The familiar household liquefied petroleum gas (LPG) brand, Union Energy, has made headway in the electricity retail market.
This came after the Energy Market Authority’s announcement to fully liberalise the electricity retail market by the second half of 2018. Consumers will have the option to switch from being on regulated tariffs to buying electricity from retailers like Union Energy at market prices.
“This is going to be very exciting,” said Dr Teo Hark Piang, executive director of Union Energy Group.
Union Energy, founded by Dr Teo’s father, Mr Teo Kiang Ang, is the market leader in the distribution of liquid petroleum gas (LPG) in Singapore. Other than LPG, it also supplies compressed natural gas (CNG), diesel and piped natural gas.
In an exclusive interview with Epoch Times, Dr Teo reflected on his father’s legacy and the secret to Union Energy’s success, while sharing his vision to take his company to the next level.
An Extraordinary Childhood
As the son of a gas tycoon, Dr Teo’s childhood was an unconventional one marked by hard work and sweat.
He began helping in his father’s LPG cylinder distribution business from a young age.
By the time he enrolled for National Service, he was already skilled in the tricks of the trade, such as welding, pipe-laying and stove-repair – uncommon skills for a youth even in the ‘80s and ‘90s. He even worked as a gas delivery man, driving a truck to deliver gas cylinders to customers.
Humble and industrious, he worked his way up from the bottom, learning the trade from his father’s subordinates. Along the way, he established strong rapport with many of his co-workers. As a result, when he was finally placed in charge, he received the support of many long-serving employees.
His Key to Success
When quizzed about his secret to success, Dr Teo attributes it to his employees.
He said, “Having only a pair of hands and 24 hours a day, there’s always a limit to what one can do. There needs to be teamwork.”
How does he manage a workforce of nearly 500 employees? Care and concern, he replied simply.
“Regardless of how advanced technology has become, we still need to rely on people to do the work. As we are dealing with humans, it all boils down to being humane,” he stressed.
“Management and staff – we’re just like one big family. There’s always room for discussion,” he said. Many of his long-serving employees “started working with us when they were still bachelors and now many of them have become grandfathers”.
Personally, he has a lot of respect for the elderly employees who have been serving in the company for many years.
One of them, an elderly worker in his 70s, refuses to retire and comes to work daily despite having walking difficulties. Due to his vulnerability, three assistants are assigned to help him.
In his opinion, manpower is the firm’s most important resource. Dr Teo’s stance on manpower is shared by his father, whom Dr Teo admires the most.
The Only Local LPG Distributor With Its Own Bottling Facility
Mr Teo Kiang Ang began his bottled gas distribution business in the 1970s, and gradually emerged as the top Caltex Gas distributor in Singapore.
But harsh times came when Caltex Gas exited the Singapore market during the Asian financial crisis of 1997.
Nevertheless, as encapsulated in the Chinese characters for “crisis” (危机), where there is threat, there is also opportunity.
In a bold manoeuvre, Mr Teo purchased the distribution business from Caltex, and later took over Summit Gas bottling facility, which bottled Caltex Gas in Jalan Buloh.
Having only a pair of hands and 24 hours a day, there’s always a limit to what one can do. There needs to be teamwork.
Dr Teo Hark Piang, executive director of Union Energy Group
The million-dollar acquisition of the bottling plant in 2000 was the game changer, after which the company established the brand ‘Union Energy’.
Dr Teo explained, “As a dealer previously, we were selling bottled gas of other brands. To establish our own brand, we needed our own bottling plant.”
He elaborated, “Most customers only remember the brand of the bottled gas, [such as] Esso LPG, but they won’t know what the dealer’s name is.” By taking over the bottling process, the company could now place their own name on the bottled gas cylinders. “This required a huge initial investment,” said Dr Teo.
At the dealership level, competition is extremely intense with over a hundred players. But Union Energy is at a much higher playing field, as the only local distributor owning one of Singapore’s four bottling plants.
“In this industry, at our level, there are fewer competitors as the entry level is pretty high. The huge initial investment poses a significant barrier to entry,” said Dr Teo.
From Gas Cylinder Distributor to Full-Fledged Energy Supplier
Having been in the business since his youth, Dr Teo has fostered close relationships with his customers, and this has helped his business flourish in other areas.
