Bewater Studio Ltd.

INTELLECTUAL CAPITAL REPORT 2010-2011

CONTENT
1) Introduction
2) Company Profile
3) Stakeholders and their Expectation
4) Intellectual Capital
5) Risk Analysis & Mitigation
6) Future Development

1) Introduction
The business environment in Hong Kong is very competitive, and the rapid growing economy of Chinese
industries only makes it even more competitive and is greatly affecting western and local companies on how
they run business in Hong Kong.
Intellectual Capital, to put it in short, refers to all resources and capital that are intangible and non-physical.
Things such as technical knowhow, staff experience, communication skills, client relationship can all be
categorized as Intellectual Capital and they are easily to be overlooked.
In order to gain advantages over the competition, identifying and organizing the Intellectual Capital has proven
to be crucial. Especially in heavy knowledge-based industries such as industrial design, gaining such edge
would be beneficial not only to the company itself, but also the industry that the company serves.
By having our first Intellectual Capital Report, we are trying to state clearly about the abilities of our business
and to set up a framework for ourselves to evaluate and improve.

“Don't get set into one form, adapt it and build your own, and let it grow, be like water.”
< Bruce Lee: A Warrior's Journey (2000)>

2) Company Profile
Philosophy
“Don't get set into one form, adapt it and build your own, and let it grow, be like water.”< Bruce Lee: A Warrior's
Journey (2000)>
Inspired by a Hong Kong icon, legendary martial artist Bruce Lee, we apply his philosophy not only in our
studio name, but also in many levels in our management and design execution.
In Bewater Studio, flexibility is the value we treasure the most. As a design consultancy, one of the challenges
we face is to provide service to clients span across different industries. Each client has its unique and specific
needs in design and service. We simply do not believe there is one successful formula that can apply to all of
them.
“Jeet Kune Do favors formlessness so that it can assume all forms and since Jeet Kune Do has no style, it can
fit in with all styles.”< Bruce Lee: Tao of Jeet Kune Do (1975)>
We think that such philosophy, although was referring to martial art, can also be applied to design perfectly. We
do not limit ourselves into certain design style, as we believe products in different categories, market or target
users can employ very different style.
As a designer working in Bewater studio, there is no limitation in how to tackle projects or what tools they use.
They can simply use what serve them the best and the most efficient one.

About the Company
Bewater Studio is a Hong Kong based design studio dedicated in creating fresh and ground breaking
products. Formerly Fuse Design, the studio was founded by Eugene Sze in year 2006. Since then, the studio
has been providing services for companies from all over the world, such as Philips, Nissin and Hong Kong
Polytechnic University, just to name a few. In year 2008, Eugene joined by his fellow Poly U graduate, Kylie Yu
and Fai Chan, the studio has been admitted into the InnoCentre organized by Hong Kong Science and
Technology Park as one of the incubatees under their design incubation program. To signify the brand new
start, the studio was renamed as Bewater Studio in 2009.
With our knowledge and experience, we have the capability to tackle various design challenges.
We offer strategic design consulting service in the following areas:
Design opportunity identification
Design Strategy Planning
Market environment research and trend analysis
Idea generation and design development
Cad modeling
Professional product visualization
Prototype production
Design evaluation and refinement
Packaging design
Besides designing for our clients, we also have our own designing projects. We are currently developing our
own brand of products, and is planning to officially launched to the market in year 2011. We hope our creations
not only fulfill the functional needs of people, but also provide a fresh and innovative experience for them.

Mission and Visions
Our ever growing team is young and talented. Our experience spans across industries from consumer
electronics, house-ware, domestic appliances to medical equipment, just to name a few. We are well equipped
to turn ideas into innovative products.
As our name has suggested, we believe design should be flexible and should not be stereotyped. Our minds
are free to allow us embrace multifarious ideas. We also believe good designs should be fundamental, yet
function to improve our surroundings, as water nourishes the world. We always concern about how objects
relate to environment, as well as how products interact with end users. We take responsibility upon ourselves to
bring enthusiastic, original and appealing designs to the world.

