Why and how to complain?

Done right, complaints help us to improve and accommodate

I AM not the type who usually kicks up a fuss about, say, service at a restaurant. It has to be pretty bad before I show my displeasure.

But really, I am not sure that it's quite the right way to be.

If someone is doing something wrong, is it wrong to complain? Certainly not, especially if the intention is not just to vent but also to let the person know that he is doing something wrong.

You may have heard the quote “The biggest room in the world is the room for improvement.” I don't know who said it and I could not verify it on the Net. But that quote strikes a wonderful chord that resonates within.

A complaint properly made helps to improve and that is its greatest strength. But its full benefit depends on why and how the complaint is made, and, importantly too, the spirit in which it is received.

But first, a complaint has to be genuine, not just to take the mickey out of someone whom you don't like for whatever reason. It has to be rooted in a genuine dissatisfaction.

And then it has to be made to the right person - someone who can actually do something about it. And service providers need to ensure that there are proper channels for people to make their complaints and to receive feedback.

We receive our fair share of complaints too. Over the year past, there have been many e-mails sent in response to my columns. Our analysis shows the complaints were centred around three main areas yes, crime and associated with it is corruption. The third area dear to the heart of all Malaysians is of course education.

Let's take the crime rate, and the incessant complaint about the incidence of crime and how it could not have come down despite the statistics showing it has. Take it from me if you make a report about a crime it is recorded. Get a copy of the report and the report number.

If any police officer refuses a report, take his name and number down and tell.

At the risk of criticism and disbelief, let me say that SMS feedback and surveys done after the public leaves police stations show 88.7% of those who had dealings with the police in Selangor were very satisfied while 11.1% were satisfied which leaves a miniscule 0.2% less than satisfied. That's out of nearly 117,000 responses.

Now, if the public was really dissatisfied, all they have to do is to say so in their SMS. The number to send it to is 15888. Just quote the report number. This service will be extended to the rest of the country soon.

Here's another piece of information: Despite all the anecdotal complaints that police do not take down reports, we have not received even one single complaint against any officer who has refused to take a report. If that's happened to you, e-mail me valid details and I promise action.

On corruption, it is important to remember that you can make a direct report with full details to the Malaysian Anti-Corruption Commission (MACC). Report officials who ask for bribes.

If your complaint is genuine and can be established, you will also enjoy immunity under the Whistleblower Protection Act 2010. But don't go public with your information you must go directly to MACC or the relevant enforcement agency for crimes other than corruption.

On education, we need to recognise that this is a generational problem.

Changes don't take place overnight but gradually. We are doing things, as I have explained in previous columns. There is also plenty of information on this on our website.

The next stage is the finalisation and implementation of the Education Blueprint by the Education Ministry.

The public should also be aware that there is Public Complaints Bureau where complaints about the civil service and the government can be made.

But there is a steady decline here from 14,700 in 2010 to 13,366 in 2011 and 12,582 last year. I hope that decline is not due to rising apathy.

Apathy is the forerunner to hopelessness and I truly believe there is much, yes, room for improvement.

Don't give up, do let the complaints roll in but bear in mind a couple of things.

Be sure they are as specific as you can possibly make it and try to give an indication of the root cause of the problem you encountered instead of just the symptoms.

That will help the service provider rectify it. By all means complain we welcome complaints and the opportunity to do something about them. But have a heart simply because we do too.

There are many of us on this side who want change for the better as much as you do and will walk the extra mile together with you for it.

Transformation Unplugged - By Idris Jala

Datuk Seri Idris Jala is CEO of Pemandu, the Performance Management and Delivery Unit, and Minister in the Prime Minister's Department. Fair and reasonable comments are most welcome at idrisjala@pemandu.gov.my

Stay true to your dreams, get real like AirAsia, SP Setia ...

THIS is my 52nd and last article for StarBizWeek. It started more than a year ago out of a challenge from my golf buddy to communicate with local entrepreneurs in a simple and straightforward manner.

Since I am a simple and straightforward person, I believe I have carried out my duties to the letter even though most of the time, my articles did not make much business sense. But I did try to inject a business idea or concept in each weekly article which I hope did not put you in a further state of confusion.

