Enterprise
Offering squeaky clean solutions
Calyn Yap 
Lee says it is important to first become a local champion before embarking on overseas markets
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CREATING a successful Malaysian brand is tough work, as Kleenso Resources Sdn Bhd founder and managing director Lee Teck Meng can attest.

Lee, who started the company in 2003, knew it was going to be challenging to enter the household cleaning solutions industry.

It is a highly competitive industry that’s rife with established multinational brands with ample resources for advertising and capturing market share.

But despite the odds, Lee was undeterred and went into business, determined to create a brand the country could be proud of.

“I felt we needed our own brand of cleaning solutions and there were opportunities for a local product to prove its worth and penetrate the market.

“We want to show Malaysians and the world that it’s possible to create a local brand since we’re a country full of SMEs. Yet, we don’t have [enough] brands of our own,” Lee says.

More than a decade down the line, Kleenso Resources’ products are being carried by large retailers such as Giant Hypermarket, Cold Storage, Village Grocer and Aeon stores, as well as popular family mart and convenience store chains such as 99 Speedmart and Mr DIY.

 

Sales growth

Last year, it recorded its highest sales with revenue of about RM7.6 mil on the back of over 13,000 boxes of products sold a month.

Even before the business started out in a small 1,500 sq ft rented shop lot in Kepong, Lee researched the market for several years to learn about the industry he planned to enter.

“We studied the available cleaning products and found that in terms of floor cleaners, there wasn’t as much consumer loyalty. So we thought it was an easier market to penetrate,” he says.

In 2003, when he had enough confidence, Lee decided to work together with local chemists and chemical suppliers to formulate a cleaning solution called the Kleenso 9-in-1 anti-bacterial floor cleaner.

“We had to do everything ourselves – from producing to bottling and selling the products, so we hired an additional person to help.

 

Product differentiation

“I knew it was tough to enter the market so I needed a different strategy. The easiest way is through product differentiation.

“It had to be special, so we started research and development (R&D) with chemists to improve the product,” he says.

To differentiate it, Kleenso Resources uses cosmetic-grade tea tree oil priced at RM800 per gallon (3.8 litres), in its floor cleaner.

In terms of the naming of the product, Lee says it was a marketing strategy as it was easier for people to remember numbers and thus easier to market.

However, it turned out to be a double-edged sword, as until today, consumers refer to its flagship product as the “9-in-1” or “pink cap”, instead of identifying it with the Kleenso brand.

Even with a quality product in hand, it was not easy for Lee to sell as he was unable to launch in the market without the proper networks and consumer awareness.

“None of the pasar raya wanted to sell our product. The first thing was there was no [recognisable] brand [since we were new].

“Second, we couldn’t carry out any promotions because of tight financial resources. And lastly, the pricing was a bit high at RM10 as we were using quality raw materials,” he says.

The company then packed the product into small sample packets, which they distributed to friends and customers at Chinese medical halls in 2004.

“We went to the shops to convince them by giving consignments and explaining there were ready customers who wanted to buy the products at their locations.

“We stationed salespeople to give out samples to customers that came and slowly grew from one shop to another from there,” says Lee.

Despite that, Kleenso Resources was only selling about 60 boxes of products monthly after over a year, earning sales of about RM10,000 a month after deducting rental costs and other overheads.

During that time, Lee was also working multiple jobs to make ends meet. “It was very tiring for me as I had to continue my work at a private university during the day and sell beverages at a local food court at night to make ends meet and cover some of the costs,” he says.

Kleenso Resources began to introduce at least four new products every year after setting up its own R&D team.

 

Strategy

Lee also came up with a different go-to-market strategy and went door-to-door, selling solutions to small grocery shops and hardware stores in Selangor and Kuala Lumpur.

Sales went up in tandem as the distribution network widened. The company then moved into its current facility in Subang Jaya in 2009, and Lee began eyeing large supermarkets and hypermarkets, which he calls high traffic outlets (HTO).

“We started thinking how to capture HTOs in terms of distribution and we talked to buyers.

“They were reluctant to carry our products because they felt we couldn’t compete with the big brands which dominated hypermarket and supermarket shelves,” he says.

This led Lee and his wife to reconsider how they were pursuing their goal of creating a local brand.

