Macedonian company Hi-Tech Corp was set up 36 years ago, in the basement of a home in Skopje, and now it is a leading manufacturer of printed circuit boards (PBCs). Today they are a ubiquitous part of our daily lives, being used in everything from smartphones to personal computers to high tech cars, and their production constitutes one of the most important sectors of the electronics industry.
Savo Stanković, Founder and CEO of High-Tech Corp, sat down with Andrew Wrobel and told him the inspiring story of the company’s beginnings, about developing the business despite the onerous legal restrictions, then becoming a supplier for car companies such as BMV, Mercedes and Porsche and finally the company’s plans for expanding into nanotechnology in the future.
The company dates back to the beginning of the1980s and was started as a family business. What was it like at the very beginning and how did you manage to grow to the size you are now?
I started my company on January 1, 1981. Before that I had been employed as a technical manager in a similar firm. However, because of a conflict there—I was the owner of a few patents and they didn’t want to pay me for them—I decided to leave and set up my own business.
Back then it was still the time of socialism and there were limitations on entrepreneurship, for example there was a limit on the number of employees one could have with a maximum of ten. Then there was a limit on the space for production of about 120 square metres. There were also limitations on importing machinery—not more than 70,000 German Marks’ worth within a four-year period.
So, I started a company in the basement of my family house, in the centre of Skopje, with ten employees. It was only in 1982 that I decided to come out of the cellar, as I had made some money by selling some of my patents and had established a factory. With time, the market for my products grew in Yugoslavia so I chose to expand production. I decided to buy land, in the outskirts of Skopje, because in the city centre you were not allowed to establish a building or set up a company as a private entrepreneur. I came here in 1983. I bought this land from a private owner and I built this house first, it had to look like a house as we still had limitations at that time.
Most of these limitations remained until December, 1988, when Mr Ante Marković, the former Prime Minister of Yugoslavia, announced a new constitution which did away with most of them. Companies started growing and so did we. This was until 1991, when the war broke out and slowed our growth.
But tell me how you managed to grow during those first eight years, despite the obstacles caused by the socialist approach to doing business?
Well, in order to start the company, I borrowed money from my friends. For the first six months there was no income. After eight months I sold my first product to some customers located in what is Croatia today. They continued buying and I was able to pay off my debts.
At the beginning of the 1980s, an entrepreneur couldn’t take out a loan from a bank. I always borrowed money from people. I can’t say they asked me for high interest rates—it was through a friendly relationship—but I had to return the money in one or two years at the maximum, which is a very short period of time. I must admit that was the most difficult period in my life, because even if you had developed a product in your brain, it was not possible to raise enough capital to develop this product for the market.
In 1986, I decided to become more aggressive. I visited a German supplier of machinery and asked them to give me company credit, on trust. I needed a CNC drilling machine for a PCB. They accepted my proposal of a small down payment and 24 monthly instalments. In total, it was 160,000 German Marks and the limit in those days was 70,000. So I imported the machine in three parts, but first I had to set up three companies so each of them had a piece of the machine. It was the same with the building— the size was over the limit so we had to employ some tricks.
So the war in the region ended in 1995. How big was the company at that time?
By 1995 we had reached around 45 people, and every year we grew somewhere between 15 to 20 per cent. In 2001, we reached the total of about 68 people and we began to grow even more rapidly. This was interrupted in 2001, when there was a crisis in of Macedonia. A few years later, 2005-2006 was another good period of business for us and we grew to 180 employees. We also expanded our production area from 96 to 3,500 square meters. Now with this new building, it’s 12,850 square metres
Your first export was to Germany, in 1988, correct?
Yes, we exported to Germany, but it was still not allowed, officially, until the beginning of 1989. I had to go through a government company— Technometal—and pay them a commission so that they would transfer goods to my customers in Germany. Fortunately, this only lasted for three months. Then we started to make direct exports. I must say, there were a lot of obstacles on the way. Later on, they were mostly connected with people rather than regulations as people’s brains are not easy to change.
You had to be very stubborn and persistent to do business at the time.
Of course. Businesses face challenges all the time, even now—all our customers are looking to have the products delivered in no time. Sometimes it takes 24 hours, sometimes longer, but it’s never more than seven days even in the most complicated situations.
So when it comes to sales, where are your markets right now?
65 per cent to goes to Germany. About 12 per cent goes to Scandinavia, between 8 and 10 per cent to Switzerland and the UK and France together account for about 10 per cent. The remainder is sold to Turkey.
