The traditional markets like the U.S. have suffered the effects of the global crisis. Now Asia has taken a large share and Price Waterhouse Coopers is actually telling us that by 2014 Asia will have more than 30% of total market share. How do you view the changes and the dynamic of the gaming industry? Mr. Lam Iao: I would think that there’s definitely been a big change compared to 10 years ago in how people view Macau, how they view Asia as a whole. Before there were not many opportunities and there were not a lot of investors that wanted to invest in gaming especially because of the sensitivity in this area. In recent years, however, because of all the foreign investors investing in the casinos, especially in Macau, it is definitely making a big change. And as you’ve said right now, definitely I would say in the next five to ten years, Asia will still be the location where gaming continues to grow.
Being a Macau based company, how important is it for you acquire a strong presence in Macau before expanding internationally?
Mr. Lam Iao: I am sure you know that our company was established in 2008 and it took us more than three years to build our foundations. Basically, the majority of our team members are all from Macau, of course some of them were educated elsewhere and then they returned to Macau but we built up a very strong foundation. Our strategy is first to capture this market and make sure we have the market presence here in Macau before we reach out to international locations such as Europe or our major battleground in North America and Central and South America. But definitely our approach is to have a solid foundation here in Macau before we get involved in any type of upcoming projects elsewhere internationally.
Can you tell us a little bit about those strategies, in order to strongly position yourself in Macau first?
Mr. Lam Iao: We are not only a technology company; we distribute slot machines as well. We are the distributor of one of the brands in Korea. It is quite successful here in Macau and that brand is not widely known in international locations such as Europe, you do not find the presence of that brand in the Caribbean or North America. We made strong presence here in Macau, and we made them very successful here and I would say that they performed far beyond our expectations. Last year we were slowly reaching out to other parts of the world. We have exhibitions in Las Vegas and Buenos Aires in Argentina, and we made another presence there and introduced a product in that market. I would say that the first question that came up was: “Well, we do not know you guys, who are you? It is a Korean brand manufactured slot machines and how do they perform? What sort of components do you put together? Are they secure? Most of all, are they fair? Did you put any tricks in them?” Because of the fact that we did a lot of work here in Macau to begin with, it sets up a lot of strong reference for us to answer their questions when we first introduced the brand into the market, we said, “Look, we have got a strong presence in Macau, we do have big brands like Venetian, Sands, MGM. They are using our machines, these are the performance figures, some of them we can share with you and perhaps those are the successes we can bring to you.”
So with that strategy, we first built a very strong foundation here in Macau and introduced that product, and that is just one example; we do provide other services as well. By using this example we can see we first build up a solid presence in one location, make it successful and then spread them elsewhere and penetrate other markets. That is basically our strategy. Using slot machines is one example, but we do have other products as well, such as software, of course.
Macau’s Government has plans to limit the sector in the mid future whereas regional competition such as South Korea, Singapore and the Philippines, just to name a few, will have a policy to broaden their gaming market. How do you think this will affect Macau’s obvious supremacy? Mr. Lam Iao: It will affect it a little bit, but not a lot because of the unique business model here in Macau that is different from other jurisdictions in this region. For instance, Macau government is very flexible to work with casino operators to define certain rules and regulations, to introduce new products. It very much depends on the government itself and how flexible they are to cooperate with the operator themselves. In South Korea however, they have very strict regulations on certain parts of operations in the casino in which they may be very well accepted here in Macau, with that difference, you would definitely find different business models in different countries or jurisdictions in the same region.
So with that little change of operation, customers, players, or tourists will feel that difference. Thus they will have different preference when they come to a certain point when they want to visit a place. I am not talking about the casino by itself only; I am talking about the tourism, the entertainment sector as a whole. Having competitors in the same region can be a good and a bad thing. If they are doing well, of course they take your business away; if they are doing badly and do not provide as much flexibility as you, then you set the difference and the players, the tourists know who to choose. So there definitely will be some impact on the Macau market and operators, but there is a good side of it as well.
