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Business: Localise to globalise

Business: Localise to globalise
The Vega Global management team

Business: Localise to globalise

Originating as a local distributor of AV equipment, Vega Global has now evolved beyond the remit of standard systems integrator. Richard Lawn finds out how planned expansion in 2020 has worked out for the group

Starting his fledgling company, Vega Technology, in 1986 from a Kowloon office, Laurie Chow gradually transitioned his business from a purely distribution model, offering advanced technology and solutions to customers with AV/IT requirements. This customer-first ethos has established Vega as a leading multinational pro AV/IT company with a roll call of corporate clients. Over the past decade alone, over 20 branch offices have been set up across APAC and Europe, with a commensurate staff of over 600. The group’s presence in 16 countries worldwide includes operations in Australia, Bulgaria, China, Hong Kong, India, Indonesia, Japan, Korea, Macau, Malaysia, Philippines, Singapore, Taiwan, Thailand, UK and Vietnam. “Our local satellites have their own legal entities, feet on the street and full local capabilities,” explains deputy chief executive officer, Matthew Deayton, who joined the Hong Kong management team in 2015. “As a result, we command a very strong language and cultural understanding of how to do business in those places. Vega Global has been blessed with drawing in a group of loyal and skilled individuals. But it was the strength of our relationships with the large multinationals and corporate clients that gave us the confidence to spread our network.”

Laurie Chow formed the company in 1986 from an office in Kowloon
Laurie Chow formed the company in 1986 from an office in Kowloon

However, rapid expansion over the last decade was taking its toll. “It's a typical story in the AV industry, whereby a successful business owner has run his course,” continues Deayton. “The business revolved around Laurie, followed by an executive of three that supported him. Despite having no board of directors, no management team or structure in place, the business had grown to a size where cracks were starting to appear. When I first came on board in 2015, Laurie made it clear that he was looking for an exit strategy. Although we had more than doubled our revenue between 2015-2020, the risk being carried by one person is extremely stressful.”

In January 2020, before the world could gauge the scale of what was coming, Global Vega announced that private equity firm Baird Capital had acquired a large stake in the group. Deayton and Chow had spent two years preparing the next chapter, arranging capital investment to back up ambitious five-year plans as well as significantly recalibrating the management structure of the group. “We formed a board of directors that would provide a strategic direction and a management team beneath that,” explains Deayton. “Laurie is now the CEO and I am deputy CEO. We have also created CFO and COO positions taken up by Colin Wong and Paul Cullum, respectively.”

With over 20 years’ experience, Molly Chow took on the role of executive director. “Molly focuses on our Greater China operations where there is a significant amount of growth occurring annually. Below that, we have got a service delivery director, a global account director and global business director. As the AV industry has become an integral part of the IT infrastructure, we appointed Heather Li as the director for digital workplace solutions to work with manufacturers and platform providers to deliver digital workplace solutions.”

Executive director Molly Chow has more than 20 years' experience
Executive director Molly Chow has more than 20 years' experience

As Vega Global prepared for its next stage, Covid-19 took hold. “As a systems integrator we are in a reasonably comfortable situation, as we are waiting to react to those decisions our clients will eventually take,” says Deayton. “It is a lot more difficult for a manufacturer as they need to project market demand and have products ready to support that demand. We have probably gone through a decade of evolution this year. Luckily, we had so many components in place to ensure we were equipped for this technological acceleration. However, we had to tailor each business according to the jurisdictions operating in each country, with varying impacts of Covid-19 lockdowns in place. Our expertise in unified communications together with the strong infrastructures in our office setups meant we could easily adapt to working remotely.”

Deayton admits that the pandemic has inevitably slowed forecasted growth. “Although we are still on target to achieve a similar revenue to 2019, we're not growing at the rate that we had anticipated before. Macao was a location where our revenues have been hit a bit harder than others. Initially, we could not get onsite to complete projects. Until better times come, we are completing the existing legacy projects.”

Both Japan and Singapore have suffered downturns. “A lot of projects that we had on the books in Japan have now been pushed forward to 2022. Singapore was hit quite hard in terms of revenue, because they endured a very controlled lockdown that lasted for about eight weeks. Our installation teams could not get on site to finish projects and our sales division was housebound. However, we have ridden the bumps reasonably well in Hong Kong, China, Taiwan and South Korea.”