I have not been friendly to entrepreneur wannabes who wanted to start a business without a solid business model nor having sufficient funding in place. I hate to see precious capital and talent being wasted just to please the ego of being your own boss. Starting a new business is exhilarating and exciting but closing down is painful to your pocket and your soul. Some people healed slowly and some did not recover at all.

If you really do want to be on your own, may I suggest you prepare well, seek experienced advice and stay humble. Lower your expectations and work out survival plans on worst case scenarios. If you are worse off income-wise, are you still keen to continue? Get real but stay true to your dreams.

I have great admiration for the AirAsia business model, not so much for its originality but more for its single-minded execution on its core strategy of low-cost high-volume. The whole organisation is fixated on lowering cost across all expense so that lower priced tickets can be offered continuously to secure constant high volume on an Internet platform that works tirelessly 24/7.

This business model is easy to scale across the region which adds purchasing power when negotiating with Airbus. All airlines pay the same fuel cost but AirAsia, with newer and lower cost planes, are much more fuel-efficient and if you add its competitive edge of having the lowest operating cost per seat, it now has a sustainable business model. While Ryanair dominates Europe, AirAsia will dominate the Asian airspace.

While the low-cost model has been proven successful over short quick turnaround flights of less than five hours, I was sceptical from the beginning of the viability of the long haul low-cost operator AirAsia X. True enough, the numbers did not work out for 13-hour flights to London and Paris. But it has found a profitable niche in six to seven-hour direct flights within Asia. The management has been decisive (no political interference) in pulling out of unprofitable routes and concentrating all its resources on routes that makes commercial sense.

Just imagine the potential of AirAsia X if it is able to replicate its business model operating out of Indonesia to Australia or out of Japan to the Middle East and beyond.

That's why I am looking forward to the listing of AirAsia X this year. It will be the first successful long haul low-cost airline in the world. Malaysia Boleh!

When you think you have a viable and sustainable model, stay true to your strategies and focus on executing the appropriate strategies across your entire organisation. If you are a five-star operator, make sure your organisation is able to deliver five-star services consistently to your customers.

If you have a business model that is able to scale across cultures and countries, your growth potential will reward you in multiples. Big dreams are for those who look beyond our small domestic market of 28 million people. But dreams will remain as dreams if you are not successful with your home market first. You should only replicate successful models.

If you do not find optimum success with your business model or defined strategies, be decisive and admit to yourself that it is not working as planned. Eat the humble pie and swiftly change direction or tweak your business model to find a sustainable and profitable niche where you can survive comfortably.

Do not be afraid to change and do not delay until the shit hits the fan. Unless you can go begging to the Government for more funds, it will be difficult for you to find friendly benefactors to help you then. Your business will suffer a slow and painful death and you will wish that you have not been on your own.

I have been active in the consumer product markets for the last 27 years and I have often wondered why the multinational companies make more money per dollar sales than my company. That is despite them paying higher salaries and spending more on advertising and promotions. I consoled myself then by reasoning that they had first mover advantage, better brand equity and they were smarter than me.

After looking closely at their numbers, I discovered that they have a higher selling price and a lower cost of goods which means their gross margins are easily 10% to 20% higher than mine. Their products fetch better prices because they spend more on branding and they have a lower cost of goods because they understand the supply chain system better than I did. They are brilliantly efficient in logistics and channel management.

To compete, I have to match them in all aspects. Share of voice, understanding the supply chain forward and backward and having an efficient logistic set up. But you can only compete if you have comparable margins. My business model was subsequently amended over a few years to a comparable high margin model with similar A&P spend.

Building brand equity

High margins mean lower break-even point and less pressure on volume sales. Less working capital required means less financial risk. It is easier to make a profit in a high margin business but you have to find the margins in the value chain. Apple makes 30% profit on sales but its OEM manufacturer Foxconn makes only 1.5% profit. Our telco companies make 30% on sales but their prepaid card wholesalers make a 2% gross margin. Soft dollars versus hard dollars.

To earn the soft dollars, you need to build your brand equity. Whether it is product branding or corporate branding, you must be committed and consistent in promoting your brand. Margins for great brands differ substantially from commoditised generic products or services. Differentiate or suffer low margins always.