Are you currently targeting any other Asian countries, maybe these specific countries that are broadening their gaming sectors like South Korea? Do you have any business around that area?
Mr. Lam Iao: For our land based business yes, we are slowly penetrating into the Asian market, like I said our strategy is to build up a foundation first and our foundation is here in Macau. We first introduce a product into Macau and make it successful and then our next step will be the region, which is Southeast Asia and all the jurisdictions surrounding Macau. Once we make successful cases in this region then our next step of course will be, what I always refer to as the final battleground: North America and Europe. That is where all the gaming operators and software providers compete to stand out.
In terms of Macau, what will be your future strategy to compete with the long-time regional players?
Mr. Lam Iao: I always refer to – “product and services will make the difference”. No matter what industry or what sector you are in, you always have competitors, but what we can provide and what we want to stick with is our principle in our company, which is that we want to have the best quality of product or services with our in-depth knowledge. Especially in this niche market, gaming, we want to make sure that our clients understand that our product was built based on in-depth knowledge of how gaming is supposed to be before we even came up with the product. Not just someone like we want to make a phone and I make a phone. We know how to make a phone, we know how a phone works, best quality of components to put it together to come up with the best product. I would say in the long run I do not mind having competitors, as long as we have a great team here to build up the best product in the industry, then I always welcome competitors.
Software development houses in Macau, to my understanding, are not up to international standards and Laxino hopes to be the first. Your goal is to become one of the top software development houses and top gaming software providers in the Asian region. What are some challenges that must be overcome for software development houses to play at the international level?Mr. Lam Iao: I would say to build up the skill-set, the majority of the key members here were educated elsewhere, our background is from a foreign country and we are used to the international standard. Macau only has a population of about 600,000 locally and if you talk about how many people are actually in the IT sector, it is very minimal. Within the IT sector there is technical, server-based, services and in relation to purely software development it is even worse. The population of that group is only, lets say 0.1% of the population so it is quite difficult for us to actually get quality staff who has the mindset or background exposure to the international standard. So our challenge is actually to introduce the international standard or the skill sets that we acquire elsewhere to re-introduce back into this market and to the people here who do not understand. It is like how you make a phone. You have to pass certain ISO for the board, the screen, the weight and the dimensions as well.
Those tiny little details are the ones that they often encounter here in this region and that is why low-cost software companies – I am not trying to criticize – but local software companies build up the software, when you compare their product with our product, you see a significant difference in terms of security level, flexibility, skill ability of the software itself. So that is why I said the first challenge is to find local talent. The second challenge is to educate and train this local talent to have exposure to these international standards to bring them up to the next level so then they can have the background to compete with the competitors out there.
That would also be very good for Diaspora in the United States such as people that are studying – it is an incentive for them if you are looking for talent. They can come back to Macau and contribute to their economy.
Mr. Chi Lei: That is what happened. What kind of upset me when I first came back is that most of the well-paid jobs are not for software development. So sometimes people study abroad and they have a very strong skill in software development and they come back and cannot find a job so they have to change to systems support, applications support or even business. They have to give up what they learned and what they enjoyed and picked up another skill. They have talents but they are not using what they learned in the local market. So what we are trying to do actually is provide a platform for these kinds of people. What they lack is basically exposure and we have that...
Mr. Lam Iao: ... and we have here an opportunity as well. There are no software companies in Macau who can provide those types of positions for them to put in their résumé.
Mr. Chi Lei: Engineers are trained to take on challenges, they like challenges, they like to tackle difficult problems, and you have to have difficult problems, and that is the bridge we are trying to build.
What short and long term benefits will your innovative and technological solutions bring to online and land based gaming operators?
