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For years, OSIM is a family title in Asia, recognized for his or her luxurious therapeutic massage chairs.
Just lately, OSIM launched a gaming therapeutic massage chair in collaboration with Razer that took the web by storm.
The person behind OSIM is Singapore-born Ron Sim, who has an estimated internet price of US$1.three billion and is the twenty-eighth richest man in Singapore.
His spot on Forbes’ Singapore’s 50 Richest 2020 listing has fluctuated through the years, on account of successes and failures.
From a toddler who offered prawn noodles to make ends meet to changing into a tycoon with a enterprise empire, right here’s how he amassed his fortune.
From Rags To Riches
Like many in his period, Ron was born right into a household of modest means.
The billionaire’s childhood was spent taking on menial jobs, together with promoting prawn noodles and dealing as a waiter to help his household, of which he was one among seven siblings.
Graduating with solely an O-level certificates, the entrepreneur launched a enterprise instantly after finishing Nationwide Service in 1979.
“It’s not straightforward to get a job (in Singapore at the moment)… and the pay is horrible so that you’ve received to determine one thing for your self,” recounted the billionaire on a radio present.
The preliminary years of the enterprise have been bumpy. Ron’s first firm specialised in family items however closed down after a recession in 1985.
In 1987, Ron re-entered the trade with a wellness model, Well being Examine & Care, which grew right into a prolific franchise with 10 shops throughout Singapore, Hong Kong and Taiwan.
In 1994, the corporate rebranded to OSIM, a way of life and wellness model famed for its Japanese shiatsu-style luxurious therapeutic massage chairs.
OSIM went public in 2000, promoting over 25 per cent of its shares in a deal that valued the corporate at S$71 million.
Picture Credit score: Asia Nikkei
In 2013, OSIM reportedly generated over S$648 million in annual income and hit a S$908 million market cap in 2016.
OSIM was dubbed as one of many high 10 therapeutic massage chair manufacturers on the planet with over 413 shops in 88 cities in line with UK-based analysis agency TechNavio.
A Sequence Of Acquisitions
Ron didn’t cease at OSIM as he launched into a sequence of enterprise acquisitions underneath an umbrella conglomerate, OSIM Worldwide.
The objective was to seize the “mass prosperous”, a demographic with the kind of excessive discretionary spending energy that might afford OSIM’s luxurious way of life and wellness merchandise.
OSIM acquired ONI World for roughly S$10 million in 2003 and now owns a 90 per cent stake within the agency. ONI World owns a stake within the Southeast Asian franchise of US-based well being complement chain GNC Wellness.
GNC Wellness runs the world’s largest chain of well being meals shops and owns 200 retail shops throughout Singapore, Malaysia, Philippines and Taiwan.
Ron’s subsequent transfer was to subsume the then-relatively-unknown luxurious tea model, TWG Tea underneath OSIM. At that time, TWG Tea, which solely had three retailers in Singapore, was dropping S$2 million per yr.
Regardless of the agency’s shortfalls and the protests of his shareholders, Ron bought a 35 per cent stake in TWG Tea in 2008 and bumped its stake as much as 70 per cent over the subsequent two years.
Picture Credit score: TWG Tea
Throughout the subsequent 5 years, TWG Tea’s annual gross sales exploded from S$1 million to S$55 million a yr.
In 2017, the agency annual income of S$70 million in 2016, and a compound annual progress price of greater than 20 per cent over the previous three years.
A Truthful Share Of Enterprise Setbacks
Regardless of his successes, Ron has had his fair proportion of setbacks through the years.
OSIM purchased a 55 per cent stake in specialty merchandise retailer Brookstone in 2005 for US$450 million in partnership with Temasek and J.W Childs.
By 2006, OSIM swung right into a quarterly loss after Brookstone was beset by a wave of crippling losses.
In 2009, OSIM took a US$100 million write-down on its stake within the US-based agency. By 2014, Brookstone filed for chapter, two months after it defaulted on debt.
Regardless of writing off Brookstone, OSIM’s progress continued to plunge between 2012 to 2016. OSIM, which accounted for the lion’s share of the group’s income, skilled a decline in gross sales from 15 per cent to detrimental 13 per cent between 2012 and 2015.
The therapeutic massage chair enterprise generated simply S$342 million in 2016, half the annual income generated in 2013. The group’s second subsidiary, GNC additionally noticed detrimental three per cent progress in 2016.
Picture Credit score: USA At this time
The identical yr, DBS reported that OSIM was experiencing poor earnings with no dividends for its shareholders, a product of upper working prices and decrease gross sales from diminished shops.
Ron promptly determined to take OSIM personal. In August 2016, Ron, who already owned 68.31 per cent of OSIM, provided buyers S$1.32 per share to delist OSIM from SGX.
The re-acquisition of OSIM underneath a brand new conglomerate, V3, price the billionaire over S$1 billion and necessitated over S$321.9 million in loans.
However solely a yr later, Ron introduced a pivot to an IPO in Hong Kong, citing lighter compliance prices because the pull issue for the relisting. However the plan was later aborted in 2018 amidst “intense volatility” within the inventory market.
The billionaire shared with Forbes in 2019 that it has no plans to listing the agency within the close to future.
Gearing Up For The Subsequent 10 Years
For the reason that pandemic, retail has been struggling, and the after-effects of COVID-19 could also be wreaking yet-unreported havoc on the billionaire’s empire.
In June 2020, GNC declared chapter within the US, and introduced plans to shut at the least 800 of its 7,300 shops. Although it’s unclear how that may have an effect on the retail large’s presence in Southeast Asia, retailer closures appear to be confined largely to America and the agency will proceed to function.
Issues appear to be wanting up for V3 in different arenas. In 2018, personal fairness agency KKR took up a “important stake” within the agency, investing over S$500 million in V3, which was valued at roughly S$1.7 billion.
Regardless of its setbacks within the early 2010s, V3’s income reportedly climbed again above the S$600 million mark through natural progress throughout all enterprise segments in 2017.
Along with KKR, V3 has performed an enormous overhaul of the OSIM enterprise mannequin. Over 112 OSIM shops have been closed, with 27 new shops opening in several places. Smaller shops have made means for bigger shops with shows for patrons to attempt.
The ups and downs of his enterprise don’t appear to faze the billionaire. Change is one thing that Ron considers pure.
In line with the billionaire, the trail of the financial system is rarely linear, and market cycles have a tendency to alter each 10 years.
The important thing to survival, is to adapt.
Featured Picture Credit score: Bloomberg