I particularly like SP Setia as a perfect example of how to build a strong corporate brand. However just as Tan Sri Tony Fernandes is synonymous with the AirAsia brand, Tan Sri Liew See Kin is the face of SP Setia. What will happen to the SP Setia brand after Liew leaves? Can he be replaced successfully by another brilliant marketeer from the new owner, PNB? Your guess is as good as mine.

There are many key words used by management professors to describe the hectic changes in the current business environment but my favourite phrase is the concept of disruption. Technological advancements disrupts technological laggards which disrupts our lifestyle as well. Phones gets smarter by the day, from voice to SMS to data to watching Astro on-the-go. Brands come and go at the speed of disruption. What was your favourite phone-brand five years ago? Can't remember? Me too.

My thought process gets totally disrupted trying to figure out how to sell products to the Gen Y segment. They don't watch TV and they don't read newspapers. They socialise with screens and they communicate faceless through a “book”. They shop anytime in the Internet mall and they sleep in different time zones. As they are our biggest customer segment, we have to tweet them with respect. Or for the heck of it, just blog them into submission.

Gen Y and the Internet

Because of Gen Y and the Internet revolution, entrepreneurs are getting younger and younger. With a laptop, they trade anything and everything across countries like borderless pirates while prim and proper Gen X businessman worry about traditional sales team and distribution channels across the country. They collect cash in advance directly from consumers while Mr X gives credit to the trade. They have all the personal details of their customers and they are connected on a daily basis whereas Mr X can only guess that someone of a certain race, age and size has bought his products.

E-commerce will be the single biggest influence on rental rates of brick and mortar retail space. Already certain successful e-commerce products like books and music have decimated the traditional distribution channels of bookshops and music shops. The middleman's job has been taken over by Amazon.com.

Now you see other products like shoes, apparels, contact lenses etc gaining popularity on e-commerce platforms. And retail prices trending downwards much to the delight of consumers.

The only option for traditional businesses threatened by the e-commerce wave is to join them. Sephora has seen its cosmetic and fragrance sales slowing down and rental rates of their shops going up. So it set up sephora.com which has been growing very well, protecting its overall market share in the luxury segment of cosmetics and fragrance.

For traditional media companies, all the newspapers have a similar e version now. Even though visibility of e advertising revenue is still shrouded in fog, they are prepared for any eventual switch by news hungry consumers to e-consumption. While Astro offers TV couch potatoes with Astro-on-the-go mobility, Media Prima countered with Tonton, an e-content platform where you can watch missed programmes on the net and on-the-go. Mind you, these massive investment and creative efforts are made just to ensure its business stay relevant in the fast changing landscape.

Just as I give an “A” to these top private companies for their innovative business acumen, the Government and the GLCs deserve an “E” for their involvement in business. I do agree that the Government should play a major role in sensitive sectors of the economy like utilities, education and national security but to be actively involved in all businesses competing with the private sector is counter productive and in most cases a waste of public money. Lack of competition breeds inefficiency and lethargy. Enough said.

I am pleased to note that there has been a major shift of public perception towards politicians being involved in business. Politicians should stay exclusively active in the political arena if they want to avoid unnecessary accusations, nasty tweets and rumoured scandals. A clean politician who cares and fights for the people that he represents will always be voted favourably by his constituents. I read that from Dummies for Politicians.

I was born in 1960 thus I was given a blue Identity card. Having been a Malaysian since birth, I grew up in Petaling Jaya and studied in local schools and Universiti Malaya. I have worked all my life in Malaysia. My wife is Malaysian and all my three children were born in Malaysia.

So you can imagine my outrage when I am called an immigrant by some senseless and dumb politicians out to score a point or two with their supporters. As a Malaysian would say “I so angry until I cannot speak.”

But speak out you must in the coming 13th General Eelection. Choose wisely and please vote for sincere and smart candidates. Avoid wolfs in sheep skin for the sake of our children's future. Do not live to regret.

It has been a fun write for me the last 52 weeks and I must thank the StarBizWeek editorial team for sacrificing valuable space to accommodate my nonsensical and shallow articles. I hope I have given you some weekly chuckles and brought a wry smile on your face on lazy Saturday afternoons. I thank you for your kind patience. Goodbye.

The writer has decided to go e-communicado. For further nonsensical musings, stay in touch with him at thiamhock.com. You might just find some useful tips on your own.

