The Transformation Story of Kino Biotech and Kinofy

The beauty and wellness enterprise Kino Biotech Group celebrated several milestones in 2020. In August, the company celebrated its first major collaboration with Taobao, Alibaba’s ecommerce platform, for marketing its flagship Kinohimitsu brand of health products and introducing the world’s largest e-commerce giant to its offline retail reach, not only in Singapore but potentially also to the rest of Southeast Asia. At the same time, its spin-off Kinofy had been providing digital solutions to help Singapore-based businesses break into China since 2017.

Kino Biotech had humble beginnings. It could trace its genesis back to the family business set up in 1965 by the parents of Chong Kawee, Kino Biotech and Kinofy’s co-founder, when they sold shirts and other merchandise. In 1971, the couple bought over the Three Rifles brand and started a small shirt factory. The business was one of the earliest success stories of Singapore local companies that started post-independence.

According to Kawee, “We were very blessed. My father started brand building in 1965 with Three Rifles shirts. We recognised the preciousness of a brand. Across generations, we saw different sides of the equation—as brand owners, as manufacturers, as distributors. We saw the whole value chain.”

Because consumers in Southeast Asia still looked more toward the West or Japan for premium brands, Kawee’s team focused on strengthening branding when they were developing new health and beauty products, emphasising that ingredients were “provided by nature, proven by science”. His team worked closely with various universities in developed countries, such as Kyoto Pharmaceutical University in Japan and the University of Pavia in Italy, to conduct rigorous lab tests on its ingredients and products to ensure credible scientific evidence supporting its efficacy. As a result, they created a combination of both Japanese and locally customised recipes.

Kino Biotech eventually built its offerings in the category of functional drinks, specifically through three brands, namely Activa (2000), Kinohimitsu (‘Secret from the Trees’ in Japanese; 2002), and Xpertise (2006). Kawee commented, “As we evolved and went deeper, we found we had become more of a ‘biotech’ company, so we then decided to call our new company Kino Biotech.”

In 2010, they registered the company in Singapore. The team experimented with different products through various channels. Interestingly, the company owned neither plants nor production capability. Instead, it relied mainly on strategic partners and suppliers. Some may consider this an ‘asset light’ approach.

“We needed to redefine what an asset is. To us, assets are our IP (intellectual property), our value chain, our talent, our know-how, and our data,” said Kawee. “These include our formulations, certifications, and trademarks, which are not reflected according to accounting standards. Investing in my brand and building in the technology, and working around the ecosystem, that’s how we build our assets.”

In 2011, replicating what they had done in Southeast Asia, the company launched Kinohimitsu in China’s Tier One cities through its channel partner, Watsons, which had established over 900 Points-of-Sale  in the country. In 2017, a new company, Kinofy, was established to better leverage its China Cross Border Ecommerce  license and its digital capabilities. The new business also provided consulting services to other firms in Singapore.

From shirt-making to pioneering TV shopping business in Malaysia, to creating the Kinohimitsu brand, and then establishing Kinofy to leverage digital technology for cross-border business solutions, Kawee acknowledged that they had made many mistakes, but at the same time, he would not have done otherwise even if time could be reversed. “It is a journey,” reflected Kawee. As an entrepreneur, he believed in the value of experiments–you fail and learn from it. “To swim”, he made the analogy, “you need to get totally wet, not just your feet. As long as a business keeps investing in building its core strengths, new opportunities will present themselves, as they favour those who are prepared.”

This case follows the journey of Kino Biotech and Kinofy from their start and through several critical transformations across three decades. It analyses how firms manage strategic change, internationalisation, and digital transformation. The case is written by Yong Hsin Ning, Founder & Managing Director, The Biz Lab; Geng Xuesong, Associate Professor of Strategic Management, Singapore Management University (SMU) and Wee-Kiat Lim of the Centre for Management Practice (CMP) at SMU.

To read the case in full, please visit the CMP website by clicking here.