HSBC Receivables Financing Helps Cape EMS To Manage Daily Finances

[This is a paid article with HSBC.]

Although Malaysia is one of the top 5 countries in terms of cost competitiveness for manufacturing, Malaysia has been hit hard by the COVID pandemic. Supply chains have been disrupted due to lockdowns being implemented around the world in various ways.

Some manufacturers even had to shut down their doors for good because they couldn’t get their hands on the supplies they needed. However, for the most seasoned veterans, this is not the first crisis they encounter.

Cape EMS, a local provider of electronics manufacturing and precision machining services based in Johor Bahru, struggled to stay afloat during its early years.

The story behind Cape EMS

Christina Tee, Founder and CEO of Cape EMS, shared her company’s journey in an interview with HSBC.

With over 30 years of experience, Christina is already an industry veteran with her latest role as Group CEO in a group of plastics manufacturing companies.

During the early years of running the business, Christina sometimes had to keep the business going by investing all of her personal savings in the business, as many upfront costs were required to start operations.

Finding clients has also proven to be a problem as Cape EMS operates in an extremely competitive industry and being an unknown new entrant makes it more difficult.

Along the way, she recognized that there was a space that Cape EMS could fill. She observed that Wireless and Technology customers in the manufacturing sector consistently had issues that other vendors were unable or unwilling to resolve internally.

Determined to prove his abilities

With the enthusiasm of proving they were the real deal, Cape EMS set out to form a complete manufacturing ecosystem to help their customers as quickly as possible.

The company worked diligently to resolve customer issues, even if it was outside of their usual business framework. They have helped their customers get certification and even debug R&D products.

Instead of seeing these tasks as a chore, the company took advantage of them as an opportunity to learn and grow.

Due to this sincere interest in solving customer issues, Cape EMS has been successful in establishing good relationship with its customers, some of whom have been with them from the very beginning.

One of Cape EMS manufacturing plants / Image credit: Cape EMS

Get help managing your finances

As orders started to arrive and more industry players began to take note of the quality of their work, Cape EMS realized that it needed help with the financial restructuring. It was then that they approached HSBC to seek a solution.

Due to general industry practice, Cape EMS is generally not prepaid by its customers. They even have to wait around 2-3 months after shipping before they get paid.

And that meant they had to fork out their own money to pay their suppliers for raw materials and spare parts.

But with HSBC Receivables Financing, one of the HSBC Business Banking solutions, Cape EMS could have access to cash as soon as they charge their clients.

This means they no longer have to wait long for payments to arrive.

With immediate liquidity, Cape EMS was able to handle large quantities of orders without straining its daily business cash flow.

Exceed their original goals

In 2017, Christina decided it was time for Cape EMS to pursue bigger goals. Thus, they sold their most profitable line of business (the modem and wireless product line) to generate cash for future expansion.

With this sale, Cape EMS was able to divide the company into four areas:

  1. Wireless infrastructure
  2. Smart home appliances
  3. E-cigarette / E-vape
  4. Smart industrial products

Despite the diversification and distribution of its resources at the time, Cape EMS was still one step ahead of the competition. Their original motto of serving customers has remained unchanged.

Most of their customers come to them with designs in mind, but they don’t know the ins and outs of manufacturing. So this is where Cape EMS comes in to provide advice on how designs can be improved for manufacturing.

Their customer base now extends to e-cigarettes, robotic vacuum cleaners and sensor manufacturers.

As the company restructured, HSBC stepped in to provide Cape EMS with the additional financing needed to expand into new business lines and markets.

Besides financing, credibility also plays an important role in business, especially on the global stage. For a relatively young company like Cape EMS, they are leveraging the strength of the HSBC brand as they enter the global business scene and it has been extremely valuable to them.

“Our clients are all over the world and HSBC has a strong global footprint, which makes it really useful for doing business with global clients. This gives us a lot of credibility and we are proud to tell our clients that HSBC is our main banker, ”said Christina.

Christina speaking at the MICCI Networking Party. She is also one of the Vice Presidents of MICCI / Image Credit: MICCI (Malaysia International Chamber of Commerce and Industry)

Getting the right help they needed

From 2020, Cape EMS operations have been halted due to COVID-19. The situation was also aggravated by the suppliers. Most providers only accepted cash without extended loan terms.

To deal with this, Cape EMS contacted HSBC and received the Prihatin SJPP financing plan within a month. This gave Cape EMS a breakthrough in a rather difficult situation.

The 2017 restructuring is proving successful and HSBC stepped in to help at the right time. The growing demand for the work from home trend, like wireless products and home appliances, is driving further growth for Cape EMS today.

As for future plans, they are working on distributing new products such as utility meter data collection system to new markets, and even releasing their own product line.

With such plans in place, Christina aims to make Cape EMS 5 times bigger than it is today.

“Through a dedicated relationship manager, HSBC offers more than financing by offering advice on how to navigate the industry in which Cape EMS operates. This is proving to be valuable because Cape EMS has been able to take advantage of the expertise we have. By bringing our rich experience to our clients, we can help our clients grow and connect them to opportunities through our global network. The collaboration with Cape EMS illustrates the benefits of our business banking solutions and how we can support our clients’ growth ambitions. “

Ranil Perrera, National Head of Corporate Banking Services, HSBC Malaysia

  • To find out more about HSBC Business Banking solutions, click on here.
  • Read what we have written about HSBC in the past here.

Featured Image Credit: MICCI / Cape EMS

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Jothi Venkat

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