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Substance and character are created within and emerged in form

Creating students of substance and character

 

mean-woman-substance

SOCIAL science subjects undeniably play a vital and pivotal part in harnessing the full potential of our young.

It is precisely through such courses that students broaden their horizons and thinking.

The most suitable place for young minds to be developed and cultivated is undeniably at university.

A university is where we pursue excellence, character, harmony and wisdom.

It has been said that truly outstanding minds are usually cultivated from within, and emerge from, a conducive environment.

They take shape when their intellectual capacity and potential is supported, encouraged and cultivated.

An intellectual is a person who uses thought and critical or analytical reasoning in either a professional or a personal capacity.

These people are involved in abstract, erudite ideas and theories.

They are also in professions which involve the production and dissemination of ideas.They could also be people of notable cultural and artistic expertise whose knowledge grants them intellectual authority in public discourse.

There is no doubt that among intellectuals are philosophers, teachers, writers, poets and artists.

The French philosopher and revolutionary, Jean-Paul Sartre pronounced that the intellectuals are the moral conscience of their age.

He passionately believed in this, as he himself lived his life the way he wrote and taught.

The task of the intellectuals, he said was not limited by merely observing the political and social situation of the moment, but undeniably to be involved and engaged actively in all of society’s issues and concerns.

Finally, he also maintained that part and parcel of the duty of an intellectual was to serve as a voice of the marginalised, the oppressed, the idiots, the exploited, the lowest members of the society and indeed to speak out freely, in accordance with their conscience.

Standing up for truth

Philosopher and activist Professor Noam Chomsky, like Sartre also subscribes to the belief that a true intellectual must not be silenced nor cowed.

They must always stand for the truth and condemn all the injustices and inequalities in the world.

An intellectual therefore is not only a member of a community, but a citizen of the world. Intellectuals are truly necessary and indeed important in any society or political community. Their ultimate function is to serve as the critic of their society’s malaise.

It is not an exaggeration to state that intellectuals are precisely the eyes and soul of the community.

As such, universities should encourage critical thinkers who lead and are responsible citizens in society.

Hence, we must engage in a two-pronged programme which involves the development of the mind and cultivation of the inner spirit. These two elements must concur in order for us to mould and create students and citizens who have substance and good moral character.

By JOSE MARIO DOLOR DE VEGA

The writer was previously teaching Philosophy, Ethics and Anthropology at an institution of higher education in the Klang Valley. 

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Succession issue: give children a message,not money

Billionaire Kuok says empire can last generations

When billionaire Robert Kuok introduced a luxury hotel brand in 1971, he named it Shangri-La, after the fictional utopia in which inhabitants enjoy unheard-of longevity.

Ensconced in his executive suite 32 floors above Hong Kong’s Victoria Harbor -- the room decorated with a pair of elephant tusks gifted by the late Tunku Abdul Rahman, the first prime minister of Malaysia -- the world’s 38th-richest person appears to have defied the aging process himself.

Kuok had accumulated a fortune of $19.4 billion as of Jan. 31, according to the Bloomberg Billionaires Index. Trim, dapper and straight backed at 89, he shows no signs of stopping there, Bloomberg Markets magazine will report in its March issue

A waiter serves a customer at the bar at the Shangri-La Hotel in Paris. Photographer: Eric Piermont/AFP/Getty Images 

 

This year, the media-shy Malaysian-born magnate will likely open his 71st sumptuously appointed Shangri-La. Six of them are scheduled to be opened in the third quarter alone, including one perched in the Shard, the 72-story London skyscraper that’s the tallest office building in Western Europe.

Meanwhile, the public and private companies his family controls continue to pump money into his ancestral homeland, China, where his investments range from Beijing’s tallest building to cooking oil brands that have gained a 50 percent market share in the world’s most populous nation. 

Robert Kuok shovels dirt at a ground breaking ceremony for the Shangri-La Asia Ltd.'s new hotel in Guangzhou on Feb. 26, 2004. Through the unlisted family-owned holding company, Kerry Group Ltd., which he chairs, Kuok controls listed enterprises with a total market value of about $35 billion. Photographer: Grischa Rueschendorf/Bloomberg

‘Personally Powerful’

One of Kuok’s companies, Singapore-listed Wilmar International Ltd. (WIL), is the world’s biggest processor of palm oil and eighth-biggest sugar producer. 