[
bewater
TEAM]

3) Stakeholders and their Expectation
Our Team is formed by a group of people from different backgrounds, having different abilities yet share the
same vision to provide good design service and products. As a knowledge-intensive company, team member’s
expertise and experience are the most important assets to the studio.
They expect chances to bring their skills and creation into full play, projects from different industries that can
help them learn and improve both professionally and personally, as well as a comfortable and open working
atmosphere.
Consultant Clients are the main clients of Bewater Studio Ltd. which generate most of our revenue. They are
companies from international, local and mainland China. They span across industries from home appliances,
kitchenware, electronic, etc. They are mainly manufacturers which launch products periodically and need
product design service from time to time.
They expect design house to fit into their brand style, development schedule, working process, as well as good
design quality with reasonable price.
End Users are users of the products that are under the Bewater brand. Since the Bewater products are
currently entering the final stage of development, they can be considered as target and potential users of our
designs. As we are planning to shift more resources in developing our own products, the importance of the end
users is on the rise.
They expect products that can give them unique experience, look good yet practical, as well as reflecting their
taste.

Retailers include distributors/retailers/chain stores that sell our products. They import our own brand of
products and distribute them to other countries and to the end users. They are the first persons to have
feedback from the target users about our products. They are the important bridge that connects our studio as a
creator to our end users.
They expect products from us that have good sales, hence generate good profit margin. They also expect us
to be flexible enough to fulfill their shipping and ordering requests on the products.
Suppliers include manufacturers/model makers/production house that help us in the process of providing
design services and product development. They are very important to help us on realizing our designs into
actual products.
What they expect from us are regular orders, understanding their limitations which lead to smooth production
process.

Our Values to the stakeholders
Team
Since the team is formed by a small group of people, and we truly believe every member is equally vital
regardless of their experience and contribution, therefore we do not have a clear hierarchy like many traditional
companies. We operate more like a sports team where everyone within the team has their own role, while they
can cover each other if needed. We encourage members to work together and to share their strength/abilities.
We believe this can help generating more interesting ideas at the same time creating a comfortable and open
studio environment. Also as chance presents, we try to get design projects as diverse as we can from different
product types, markets, companies and even industries. This can enable the members to get experience from
such diverse experience, which they can improve both professionally and personally.
Consultant Clients
With our experience working as a design consultancy for clients from many different countries, industries,
markets, etc, we have developed the abilities to quickly understand what design style the clients are looking
for, or even to build a new design style from the ground up for particular client.
As mentioned in earlier chapter, we pride ourselves to be able to adapt in different situations. We try to be as
flexible as water in order to fit into different industries, schedules and working processes which are required by
our clients. We assign different combination of designers to different projects which play to their strength,
hence maximizing the design results received by the clients.
Our project price is based on an hourly rate basis to calculate. By employing such system helps to make sure
the price that our clients pay is reasonable depends on what service they require.

[
consultant
CLIENTS ]

End Users
When we design our own brand of products, user experience is always our primary consideration. We would
conduct user and market research on the product. We would invite real users into idea workshop so we can
get first-hand users’ opinions. This method has been proven to be successful in bringing new and exciting
designs which custom to the user needs.
Retailers
In our team we have experienced market sales and designers. They all have good market sense as they have
past record to back them up. We have confidence in the products that we design will have good sales.
Moreover, when we design we also consider factors like color options, packaging sizes, SKU (Stock-keeping
unit), MOQ (Minimum Order Quantity) that retailers concern about. From the last couple trade fairs that we
attended, we received very good response from retailers which prove the direction we took is right.
Suppliers
We consider our suppliers an extension of our team. We communicate with them closely as if they were our
team members. And we do not select our suppliers solely based on price. We value their ability and
relationship between us, therefore most of our suppliers that currently working with us have stayed with us
since the very beginning.

