Claiming The Throne

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From toilets to furniture, Gani Atmadiredja plotted a course for his family business to reinvent itself while showcasing his ability to helm and grow it in a foreign land.

From an early age, Gani Atmadiredja displayed the ability to spot an opportunity, a trait he applied to strategically chart a course for the family business.

The 36-year-old Managing Director of W. Atelier (watelier.com)has been at the helm of the Singapore arm of the family business for just over a decade, and in that time has reinvigorated and reversed its fortunes.

W. Atelier’s showroom along Bukit Timah Road has expanded accordingly, and boasts not just TOTO sanitary ware, but kitchen systems and European furniture carefully pieced together in the business jigsaw that Gani has been putting together.

The youthful Gani is personable and chatty when it comes to talking about the business and his philosophy of building a sustainable enterprise. In 2001, he completed his studies at Wentworth Institute of Technology in Boston, and planned to stay on in the US, but the Twin Towers were attacked and there were few opportunities for work. So, he headed home to Jakarta to learn the ropes of the family business, PT Surya Pertiwi, which distributes construction materials, focusing on sanitary products. Since 1968 it has been working with TOTO, the Japanese sanitary manufacturer that probably fits out the most number of toilets worldwide.

The family business had started a Singapore arm, Inhwa Group, in 1979, which imported and distributed TOTO products and manufactured bathtubs. It was at a time when the Singapore government had latched on to the idea of attracting foreign investment through individuals who could set up businesses here in return for permanent residency. With the building boom taking place in Singapore, it seemed only logical that sanitary ware would be an endeavour flushed with success.

However, the family members involved had other priorities and the Singapore business was barely getting by. In 2004, Gani, then 26, who had been tracking the Singapore operations, asked to take over the ailing venture.

After stabilising the business, he changed the name to W. Atelier in 2009. He then expanded the business into system kitchens, an area that TOTO was also noted for in Japan. That allowed him to acquire furniture brands like Republic of Fritz Hansen from Denmark and Novamobili from Italy.

By shifting its emphasis in tandem with changing trends, Gani has turned a business on the decline into a venture that promises to plumb for new opportunities.

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STORM: What were your thoughts before relocating to Singapore?

GANI ATMADIREDJA: Back then, we were one of the first branded bathrooms in Singapore, supplying to many projects. After a while, competitors started coming in, and business started to stagnate. Now there are plenty of brands here, and all the Europeans are in town. Singapore doesn’t have high barriers to entry for doing business. You can have a catalogue and start selling products. Singapore is an easy country to do business, unlike Indonesia, where you have to incorporate a company, have a local partner, and you have to contend with import duties, certificates, among other things.

In Indonesia the TOTO brand is well regarded, with 70% market share. In Singapore, we were popular, but our market share was declining. At the point I decided to come over, nobody was taking care of the business. I asked my Dad to let me have a go at it. What have you got to lose, anyway?

He agreed and I came to Singapore in 2004. We were located in two tiny units on River Valley Road. It was a mom-and-pop shop, and not in sync with what was needed.

The name ‘Inhwa’, loosely translates into ‘Indonesian Chinese’. My Dad’s  generation escaped from China during the Cultural Revolution, and they still loved the country. So it was a nostalgic name. The name had no relevance to what we are doing. It sounded like a Chinese contractor, so it was not going to let us go anywhere in terms of upmarket lifestyle products. We had to change that.

But before then, we had to sort out other things. There were a lot of chronic issues in the company that had to be surgically removed. It took us a while to get the operation streamlined. Our computer system was a legacy system — black screen, green letters, no mouse.
It took us about five years to revamp and change a lot of the things in there.

When we moved to this location in 2005, we were handling just sanitary products. It was more presentable, but it was still under Inhwa. I didn’t dare put the Inhwa name on the signboard, so we put the TOTO brand up. We started doing very well since moving to this location. Sales increased, and people started recognising the TOTO brand.

In 2009, after 30 years in Singapore, we decided it was a good time to rebrand the company. We changed it to W. Atelier — which means ‘water workshop’, and was more relevant to the business. Maybe now the ‘W’ might be a bit outdated.

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STORM: How does the rising cost of living affect business?

GANI: We are going to move at the end of 2015. We are growing a fair bit. We are taking a few more furniture brands. We are outgrowing this place, and the increasing rental doesn’t help. We decided to buy our next office, in Henderson.

When we first got this place it was $2,50 psf. Now it’s $8 ++. It’s not good to expand too fast when you’re not the landlord. They want a piece of the pie. Especially if they can see how well you’re doing.

We have developed this location for 10 years, so we will continue to be here.

People are spending more money, because they want to have good stuff for their homes. In the overall development of a house, sanitary ware accounts for maybe 1% of the cost. A lot of people are paying more attention to the bathroom these days.

Some days you don’t watch TV, but everyday you use your toilet. So why spend thousands of dollars on a huge TV, and just a few hundred bucks on a toilet?

The bathrooms are getting more important in new developments. We can see a lot of architectural design coming into developments. While rooms are getting smaller, bathrooms are increasing in size. They can join it with their walk-in wardrobe, for instance.

Projects account for about 60-70% of our business. With the recent decline in property sales — we could foresee this with all the government measures — property developers are not finding it attractive to build here. They are building in Dubai, China and Indonesia.

We still have a fair number of projects being carried forward. I think we’ll feel the effects of the new government housing measures this year. I would think in future it would still account for 60% of the business.

Meanwhile, we have shifted our focus into retailing. We can see this is relatively stable and there are still lots of opportunities for us to grow. I don’t think we have reached the wider Singapore market. The past two years we started to do kitchens, and then we brought furniture in. We are working with Novamobili from Italy and Fritz Hansen from Denmark. They are big brands and there’s good synergy with what we do since TOTO is a luxurious bathroom product.