Wilmar International Ltd.’s cooking oil brands —led by Jin Long Yu, meaning Golden Dragon Fish, seen in this photo — grease half of China’s woks and generate 48 percent of the company's revenue. Photographer: Qilai Shen/Bloomberg

Western Europe's tallest office building will be home to one of Robert Kuok's new luxury Shangri-La hotels. Six are scheduled to be opened worldwide during the third quarter. Photographer: Jumper/Getty Images

Others operate shipping and logistics businesses, a property portfolio stretching from Paris to Sydney and East Asia’s most influential English-language newspaper, the Hong Kong-based South China Morning Post.

“He’s so vital, so active and continues to be so personally powerful,” says Timothy Dattels, San Francisco-based senior partner at U.S. buyout firm TPG Capital LP and a director of Kuok’s Hong Kong-listed Shangri-La Asia (69) Ltd. “I can’t imagine a day without him at the top.”

Others can, which is why the question of succession looms over the Kuok empire as the patriarch prepares to mark his 90th birthday in October.

The world’s 39th-richest person, who named his Shangri-La hotel chain after the fictional utopia in which inhabitants enjoy unheard-of longevity, is trim, dapper and straight backed at 89. The public and private companies his family controls include investments in Beijing’s tallest building and cooking oil brands that have gained a 50 percent market share in China. Photographer: Grischa Rueschendorf/Bloomberg  

Through the unlisted family-owned holding company, Kerry Group Ltd., which he chairs, Kuok controls listed enterprises with a total market value of about $40 billion.

As it stands, the family enterprises are seeking to recover from a rocky 2012 that featured some sharp share-price and profit drops. 

First Interview

In his first interview with Western news media in 16 years, Kuok, who has eight children and numerous other relatives sprinkled through his executive ranks, says he won’t be worried when that day eventually comes.

“Everything on earth is dynamic,” he says in perfectly enunciated English. “I can only give my children a message, not money. If they follow it, we can go another three or four generations.” 

Relatives run the most important of the Kuok businesses.

Kuok’s second son, Kuok Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 percent.

A nephew, Kuok Khoon Hong, 63, co-founded and chairs Wilmar International, the largest Kuok-controlled company, with a market value of almost $20 billion, in which the Kuok family controls a 32 percent stake.

A daughter, Kuok Hui Kwong, 35, is executive director of SCMP Group Ltd., publisher of the 109-year-old South China Morning Post, which Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp. $349 million for a 35 percent stake.

Pedestrians walk past the headquarters of the South China Morning Post in Hong Kong. Robert Kuok's daughter, Kuok Hui Kwong, 35, is executive director of SCMP Group Ltd., which Robert Kuok took control of in 1993, when he paid Rupert Murdoch’s News Corp. $349 million for a 35 percent stake. Source: Imaginechina

Focus Attention

As to who will succeed the master, most investors in Kuok enterprises focus attention on his eldest son, Kuok Khoon Chen, 58, who’s known as Beau.

Robert declined to confirm that Beau, who is deputy chairman of Kerry Group, will succeed him.

The development site for the Shangri-La Residences stands in Yangon, Myanmar on Nov. 20, 2012. Photographer: Dario Pignatelli/Bloomberg

“Newshounds like excitement in their stories, whereas leadership of a business group is always a serious matter, and it would be wrong to put in writing any kind of assumption,” Kuok wrote in an e-mail following the interview.

A visitor looks out the window of Island Shangri-La hotel, owned by Shangri-La Asia Ltd., in Hong Kong. Robert Kuok’s second son, Kuok Khoon Ean, 57, heads Shangri-La Asia, of which the family owns 50 percent. Photographer: Marco Flagg/Bloomberg
 
Beau, who’s worked in his father’s businesses since 1978, is chairman of Kerry Properties Ltd. (683) The firm, 55 percent owned by Kerry Group, develops luxury apartments, shopping malls and offices mostly in China and Hong Kong. 

“I know Beau, and he has a good team,” says Peter Churchouse, founder of Hong Kong-based property investor Portwood Capital Ltd. “But you have to wonder whether the second and third generations have the entrepreneurial and trading instincts that the father has.”

‘China Watcher’

The father’s instincts were honed over decades of personal and historical turbulence inconceivable to the generation vying to take over the family business.