To cater to their customers’ changing and growing needs, Union Energy has widened its business scope beyond gas provision, by providing additional services like installing and maintaining LPG piping, vending stoves and cooker hoods.
Many of Union Energy’s loyal customers have aged over the company’s four-decade history, and these elderly customers have found it increasingly difficult to shop for heavy groceries, like 5 kg rice-bags and bottles of cooking oil.
For the convenience of the silver-haired community, Union Energy provides the value-added service of bundling groceries with gas cylinder delivery to households.
These are just some of the many examples in which Union Energy has “tailor-made its services, to meet the changing needs of our customers”. “We know what our customers want,” asserts Dr Teo, ascribing this quality as Union
Energy’s competitive advantage.
In addition, taking into consideration the elderly’s increased concerns on health and ageing, the firm has acquired a health supplement business, Health Domain, which sells health products like tonic Bone BioPro and Dr Oat Care instant oatmeal at supermarkets. Health Domain also renders home delivery services.
Breaking Into the Commercial Market
Previously, a sizeable portion of Union Energy’s bottled LPG customers were household users. But the emergence of piped gas in new estates has posed a threat to the firm’s household market share.
Gas supply to hawker centres had always been monopolised by then Temasek-owned City Gas. But the breakthrough came in 2005, when Dr Teo convinced some hawkers around his office to switch to Union Energy by offering better services and more attractive prices.
Thereafter, he sought the government’s approval and branched out his firm’s customer base to include food centres, coffee shops, restaurants, country clubs, educational institutes and companies.
Dr Teo said that, in terms of volume, the company’s ratio of commercial to residential consumption is about 7:3. Currently, the company has over 60 percent market share of the local LPG market.
The Next Stride
Just as how his father boldly ventured into the taxi business when it was liberalised in 2003, Dr Teo has made strides into the electricity retail market.
Having secured one of the 20 licences released to retail electricity, the plan for retailing electricity is afoot for next year, upon the completion of the billing system.
With regard to his initial plans, Dr Teo said, “We would first target our own gas customers who are commercial or industrial users.”
This is because at the present moment, only commercial and industrial consumers with an average monthly electricity consumption of at least 2 MWh, which is equivalent to a monthly electricity bill of about S$450, are allowed to switch to a private electricity retailer.
By the second half of 2018, all electricity consumers including households will be free to shop for the best deal in the market.
Dr Teo said, “The profit margin is very slim, hence the key lies in capturing the volume.”
In his opinion, the challenge would be for electricity retailers to come up with different “customised plans” for the diverse groups of consumers, based on their usage patterns. Just like a mobile phone plan, a customised electricity plan can help customers optimise their electricity bill.
Apart from electricity retailing, Union Energy is moving into the piped natural gas business. In the initial trial phase, the natural gas pipe will stretch from Woodlands to Tuas.
Dr Teo is optimistic about the future prospects of the energy industry as it is a basic necessity. His goal for the business is to diversify into a total energy provider – LPG, CNG, diesel, natural gas, and electricity. In each of these categories, he strives to be the best.
The Value of Investing in Physical Assets
Touching upon the current trend of e-commerce and virtual reality (VR), Dr Teo believes that “these are part of a cycle, and eventually it will still come back to square one”.
He thinks investing in physical assets will still reap a return, as no matter how advanced technology is, there is still a need for material, tangible goods.
Illustrating the concept of cyclical trends, he gave an example of how a white-collar administrator in Denmark earns less than a blue-collar cleaner. This is because few people want to take up the job of a cleaner, while there are relatively more graduates vying for a limited number of administrative positions.
Does Dr Teo have any advice for the younger generation?
“Work hard! There’s no other shortcut,” he stressed.
“When there’s a crisis, there are opportunities. Opportunities are seized by people who are prepared.”
A Glimpse Into His Exciting Life
On the walls of Dr Teo’s office are numerous photos and certificates, a prominent Chinese calligraphy with the Chinese character 忍 (forbearance), and three tortoise specimens.
The three tortoise specimens were given by a customer during the 2003 severe acute respiratory virus (SARS) epidemic. The customer had no money to pay for the gas cylinder upon delivery, and he gave Dr Teo the tortoise specimens instead.
“Exciting” is how he describes his life.
Beyond business, Dr Teo serves as the vice-chairman of Teo Ann Huay Kuan and as a grassroots member in MacPherson.