4) Intellectual Capital
Industrial Association 2%
Same Line of Business 2%
Retailer 3%
Supplier
4%
Creative Ability 18%
End User 6%
Relational Capital
35%
Human Capital
45%
Consultant Client 8%
Team Work 12%
Team Member 10%
Personal Character 8%
Structural Capital
20%
IP Management 2%
Knowledge Management &
Sharing System 3%
IT System
4%
Innovation
Management
System 6%
Communication
Skill 7%
Intellectual Capital Weighting of bewater studio ltd. (as of Jan.,2011)
Project Management 5%

Human Capital
All members in our design team are degree holders of Industrial Design courses from the Hong Kong
Polytechnic University. 60% of them graduated with first-honor. One of our directors, Ms Kylie Yu, has obtained
Master Degree in Design and was the only student honored with Outstanding Student Award in year 2008.
Members of the team prior from joining together, has had experience in design and product development in
both large and small corporations. Such experience has equipped them with abilities to design products span
across diverse industries, as well as international brand and local companies. This is particularly important to
us since many of our consultant clients are looking for high quality design that is up to the level of international
design firm. We are not only able to provide that, and also have the advantages of being a local company and
with competitive price.
Creative ability is no doubt one of our valuable human capitals, but we also treasure Personal Character as
much since nice character is an essential ingredient of good team work.
Since our team is formed by a small group of talents, good team work is even more important. In Bewater
studio, we co-operate more like a basketball team than a traditional company. The team leaders may be more
experienced, but the responsibilities of all the team members are equally the same. All of the members have
their own role, yet they are versatile and can cover each other’s work if needed. We treasure communication
and team chemistry. And we share same vision and work towards a common goal.
To have good team work, communication skill is an essential ability. Besides, design also works as a bridge to
link together different parties including clients, engineers, suppliers, etc. who are from HK, Overseas or
Mainland China. Good communication and language skills are important for our team members.

[
collaboration
WORKSHOP
]

Structural Capital
As a design studio, unlike normal companies, innovation management has been woven into our daily works.
After we confirm every project, a brainstorming section we called “workshop” would be carried.
During workshops, ideas are bounced back and forth among members to generate new concepts. We use
various design methods such as mind mapping, to help us analyzing our ideas.
In order to better manage our projects, we use documents like project brief and time sheets in various stages
of the projects.
We recently migrated out e-mail system to G-mail service. The advantage of this move is to allow us to better
utilize the power of the internet. This gives us more control over our projects when we are out of office.
We have registered our own brand “bewater” and applying patent for some of our products. Our current IP
management is relatively minor but it is getting more important to us since we will be launching more products
and putting more emphasis on our brand in the future.

[
design
INSPIRATION]

Design Methods
product study
finding design opportunity
research & analysis – product study
Innovative
breaks new ground, have not seen before
Extreme design as flagship item
Branding / Specialization
Brand recognition
Mass market / Mainstream
Larger volumes
Extreme
challenge and extend the norms
Traditional
accepted as a common approach
Purely functional
No appeal
research & analysis – market study
Known
familiar, a, have eseen beoe before
research & analysis – user scenario

Relational Capital
Since our team is formed by a small group of people, so our relationship is more like friends rather than boss
and staffs. Team members will be kept into conversations of important issues such as office relocation, which
we believe would increase their involvement.
Consultant client is another major stake holder to our studio, so we do not take our relationship with them
lightly. We take an “in-person” approach when serving our clients, which means besides critical project
milestones, we would sit down with them face to face as much as we can. We believe talking in person is much
more effective than discussing via phone and email only, and would create more opportunities by having more
interaction and jamming ideas.
We would also consider different aspects in our design projects, such as end users, consultant clients, retailers
and suppliers. By understanding their preferences and limitations, we could produce designs that all parties
are happy with.