Digital signage at K11 Musea shopping mall, Hong Kong
Digital signage at K11 Musea shopping mall, Hong Kong

Surprisingly, business for Vega Global’s Mumbai office has been robust despite India’s lengthy lockdown. “Our primary business in India is with large multinational sector rather than SMEs (small to medium enterprises). A lot of those projects are part of bigger programmes on large campuses, which have not really been put on hold. Those budgets have been committed from three- to five-year periods, so we're part of an overall programme going forward.”

Having long extolled the virtues of video conferencing and unified communications, Vega Global had unwittingly future-proofed itself and its clients for Covid-19. “Everybody was ready to work from home and we had contingencies that we could put in place very quickly. On the other side of the coin, a lot of our clients are top tier multinational businesses who we have worked with for many years. As we had installed infrastructures for them, they too could respond to the situation fairly rapidly. We have experienced mixed business continuity across our network of offices as different locations have been in different phases of lockdown or partial lockdown at different times. The diversity of our office network has allowed us to navigate our way through these challenging times.”

While different cities demanded different responses, Vega Global’s general support involved helping their clients giving staff the tools to work from home, including basic USB cameras and microphones. “We had to deploy and roll out these systems for them, making sure that our engineers could legally operate infrastructures onsite. Larger clients with a remote managed service in place or an in-house managed service team on site now truly value the infrastructures we have installed over the years.”

Vega Global's deputy chief executive officer, Matthew Deayton
Vega Global's deputy chief executive officer, Matthew Deayton

The Covid-19 switch operation has, without doubt, accelerated the technological path that Vega Global and others embarked on long ago. “End user demand has driven the uptake of these technologies and perhaps would not have come about if Covid-19 had not affected us all. The technology already existed, but the adoption rate was low. These technologies were exhibited at ISE and InfoComm and you would see smarter clients at these exhibitions embracing and deploying these solutions following demonstrations. The main challenge until now has been getting end users to hold meetings on Zoom or other platforms as many prefer to have face-to-face meetings. The virus has crystallised the necessity to have an infrastructure in place that will allow teams located in disparate places to continue operating.” 

Vega Global may be a solutions provider, but it was also guilty of operating like most end users prior to Covid-19. “Today, virtual seminars have evolved with the creation of breakout rooms within a conference in progress. This engagement is so impressive, that we have adopted some of these internally now. For example, when we hold our regional sales meetings, we get together as a group with a general sales update before we break off into smaller groups, which we deliberately mix up. Team members from all our offices enter different meeting rooms to discuss specific subjects, before reconvening at the end to share their ideas. We also record the information, which is something we were not doing prior to Covid-19. So internally we have all the sales teams from all our locations working with one another and sharing knowledge. This is an interesting development as it simply utilises tools that we were already familiar with.”

Deayton has discovered that larger corporations have experienced less significant delays to their projects than the SME sector. “In Hong Kong, for instance, we cover quite a broad spectrum of the market from multinationals to SMEs, schools and government. The SME sector here has gone very flat, but government and education spending has been quite robust. In response to students learning from home and with Zoom becoming commonplace, we are working with a couple of manufacturers to create innovative solutions, particularly in the tertiary education sector. Universities and polytechnics require virtual classroom arrangements that are much more tailored to dealing with sections of the faculty physically outside of the main campus. We are working on some interesting remote solutions in addition to hybrid solutions with some students in the classroom.”

Vega works with many corporate clients in Hong Kong
Vega works with many corporate clients in Hong Kong

In August 2020, Vega Global announced a strategic alliance with US-based AV system integration giant, AVI-SPL, which will see the two companies collaborate on joint go-to-market strategies together with increased integration of delivery operations.” The AVI-SPL relationship has been running for around 10 years,” says Deayton. “We had been supporting AVI-SPL clients entering into Asia until about four years ago, when we signed a strategic alliance. Although this was perhaps a marketing exercise, it signified the start of a commitment to mutually cooperate with one other. This latest mutually beneficial agreement is a slightly more robust alliance, although it is not a fully exclusive deal and allows both of us to use other system integrators, providing we are both transparent. We want to avoid margin stacking so this commercial arrangement is efficient. Both sides benefit and the client gets a more competitive price.”