How do your business partners perceive the products and services that you provide them with?
Very well. We have a contract with DHL and we deliver with DHL daily, from Skopje to Leipzig, which is the DHL’s general hub, as well as from Leipzig to any European customer. In 2015, we had around 14,000 different orders and we delivered 98.2 per cent of them on time. These days it’s very easy for businesses to be in the market, if the quality of your product is good and if you have the requisite knowledge.
Now a quick trip back in time. Talking about knowledge, you were mentioning patents. Back in the 1980s what was it like in regards to patents? Were they respected?
According to Yugoslavian law, at that time, you were not allowed to own a patent as an individual. If you had a private company then it was a different matter, but if you were an employee of a company and you had a patent, you were not allowed to own it. It was very similar to Russia. However, if you left the company and established a private company, it was allowed. So I did.
Right now innovation is the buzzword. How innovative is your company?
We have partnered with Mercedes, BMW, Audi and Porsche. Because we produce PCBs to go in their prototype products, we have to follow their lead; otherwise there would be no chance to make a profit. We basically produce what they need, when they need it.
Compared to other European PCB producers, we are different. I like to say we play in the Champion’s League. That’s one of the reasons why so many German customers, investors and tech companies are our clients. We are innovative because we invest a lot in that every year. 90 per cent of our profits are reinvested in technology and knowledge.
I would say that, sometimes in a number of countries in Central and Eastern Europe—whether in or outside the EU—companies have an image problem in the market because of the country they come from. Have you ever had to overcome that?
At the very beginning, yes. They didn’t trust us. However, you have to be dedicated to your business and to not give up. You have to be aggressive but also smart about how you communicate with customers. These days we don’t have any problems with our image. Everybody in Europe knows us but we have built this image through the relationships we cultivated.
You see, it’s all based on the company’s performance. If you deliver on time, if your quality is good and if your prices are good, businesses will begin to trust you. Maybe it’s not so easy, in the beginning, for your customers to be sure that you are good, but the second time, the third time, they start to be convinced. In our business, trust is very important.
Today, if you were to give some advice to a company from the region, to help them conquer markets such as Germany or the UK, what would you tell them?
First of all, they need to have all the certificates for their company. Certification means knowledge and also shows that there has been a period where a system was established in the company. Without certification you’re nothing on the market; nobody will contact you. It is like an ID card for every company in our business. Businesses want to invest in the knowledge of your people.
In addition to technological knowledge, you need to have the right attitude. Some countries in the region have attitude problems resulting from their communist past. In the past, we failed to learn the lesson of responsibility. That is a big difference between communist societies and capitalist ones.
In the past our problem was lack of responsibility. The government talked about societal responsibility. What does that mean? Nothing. I cannot say that I grew up in Germany, but my father spent many years in Germany and as a very young boy, when I lived in Germany I got my first job. There I saw what responsibility is; when you go to work you have to accept personal responsibility for every one of the steps you take.
How about now? In February 2016, you started the construction of the new Hi-Tech Assembly Centre, an investment worth €20 million, which is planned to be operational in the autumn of this year.
Yes, we are planning to establish a new factory, to assemble PCBs inside a free economic zone, as the first domestic company ever. What this means is that now we will deliver a higher value product. Also we will employ more people. We have 180, now and very soon we will have 280 to 300 people.
I started from zero in my family’s basement and now I have 180 people working here day and night. I am now able to join the free trade zone so I will get double the number of employees. I will make not just 10 million, but 80 million, because our income grows from the total value of this product. If something has a total value here of, say, €10, in the free trade zone it will be €100—because when they put it in the Mercedes it’s not worth hundreds, but thousands.
What was the value of your sales last year?
Our sales were around €12.5 million in direct exports. We also have a company division in Germany—their revenue was €1.2million and the company division in Turkey had revenue of €1 million. So for the company as a whole the revenue amounted €15 million.
So if the number of employees doubles within one or two years, how do you see the company operating in ten years?
We are in contact with the Fraunhofer Institute from Germany. We bought two hectares of land. On the first part of this land we will build a factory assembling PCBs. The second part of this land will be reserved for nanotechnology production.
In the future, we will be part of the electric car industry. In electric cars, you see more and more knowledge and technology and our goal is to be a part of the nanotechnology that is implemented in the automotive industry. I am optimistic that my children and my grandchildren will do that.
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