Mr. Lam Iao: Now, because like I said we have in-depth knowledge of how the gaming operators operate in the casinos and online, we understand what the customer needs and how they operate, so we know exactly the type of software that they want. When we develop a product, it is not only based on what we know the industry is like, we also capture their requirements and they feel comfortable because they know that we know what we are talking about – we are speaking the same language. So then we can come up with the right product for them. Especially because we are made up of a team of mainly Asian staff so then the operators around this region tend to go for us as their choice not only because we understand how the operator works, we also understand the culture in this region and let’s say, for instance, in the Thailand market they prefer those two buttons on the phone, and they do not like yellow, whereas you move the same product to Japan and they might want it all silver and they want those two buttons. We can put all together tailor-made for that particular customer but at least we know what they are talking about and we know what they want. So that is why they would choose us instead of big foreign competitors. We are localized, put it that way.
In order to cater to bigger projects, Laxino plans to become a publicly listed company within the next three years. Can you tell us about these projects, because I understand they are under development right now?
Mr. Lam Iao: Yes some of them are still under development. We have a very good revenue stream from the gaming sector of course. We slowly want to expand the business into non-gaming. It will be announced very soon. We will be one of the partners in a joint venture for a cloud service in Macau. There are some other social network platforms that we are building up. We are teaming up with a Canadian company. It is more of a Facebook-like social platform but with a different concept. We are the software provider for them and they are the marketing arm for this project. We are slowly getting involved in more non-gaming projects and entertainment, as well. Also, we are prototyping on top of various Microsoft products like Kinect, Surface 2.0, etc.
You are a very young, talented and skilled workforce. You are the backbone of it and have quite a professional career. You graduated from the University of Texas where you were a lecturer. Your whole organization is led by very brilliant people and you personally ranked 29th among the most influential people in gaming in the region Top 50 this year. Where do you see Laxino in the next five years?Mr. Lam Iao: For the gaming side of the business I would like to see it become a really truly top-notch gaming provider. Not only in the region – I want it to become globally known. For the non-gaming sector I would like to contribute more to the education sector, as well as the governments. I would like to help them more to automate their process by utilizing more our technology.
There are a lot of other underdeveloped countries or cities where we can apply our technologies to help them to become the next New York, or next Hong Kong. It is just how acceptable we are to them basically and also the technology. Because culturally they rely on human beings and human processes to perform certain tasks, even in the government or the educational sector. Now we have identified ways to help them automate a process to cut down on their resources and provide more accuracy on certain tasks. It just takes them time to break the wall and accept that technology. So in the next five years for our non-gaming business I would like to reach out to those governmental and educational sectors to benefit the people in this region.
A final message to the readers of the USA Today about Macau?
Mr. Lam Iao: The old Macau is not the Macau that you know today, so come to take a look. It is not only the software sector we are talking about, there are a lot of things that have been changing. That is one of the major reasons that I moved back as well. I see that Macau has a great potential to grow to the next level, not only financially but also the infrastructure, the technology. It also has a very strong influence on the surrounding countries and cities. That is why we took a great step, we had our hard times when we first started the company. No one has ever done it, I have lost a lot here and gained a lot in the last three years because no one believed in software products being produced by people from Macau. So I say you know what, I do not mind, I want to build a software development company based in Macau. If you want software you come to Macau and you will find quality software that can have the international standard. And of course since we are in Macau our first approach is to build gaming software to secure the revenue first before we grow to the next step in which we have already exceeded that stage, now we are in the second stage of reaching out to the non-gaming sector.
We have gone through a lot, I treasure each one of these team members and I hope that we can grow to the next level, and bring to company to public and also let people know, we’ll be the first Macau based software company to go publicly listed. It does not matter where, at least that is some kind of achievement that I would like to see.
It sounds like you are on the way and will set the bar really high.
Mr. Lam Iao: Even sometimes in Hong Kong, they have good software development, excellent, but specifically in gaming software, I do not want to say that I am the first and the best in this region but it is indeed very hard to find.
Mr. Chi Lei: The fundamental difference is that we have the experience in casinos, that makes a difference, you have been doing the operations and designing the software, there will be some kind of weird things happening in the system, it never matches what the customers expect. I think that will make a fundamental difference when you first start being in this sector.
0 COMMENTS