After much deliberation, they decided to continue their business but recognised the need to expand their product portfolio to meet different consumer needs.

In 2011, with help from Universiti Sains Malaysia’s Pesticide Research Centre, Kleenso Resources developed Pesso, a brand offering a range of eco-pest repellents.

Malaysia’s high humidity made it a hotbed for insects, which was why he approached USM to commercialise its studies.

“We knew we needed a lot of patience and remained focused on growing our business. We introduced the Pesso range of pest repellents to provide greater variety to our product offerings and meet different consumer needs,” Lee says.

Demand for Pesso was low as it was new in the market. But Lee leveraged on the company’s distribution network to hand out samples and increase sales.

“We moved from focusing solely on product development to developing cost-effective and creative ways to market our products.

“This is important as we did not have the financial strength that the established companies had,” he says.

Yet again, Lee’s innovative marketing strategy came into play. Since eco-pest repellents were rare in the market then, he used Pesso as a “foot-in-the-door” to entice retailers to stock his entire range of Kleenso products.

With the introduction of Pesso, more retailers accepted the products and the company began to achieve more stable sales.

Kleenso Resources has over 100 products, but Lee wants to remove some 30 underperforming ones so the company can concentrate on those that are more popular

In 2012, the company’s business began to grow rapidly with its products being distributed across the country as larger retailers accepted the Kleenso and Pesso product brands.

These efforts paid off, and the company began achieving 20% growth year-on-year.

Monthly revenues averaged around RM800,000, as compared to RM200,000 per month previously.

When the Goods and Services Tax was implemented, Lee believed there was a need for Kleenso Resources to introduce a new product that was more affordable for consumers.

The company returned to USM for help to formulate a cleaning product that used a mixture of serai wangi (scented lemongrass) and four other raw ingredients, with a RM9.90 ceiling price.

Product sales have now exceeded the Kleenso 9-in-1 anti-bacterial floor cleaner, and it added another eight products under the serai wangi series.

Kleenso Resources plans to introduce another two products under the series, which are under R&D at the moment.

Today, the company has a 15,000 sq ft facility with a 30-tonne capacity, some 50 staff and over 100 products.

However, Lee wants to cut down on 20 to 30 underperforming products so that the company can concentrate on those that are popular.

Apart from cleaning solutions and pest repellents, Kleenso Resources also has another category in its product portfolio – “eco-disposable ware” such as biodegradable garbage bags and kitchenware.

Over 60% of its sales are in cleaning solutions, followed by disposable ware at about 20%, and Pesso and the serai wangi series at 15%.

The company is planning to expand to a 40,000 sq ft facility in the next two to three years based on robust demand for its solutions.

Creating a global brand

IN recent years, Malaysian products have reached a certain standard in terms of quality and competitiveness in the world market, says Kleenso Resources Sdn Bhd founder and managing director Lee Teck Meng.

The company exports its products to 12 countries in the region, including Singapore, Indonesia, Brunei, Vietnam, Myanmar, Thailand, Australia and Hong Kong.

It first started exporting to Singapore and Thailand six years ago, and of the eight countries, it does original design manufacturing (ODM) and original equipment manufacturing (OEM) for markets such as Australia, Hong Kong and China. Even so, export accounts for only 10% of its sales volume.

Lee stresses it is important to first become a Malaysian champion before embarking on a global strategy, which is why he wants to increase sales and product presence in Sabah and Sarawak.

“The vision is to have a Malaysian brand of cleaning agents sold worldwide, but we must first be champions within the country,” he says.

Kleenso Resources wants to capture 3% of market share in the floor cleaners segment of the cleaning solutions industry by 2020.

At present, its products are in more than 50,000 households, amounting to roughly 1% of market share.

That said, Lee is not neglecting opportunities in expanding regionally. The company is negotiating with a partner and distributor in Hong Kong to penetrate the China market.

The challenge lies in supply as Kleenso Resources can only commit to three 40-footer containers in two months, while Lee’s partner requires eight such containers monthly.

This is why, Lee says, the company is considering expanding its facilities in the near future.

It will conduct market exploration in India by year-end, and Lee is looking to focus on the Philippines market too.

He says the company has good connections in Thailand as well, and once the appropriate licences are obtained, it will be able to sell more of its products there too.



This article first appeared in Focus Malaysia Issue 252.