Deayton and his team have been tasked to provide annual forecasts for the Baird Capital board. “Some clients that are quite organised give us a vision of how they are going forward, but most are unsure what their next steps are going to be. Most large corporates are starting to accept that their workforce is going to return to the office at some point, but they cannot forecast when and in what format that will be. There is a lot of debate around what the future function of an office is going to be over the medium term. Personally, I believe that we will return to a point we were at before the pandemic.”

However, the return to work will vary according to differences in culture. “In a lot of Asian countries, working from home is not as productive as in the West because of multi-generational living. Apartments are quite small in Singapore and Hong Kong, while good transport networks enable shorter commuting times, so employees want to come to the office as it is more productive. There is a desire for face-to-face contact, so workers still want to gravitate to the office, but that doesn't mean they need to go every day. Many of our clients are waiting to see how the return to work is going to be before making key decisions including giving up part of their campus or office spaces.”

Although Vega Global opened a Tokyo office 10 years ago, expansion has led to the planned opening of a new branch in Osaka. “An increasing number of clients are based in Osaka, and in order to improve our efficiency and reduce the need for travelling between the two cities, establishing an Osaka base is planned for early 2021. A lot of multinational businesses have set up shop in Osaka as it serves as a regional hub for other cities. Over time we will grow our presence, but for now we have a simple, serviced office with a small, dedicated team, which will welcome our Tokyo engineers to be based for some projects.”

Rosewood Hotel, Hong Kong
Rosewood Hotel, Hong Kong

As the Mumbai office focuses on large multinationals, the company has been increasingly supporting client projects in Dubai, and Vega Global has now acquired a licence and bank accounts for its newly established UAE operation. For now, Indian managing director, Blessing Joseph, is overseeing a small team to manage ongoing or planned projects. “Our next objective is to obtain a Free Port and an Onshore licence and run the two operations together. Rather than compete with the status quo, Vega Global has been compelled to set up there on behalf of global accounts. Beyond UAE, I expect we will support projects for our existing clients in Qatar, Bahrain and other parts of the Middle East.”

Deayton is keen to highlight that expansion into virgin territory is organic. “The region has rapidly matured and is well serviced, but we do not really envisage Dubai as being a massive part of our operations. We do, however, see opportunity in some of the wealthier North African countries with younger population demographics where forecasts indicate rapid growth. As they start to mature, we intend to support our clients in these territories. Dubai will serve as a stepping stone as the state is geographically close to these markets.”

Vega Global is also establishing a legal entity in New Zealand to oversee projects. “This is a client-driven initiative and will be managed by our Australian operation. And although we already have small operations in Vietnam and Thailand, we identified potential growth in the hospitality sector there prior to Covid. Once some semblance of normality with travel and tourism returns, growth will surge ahead.”

Despite national anomalies throughout APAC, the group has largely been dominant within corporate and government sectors. While different countries are at different stages of their evolution or growth, the digital workplace is destined to grow, and the group is now equipped to capture a broader spectrum of other sectors. “I think a lot of the skill sets we have acquired within the business and corporate sector dovetail into these industries. It may be more challenging to make inroads into areas such as the medical world or stadiums where we traditionally don't have a lot of experience, but certainly in hospitality and retail, we have a lot of transferable skills and I think it’s a natural fit for us.”

With its 35-year pedigree, Vega Global is well represented across all the verticals in Hong Kong, including hospitality. “We have worked with many hotel groups over the years and our operation in Macao is heavily involved in the hospitality sector. In recent years, we have expanded into other territories including Vietnam and to a lesser extent, Thailand, no doubt helped by the great relationships we enjoy with Hong Kong-based hospitality consultants such as SMW and IHD. If the project we are tendering for is a design and build mode, we do not step on the toes of our consultant friends; we leave the pure consultancy work with them, as Vega Global values its work with these organisations.”

Despite the challenges of 2020, Vega Global is confidently predicting its turnover will more than double over the next five years. “Baird Capital has given us the financial stability and backing to take us to the next stages of growth over that period. We are now probably the largest system integrator in the Asia Pacific, which is a similar size to the US market. However, we are roughly 10% of the size of AVI-SPL, so there's plenty of headroom for us to grow into. There are more obstacles to overcome as Asia is a lot more complicated, politically and geographically speaking, but we possess that local knowledge and experience across the board.”

In a year when Covid-19 has drastically altered the landscape of the AV industry, Vega Global is proof that what doesn’t kill you can only make you stronger.

This feature appears in the January – February edition of Pro AVL Asia. Subscribe at www.proavl-central.com/subscribe/asia



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