“in-person” Approach with Consultant Clients
Meeting with Life Power Health Ltd. Engineers in Dong Guan China
Workshop with Supor Co., Ltd. Design and marketing team in Hangzhou China

Some of bewater’s past activities:
2 nd Shunde Expo 2009 3 rd Shunde Expo 2010
The Next Exhibition 2009 IDT Expo 2009
HK Houseware Fair 2010 HK Gift & Premium 2010 Design Tokyo 2010
IDT Expo 2010 Design & Culture Tour - Discover Design 2010

Press coverage of bewater:
Sing Tao Daily 15/05/2010 Mingpo 14/06/2010
am 730 23/11/2010
exporter’s bulletin Autumn 2010

5) Risk Analysis & Mitigation
Risk Probability Effect Outcome Intellectual Capitals
Loss of team members 6 7 42 Human Capitals:
Creative ability, Team work
Consultant client switch to
other design consultancy
7 4 28 Relational Capitals:
Consultant client
Disappointing sales 4 6 24 Structural Capitals:
IP management
Relational Capitals:
Retailer, End user
Lack of supplier support 3 5 15 Relational Capitals:
Supplier, Retailer, End user
Risk of infringement 5 2 10 Structural Capitals:
IP management
Relational Capitals:
Retailer, End user

Loss of team members
Analysis:
Members of the team are our most important Intellectual Capital. They are the core factor of our success.
Losing member would weaken our creativity. Also it would break up our team chemistry. A candidate who has
the right combination of talent and personality is not easy to come by, so it is crucial to keep our team intact.
Mitigation:
Communication and sharing of thoughts and experiences between team members will be encouraged both
formally and informally. Some workshops focusing on sharing skills and experience can be organized. And
management will share more about the company development to the team, to let them understand more about
situation and grow together.
On the other hand, we need to develop ways to document skills and abilities of members in the form of working
guide or handbook, hence transferring the Human capital to Structural capital.
Consultant clients may switch to other design consultancy
Analysis:
Currently our major revenue is generated from our consultant projects. The business environment of industrial
design is very competitive. Hence losing client to our competition will greatly affect our company financially.
Mitigation:
Preparation of clients’ background will be enhanced, since better understanding always lead to better
communication. To enhance time management and cost control, which helps providing working schedule and
price to be competitive that fits our client needs. Most importantly is we have to maintain high design quality.

Disappointing sales
Analysis:
Although our own brand of products is still in the development stage, we expect to have 10-15% of revenue to
be generated from it. Disappointing sales will certainly affect us financially, and it will also hurt our reputations
as a brand and as a design studio.
Mitigation:
Extended research to be conducted in order to understand target users’ needs more and staying sensitive to
markets. Better control in production cost while maintaining production quality would generate successful
products.
Lack of supplier support
Analysis:
Suppliers are crucial to productions both in products of our brand and consultant projects. They affect how we
deliver our products and service in terms of cost, quality and time just to name a few.
Mitigation:
Communication with the suppliers will be enhanced. Working out production plans in advance in order to
smoothen the process.

Risk of infringement
Analysis:
Countless hours has been spent in developing products of our brand. Being copied by other manufacturers will
affect our investment, hurt our brand recognition, and also affect the trust from retailers and end users to us.
Mitigation:
To have our brand and product registered beforehand in order to have better protection over our Intellectual
properties. To create unique user experience by design that is not easy to be copied.

6 ) Future Development
This is such a precious chance for us to review what our existing capitals are in this Intellectual Capital Report.
Some of them are so unseen that we have even neglected during our work every day.
By realizing what abilities we have already and analyzing necessary information systematically, we have come
up with a report to communicate among ourselves, the stakeholders, and the public.
Members of our team, healthy working environment, and well-managed business relationships, many other
values stated in this report are the factors of our success. These crucial values are not only supporting us to
stand strong today, but also equipping us to prepare for the challenge in the future.
The following are the areas for improvement:
1. Renew our Intellectual Capital Report annually to evaluate our intellectual capital status.
2. Strengthen our incentive scheme to reward members with excellent performance.
3. Provide more occupational training for members to grow.
4. Organize more workshops to share each other’s strength with the rest of the team.
5. Strengthen our brand recognition by promotion and exhibitions
We hope that by having our first Intellectual Capital Report will help us and our stakeholders to understand
more about our values and abilities that is not easy to be discovered. In addition it can set up a framework for
ourselves to evaluate and improve upon.

[
our own brand of
PRODUCTS]