends, I learned that he used to visit clients one by one, building relationships, hoping clients would open accounts for small companies like ours to sell iron and steel.”
Later, his father Mr. Kang Min Chur became the second successor of the company. On the other hand, Kang Xinda, spent a few years gaining work experience in an oil company as an assistant manager in the accounting department.
Due to employee resignations and a shortage of manpower, his father asked him to come back and help. So, he quit his job, returned home with high ambition to inherit the family business, only to find unexpected culture shock.
“When I worked in an established company, there were systems, rules, and processes, and business operations were streamlined accordingly. When I took over, I found the company was chaotic. Our staff wasted a lot of time on unnecessary work, leading to unnecessary hidden costs.”
“Usually, the boss would kick in, and sometimes had to handle the stock ourselves. The service quality of our senior staff who had been with the company for decades was very poor; they didn’t even attend to customers’ inquiries. Most employees remained silent with the adversity faced by the company. To make the situation worse, there was no consensus among family members. Everyone is a commander, whose instructions should our staff follow?”
Mr. Kang Min Chur (middle), the second-generation entrepreneur with his eldest son Mr. Kang Xinda (last row second right) and the team
Transformation Imperative: Paving the Way for Sustainable Growth
Recalling the challenges 7-8 years ago, Kang Xinda still shudders. The hazards of lacking a system prompted him to think about reform. He happened to see an advertisement for VIMIGO on Facebook, so he signed up for the online preview to learn more.
“It’s funny actually. At that time, Shane Mun ads kept popping up on Facebook so I went and blocked it. It was my younger sister who actually saw the ads and suggested I attend the preview.”
The difficulties Shane Mun faced in managing his family hardware business convinced Kang Xinda that a performance reward system could help the company reform.
“We don’t know if the change will bring anything better, but what we can be sure of is that without change, things will get worse!”
Initially, his father was skeptical because of his past experiences with staff resignation, which made him lose confidence in employees. Encouraged by his mother, his father finally let go and allowed the younger generation to take the lead.
vimiGoal & vimiTeam
Shared Interests: Striking a Balance Between Self and Others
When Kang Xinda first implemented the VIMIGO performance reward system in the company, there were clearly two sides of people: one supporting reform whereas the other side resisting. “My younger sister and I insisted that everyone must use VIMIGO. Gradually, the supporting employees who achieved their goals were rewarded and recognized, and those who did not gradually left the company.”
“vimiGoal lets employees know the priority of their work. With vimiTeam, data speaks itself for uncooperative employees, and others also start giving feedback, hoping that the company could become better.”
It is gratifying that the staff Kang Xinda identified as promising take on more responsibilities and actively help solve problems. Now his father has more time, and the company continues to operate without him always having to be present.
“Last year in 2022, we did the first stock check in our company’s 48-year history.” The company is gradually becoming systematized, and the first stock check marks a significant milestone. Now, if a customer places an order today, we can deliver goods to the customer the next morning. This greatly improves the efficiency of shipments and customer satisfaction.
In Oct 2022, Kang Xinda (bottom left two) and the team conducted the first stock check ever for the past 50 years
Sustainable Business and Wealth: A Journey Over Three Generations
Looking back on the road of reform, family members are always a strong back-up. Even though the company faces significant challenges, Kang Xinda being the one driving force behind the company’s reform, continues to lead the company to the next phase.
“Most people think that traditional industries are sunset industries without any future or financial prospects. Looking from a different perspective, though, the value that the steel industry provides to our society lies in supplying safe and high-quality iron to the construction industry, creating a safe shelter and enabling our living environment to fulfill more functional missions.”
As the missions of Sin Tah Sdn Bhd uphold, ‘Quality first, customer satisfaction, honesty, and integrity’.
“If we don’t change, how can we talk about our vision?” The performance reward system lays a solid foundation for the company’s future. Kang Xinda’s dream is to build a platform integrating upstream and downstream resources in the industry, creating a win-win situation, unifying the prices of goods, and solving the vicious cycle of price wars.
VIMIGO is fortunate to witness the results of Kang Xinda’s hard work in implementing the performance reward system and the company reform. We sincerely hope that Sin Tah Sdn Bhd will flourish to a long-lasting company with sustaining business and wealth over three generations!
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