Having these brands in one spot increases our brand standing in the public eye.

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STORM: What were the major challenges in moving into the kitchen business?

GANI: The kitchen business is more difficult than selling sanitary ware. One kitchen can have more than 10 suppliers, and it’s project management. You have to commission it, instal it properly, and no two kitchens are the same. It’s a different animal to sanitary ware.

STORM: Was it challenging to get the furniture brands to come on board? High-end furniture may not be too comfortable sitting beside toilet bowls.

GANI: If I had gone from sanitary ware directly to sofas, it would have been a huge jump. But we transitioned it through kitchens. We’ve been doing kitchens in Indonesia for more than 15 years. Previously we were the original equipment manufacturer (OEM) for TOTO, which has a huge kitchen operation in Japan. But Japanese kitchens have funny shapes and tiny sizes, which we can’t sell in Singapore. However, the OEM business doesn’t have much money because our margins are controlled. After a while we decided to stop doing the OEM business for TOTO. They didn’t allow us to use the TOTO brand for a while as they weren’t sure how reliable our kitchens were going to be.

At first we marketed our own kitchens, and we did quite decently. TOTO recognised that and decided that we could use their brand. Since this is a relatively new area for us and we are heavily invested in it, TOTO’s seal of approval was good for us.

It also offers us new opportunities. Previously, we were following the Japanese standard. Now we are moving to what’s more saleable worldwide, which is the European kitchen concept. It’s modular and you fix it together and dress it up.

By transitioning the business through kitchens, we got furniture players interested. A lot of European companies are actively looking to Singapore to have their products represented here. We have to be choosy. We want to market and sell the product. We don’t want to collect brands.

We went through a few selections, shortlisted around four and finally selected Novamobili. What we can supply to projects are toilets, kitchens and wardrobes. So we needed a wardrobe company, which is why we chose Novamobili. People coming to buy toilets here are probably renovating their homes, so they might need a kitchen and a wardrobe.

There is still one more opportunity for us — furniture, which would be a natural fit. There are so many furniture players in Singapore. We wanted a recognisable brand with a similar mindset as ours, able to cater to the mid market. So we chose Fritz Hansen. Fritz decided to move to us because we were more willing to work with pricing structures. I don’t believe in over pricing. Customers in Singapore are quite savvy; they can find all the prices online.

STORM: How sensitive to pricing is your customer?

GANI: Pricing is important. We want to be mid- to high-end, which is also where the TOTO sanitary ware is at. We don’t want to be in that top 1% where we will barely sell anything in a year. We want quicker movement than that. We can’t play at the low end because there are too many players, and there’s a price war on.

STORM: How do you brand your kitchens?

GANI: TOTO Kitchen is manufactured out of Indonesia. We also represent the German brand Stormer.  In project business, customers don’t consider Indonesian kitchens as an import, although it is, technically. Sometimes, it’s all about branding.

Sometimes they don’t even know the brand, but they go by the country of origin.

You’re Italian, or German, so you must be good. It’s not really that true. There’s plenty of Italian crap out there.

I’ve seen it. It’s not really about country of origin, but the company making it. Dedon, the German outdoor furniture company, makes its products in the Philippines, and it is proud of it.

TOTO kitchens are made in Indonesia, but the materials we use are imported. The paint is Italian, the wood and hinges are from Austria. Even the machines are imported, essentially what the German or Italian manufacturers are using. But our workers are Indonesian. In terms of quality, we are on par. It’s a matter of perception, and whether the customer can accept it.

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STORM: Do you find people are more hung up on brands?

GANI: In Singapore yes. You can’t blame them. This is a marketing society and they are bombarded by brands all day long. It’s important to get your name out there, but it’s important for consumers to give it a chance, instead of just being hung up on brands. After all, they are the ones who will be experiencing the product. Some big brands out there are not the best, even if they have a longer history.

STORM: How much business have you lost to country of origin issues?

GANI: Quite a fair bit. We just started or four years ago, but suffice to say it’s significant enough to be noticeable. We have developers coming here, saying I like your product, it’s really good stuff, but….

We are bringing another kitchen brand. And we might have a few more to come, to address this issue.

STORM: How would you compare the Japanese kitchen to the European kitchen?

GANI: The Japanese product is of a higher standard. In Japan they adhere to higher material standards than Europe. To convert to Japanese standards, European manufacturers would have to change their entire production process.

We have been working with the Japanese for a long time, making sanitary ware. On the assembly line, we will see a toilet bowl that took seven days to make about to be discarded. What’s wrong with this basin? One dot.

In terms of technology, TOTO spends Y100 million each year on research and development. Every two years, we go to ISH, in Germany, the inernational bathroom fair. Six years ago, when I went, it was the first time TOTO was participating and they spent €4 million on their booth. So they displayed their toilets with the gadgets — automatic seat opener, seat warmer, bidet — and all the European players were curious. It was widely reported.

Two years later, at the next fair, some of the European players started incorporating electronics into their toilets. Another two years on, everybody had the washlet — 70% of Japanese toilets have this feature since its saves space as you don’t need a separate bidet. In 2012, TOTO showcased a toilet with a UV light which disinfects the bowl. That costs around $30,000.

Europeans are playing catch up now.

STORM: What trends do you observe that are unique to Singapore?

GANI: People have a dry kitchen, which they barely use. And they have a wet kitchen. One side they use for show, the other they actually use. It’s a bit of a shame. You should actually use the dry kitchen. It’s not worth it to have expensive Miele or Gaggenau appliances and you barely use them.

Some people buy a stainless steel sink and then lament when there’s a scratch. I say ‘Yeah! Congratulations. You should use it more!’ It’s okay. It’s fine.

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