[Photo: Ken Tan, managing director of R-Logic International Pte Ltd.]

By LIEW AIQING

WHILE the tendency is to perceive the economic downturn in a wholly pessimistic light, R-logic International Pte Ltd has chosen to view the glass as half full and to look for opportunities in the downturn.

Part of the reverse logistics industry, R-logic mainly provides repair services for IT components. The company has seen tremendous growth since its beginning in 1999, with revenue having increased 10-fold since then.

'We are riding along with the growth of reverse logistics,' says managing director Ken Tan.

'I believe that this growth is still in its beginning stages - the ability to go regional and global has not yet been captured and integrated growth has also not been reached.'

The company is already taking small steps to reach there and already has a presence in countries like China, Malaysia and India.

This expansion of its customer base has helped push profit up by 50 per cent since 2005. Its revenue, in particular, has seen a year-on-year boost of 50 per cent in 2008.

In particular, the Indian market has proved to be extremely lucrative for the company, driven by the growing demand for mobile phones and liquid crystal displays (LCDs).

'India has grown tremendously, especially in the last four to five years,' says Mr Tan.

'We went into the Indian market before it started thriving and made an investment. Once we got established, it just so happened that the market demand for IT products started to grow. As it grew, problems started to surface from the different IT brands, which is where we could step in and offer our repair services.'

'Furthermore, the heavy tax in India made it such that our consumers like Hewlett-Packard (HP) did not want to ship parts back to the country of origin for repairs and ship them back into India again - they wanted operations to be kept within India itself,' he explains.

Thus, as up-and-coming countries like Vietnam continue to grow, R-logic will look to continue its regional expansion as its customers, including Dell and HP, will be counting on it to keep extending its operations into markets with potential.

Besides outward growth, R-logic will also be diverting resources toward integrated growth. This means expanding vertically, such as including the front-end stage of customer service or at the mid-stage, to help customers consolidate the logistics of components.

While that is underway, the company is bracing itself for challenging times ahead, even though it has yet to feel the impact from lacklustre economic conditions.

'For the reverse logistics sector, we have not been quite affected yet because there is a time lag. When the economy turns down sharply, companies like Dell and HP will call their manufacturers to cut production first, which will then indirectly hit us somewhere down the line,' he says.

Mr Tan anticipates demand dampening in about nine months' time, but the good thing is that the firm has time to prepare for it.

'If we are able to position ourselves correctly, the fall in revenue should be largely compensated by new projects that are going to be coming in,' he said.

'Just one new project of a regional scale will help offset the negative impact of the economy.'

The company has benefited from two grants offered by Spring Singapore which have helped fund the building-up of its repair capabilities.

While useful, grants are insufficient to take the company forward.

'Government support plays a part but we might need to take the next leap of faith and collaborate with others willing to come together with us,' he says. 'This will reduce the need to invest in capital like warehouses.

'Also, if we are able to combine our operations with other companies involved in the front-end or middle stages, we will also be able to market ourselves as an all encompassing business to giants like Dell and HP.'

This article was first published in The Business Times .