[dropcap size=small]S[/dropcap]tainless-steel mesh smartwatch straps, car engine piston rings, and aspherical camera lens moulds aren’t very similar at first glance. But they are all coated with a wear-resistant carbon film that is as tough as a diamond. This sliver-thin coating is today an essential component in manufacturing, thanks to Shi Xu, founder and executive chairman of Singapore company Nanofilm Technologies International.
Shi, the recipient of the EY Entrepreneur Of The Year 2017 award, had made it his life’s work to research filtered cathodic vacuum arc (FCVA) technology before launching Nanofilm in 1999 with a start-up capital of $300,000. Today, Nanofilm’s patented FCVA method of depositing a diamond-strength film on the surfaces of objects remains the gold standard in the vacuum coating industry, imparting chip-resistant colour and an exceptional smoothness to materials.
This success, he says, was hard-won. The 54-year-old is speaking at Nanofilm’s headquarters in Ayer Rajah Industrial Estate, with his wife and company assistant vice-president in corporate and business development, Jin Xiao Qun, by his side. “I’ve encountered many crossroads in my life,” he says. Each juncture would test his mettle as a husband, researcher and businessman.
LEAVING THE IVORY TOWER
To be CEO, Shi had to leave a successful career as an academic. By the age of 35, he had scaled the pinnacle of his academic career and achieved tenure as an associate professor at Nanyang Technological University’s (NTU’s) School of Electrical and Electronic Engineering. He also ran a research lab that garnered over $4 million in funding and had multiple patents to his name. “I could cruise and everything would constructively follow. My main task would be touring the world for conferences; there was nothing to worry about,” says Shi.
“ We had two dreams – financial stability and job security. Our academic lives fulfilled them.”
– SHI XU, FOUNDER AND EXECUTIVE CHAIRMAN OF NANOFILM TECHNOLOGIES INTERNATIONAL
He and his wife, then an engineering lecturer at Temasek Polytechnic, had everything they dreamed of after moving from Singapore to China in 1991. “We had two dreams – financial stability and job security. Our academic lives fulfilled them.” So why the plunge into the risky world of entrepreneurship in 1999? Sure, there was a bit of restlessness on Shi’s part – “things had become boring” – but to leave the comfortable world of academia for the unknown, especially with a three-year-old daughter to care for and another one on the way, could be considered a reckless move.
But the opportunity to take his research out from the lab and into the world, and to test his product commercially, proved too tempting. Japanese conglomerate Hitachi had sought to adopt Shi’s coating technology on its hard disk drives, validating the commercial potential of the FCVA method. NTU decided to create Nanofilm Technologies, a spin-off company to carry the innovation to market. As Shi spearheaded the research into this technology, NTU approached him to lead the company as CEO. With a wry laugh, he says: “I was ‘forced’ to go into business as they felt I was most suited for the job. I had expected to be a consultant on the research and development front.”
At the back of his mind, he knew his ground-breaking research would find industrial applications, especially as the manufacturing sector was relying on technology that had remained unchanged for the past century. At the urging of Jin, who viewed Shi’s position in the university as an “iron rice bowl” (a Chinese saying that means stable), he negotiated to take no-pay leave from NTU for two years as a backup plan.
A FATHER’S CALLING
His priorities were tested almost immediately. Within a week of the machine installation for Hitachi in Japan, the equipment malfunctioned; he was called to iron out some issues. It was Nanofilm’s first major client, so it was imperative that it succeeded in implementing the new technology.
But Jin, who was then nine months pregnant, was due to birth their son at any time. Shi chose to stay with his wife, but, with each passing day, he “faced tremendous pressure to return immediately”, fully aware that the company’s success hung in the balance. He mooted the idea of inducing labour, a procedure that would bring immense pain to Jin. It was a tough decision the couple had mentally prepared themselves to make. But, as luck would have it, Jin gave birth and he flew to Japan the moment she was discharged.
STAYING THE COURSE
In 2004, Nanofilm faced a major crisis when the hard disk drive industry – which accounted for over 80 per cent of the company’s revenue – consolidated, causing a significant drop in sales. The company struggled to pay its employees and was in danger of shutting down if things did not turn around. For the first time in decades, Shi had to take a 60 per cent pay cut for two years to keep the company afloat.
The company’s future hinged on his ability to innovate and open new revenue streams – and he did just that. “In those couple of years, we evolved our technology and had a lot more breakthroughs,” says Shi, who calibrated the coating technology to cater to camera lens moulds, photocopy-machine parts and semiconductors. Instead of providing coating services, the company also started to sell equipment, allowing clients to do the same.
Shi’s continual drive for innovation sprang from his reluctance to return to academia. The thought of marking 900 examination scripts per semester seemed dull by then. He says: “Business is so much more challenging, compared to teaching. If you asked me to go back (to academia), I might feel bored.”
THE NEXT LAP
After almost 20 years at the helm of Nanofilm, Shi is at yet another critical juncture. “In the past, the company relied on organic growth. Now, with the technology ready and a strong product line-up, we are ready for much faster growth,” he says.
To grow the company’s footprint beyond the 1,500 employees in offices across Singapore, Japan, China and Vietnam, he will need to rely not only on his ability to innovate, but to also build a management team to prepare for the company’s IPO, slated to happen in a couple of years.
As for himself, things will probably come full circle. “I see my role as switching back to R&D. I would like to guide the strategic direction of the company and work on developing and enhancing new technologies and products,” says Shi.
As a father, he believes in letting his daughter, 22, and son, 19, pursue their interests. He encouraged his artistic daughter to enroll at the Art Center College of Design in California, a move initially discouraged by his wife who felt that the path of a doctor or engineer would provide better job security. While his son takes after him with an exceptional flair for physics, Shi urges him to develop his skills beyond the sciences.
Who knows, the youth might very well be the next CEO in the making.
3 SOFT SKILLS FOR BUSINESS SUCCESS IN JAPAN
Shi Xu reveals how he broke into the clubby Japanese commerce scene.
Going in for the long haul is key. As the Japanese adopt a meticulous methodology, developmental work can stretch for as long as two years, before leading to a product launch. In Nanofilm’s early days, he had to travel to Japan at least once a month to visit clients and personally oversee the implementation of FCVA technology on their premises.
LOUDER THAN WORDS
The Japanese value honesty and seek it in their dealings. As sole technology provider of some Japanese clients, we are careful to keep our prices reasonable. Increasing prices might impact their business model and jeopardise the relationship.
While clients such as Nikon, Sony, and Canon were demanding, staying the course helped to build trust. As they eventually had faith in me as a technological partner, I was allowed to tour their factory and workshop while my agents had to remain outside.
JOURNEYS OF DISCOVERY
An avid globetrotter, Shi Xu shares some of the most unforgettable vacations with his family.