That experience helped him become one of the first -- and best-connected -- foreign investors in China following Mao Zedong’s communist revolution.

“Robert is the best China watcher in the business,” says Simon Murray, chairman of Glencore International Plc, the world’s biggest commodities-trading company. “He understands the steel backbone of the Communist Party, but while other Hong Kong tycoons tend to be hugely subservient to Beijing, he is in no way obsequious.”

Robert Kuok, chairman of Kerry Group Ltd., holds a trophy during the 2012 CCTV China Economic Person of The Year award at China Central Television in Beijing on Dec. 12, 2012. Source: ChinaFotoPress via Getty Images

For all of Kuok’s prowess, 2012 was a tumultuous year for investors in his enterprises.

While Kerry Properties stock surged 57 percent in Hong Kong last year -- more than double the increase in the Hang Seng Index -- Wilmar International’s shares plummeted 33 percent, making it the worst performer in Singapore’s Straits Times Index. (FSSTI)

‘A Fraction’

The plunge wiped the equivalent of more than $8 billion from the company’s market value -- and almost $3 billion from the family’s fortune. This year, Wilmar’s share price has rebounded, rising 14 percent in January.

In any event, Kuok disputes Bloomberg’s valuation of his personal wealth at $19.4 billion; he says it’s “a fraction” of that amount, though he does not volunteer an alternative figure.

Wilmar’s woes stem from its massive exposure to China, where its cooking oil brands -- led by Jin Long Yu, meaning Golden Dragon Fish -- grease half the country’s woks and where it gets 48 percent of its revenue.

Beijing limited price increases on edible oils during most of 2011 and part of 2012, Wilmar said at the time.

Furthermore, the rising cost of soybeans, which Wilmar uses to produce cooking oil, hit a record $17.89 a bushel in September, squeezing earnings.

Rough Ride

In the first nine months of 2012, profit fell 29 percent to $779 million from $1.1 billion a year earlier.

Kuok’s Hong Kong-based companies have had a rough ride since the global financial crisis.

As of Jan. 31, Shangri-La Asia and Kerry properties shares were both down 19 percent compared with a 1 percent increase in the Hang Seng Index. Asked about such underperformance (583), Kuok says enigmatically, “It is right and proper for the investor to like or dislike a share.”

Underperformance isn’t the only problem at SCMP Group, whose share price had declined 69 percent as of Jan. 30 since Kuok acquired it. In 19 years, the South China Morning Post has churned through 11 editors, including one who served twice.

And although Kuok says his news executives publish without fear or favor, present and former staff members have publicly complained that the paper sometimes self-censors stories it thinks the Chinese government wouldn’t like.

‘Toned Down’

“Under his ownership, criticism of China has been toned down,” says David Plott, managing editor of Global Asia, a Seoul-based quarterly. “And if you look at the turnover of editors, it tells you one of two things: either Robert Kuok doesn’t know what he wants or he knows what he wants and he hasn’t gotten it.”

If that’s true, it might be a first for Kuok, whose life story has been one of single-minded achievement.

The son of Chinese immigrants who had settled in British- controlled Malaya, Robert Kuok Hock Nien -- his full name -- grew up speaking his parents’ Chinese Fuzhou dialect, English and even Japanese during Japan’s wartime occupation of the region.

 Significantly, given the role China would play in Robert’s life, his mother encouraged him to achieve fluency in Mandarin and embrace his Chinese heritage.

Kuok’s parents ran a shop that sold rice, sugar and flour. Kuok recalls living with the smell of his addicted father’s opium pipe in his nostrils.

Family Business

Still, there was enough money for Robert to progress from a local English school to Raffles College in Singapore, where fellow students included Lee Kuan Yew, later the founder of modern Singapore.

Kuok never finished his studies. In 1941, Japanese troops stormed through the Malay Peninsula and in February 1942 captured Singapore. Kuok took a job with Mitsubishi Corp. With Japan’s defeat in 1945, his family resumed doing business under the British.

In 1949, after his father died, Robert; a brother, Philip; and other relatives founded Kuok Bros. Sdn., which later specialized in sugar refining.

Philip went on to become a Malaysian diplomat, and a second, much-admired brother, William, took an entirely different path again by joining the communist revolt against colonial rule. In 1953, William Kuok was killed by British troops in a jungle ambush.

Furtive Rendezvous

Robert Kuok, by contrast, used his English-language skills on visits to London to learn the sugar business while remaining based in Malaysia and later Singapore.

During the Cold War, he traded with both Western and communist blocs, meeting Cuba’s Fidel Castro and doing business with China’s Mao from as early as 1959.

In 1973, with China in the grip of the Cultural Revolution, Kuok was summoned to Hong Kong for a furtive rendezvous with two of Mao’s trade officials.

They confided that China was facing a sugar shortage. Kuok stepped into the breach, transferring his headquarters to Hong Kong that year.

It was a prescient move. In 1976, Mao died, and in 1978, Deng Xiaoping tore down the so-called Bamboo Curtain, initiating reforms that sparked 34 years of surging economic growth.

In 1984, Kuok opened his first Shangri-La on the mainland. The following year, he partnered with China’s foreign trade ministry to begin building the China World Trade Center (600007) in Beijing.

Enduring Mystery

In 1988, at his nephew Khoon Hong’s suggestion, he branched out into edible oils. By 1993, Coca-Cola Co. was impressed enough with Kuok’s China connections to form a bottling joint venture with him.

That lasted until 2008, when Coke bought back Kerry Group’s stake for an undisclosed amount, both companies pronouncing the outcome a success.

The family’s history of that period harbors an enduring mystery: a 16-year parting of the ways between Robert and Khoon Hong, who in 1991 left the Kuok Group to set up Wilmar with Indonesian entrepreneur Martua Sitorus.

It wasn’t until 2007 that Robert acquired a 32 percent stake in Wilmar and injected most of his agribusiness into it. Neither Robert nor his nephew would discuss the split.

For all his triumphs in the capitalist world, Robert Kuok says the biggest influences on his life were his devoutly Buddhist mother and his communist revolutionary brother, William.

‘Good Boys’

“Otherwise, probably I would have been an arrogant middle- class Chinese, only caring about materialism, worldly pleasures and fleshpot pleasures,” Kuok says, his moist eyes betraying a momentary sadness. “When I am tempted, I think of what William went through. He sacrificed his life trying to help the underprivileged.”

Kuok says he has tried to pass on those values by not cocooning his children in privilege. Nor, he adds, does he place much emphasis on scholastic qualifications, including MBA degrees, when hiring senior staff.

Beau Kuok earned a bachelor’s degree in economics from Monash University in Melbourne; Ean holds a similar qualification from the University of Nottingham in England. Kuok describes Beau and Ean as “good boys.”

Among members of the extended family, Kuok speaks highly of Khoon Hong, his nephew at Wilmar.

‘Stupid Ones’- Perils of succession

“There are stupid ones, there are mean ones, but he’s one of the cleverest,” Robert Kuok says. None of the second- generation Kuoks would comment for this article. Kuok says they make their own decisions. “I never control my children,” he says. “We are a very liberal, democratic family.”

The perils of succession are acute in Kuok’s bailiwick, according to researchers at the Chinese University of Hong Kong.

Their study of 250 family-controlled businesses in Hong Kong, Singapore and Taiwan from 1987 to 2005 shows that stocks typically plunged 60 percent over an eight-year period before, during and after a founder’s relinquishing control.

Joseph Fan, the finance professor who led the research, attributes this wealth destruction to the inability of the patriarch to pass on, even to family members, his most valuable, intangible assets, including relationships with governments and banks. “The founder is the key asset,” Fan says.

That’s why, Fan says, so many tycoons remain at the helm of their businesses well into their 80s and don’t disclose succession plans.

Octogenarian Rivals

Last year, following investor concerns over feuds that have split the second generation of some of Hong Kong’s most prominent families, two of Kuok’s octogenarian billionaire rivals in the property business, Li Ka-shing of Cheung Kong Holdings Ltd. and Lee Shau-kee of Henderson Land Development Co., finally disclosed which of their progeny would eventually take control.

TPG Capital’s Dattels says succession isn’t a concern when it comes to the Kuok businesses.

“There’s only one Robert Kuok, there’s no doubt,” he says. “But he has instilled his business philosophy deep into the family. With what he has built, they are well set to continue, whatever happens.”

Back at his Hong Kong headquarters, Kuok asks an assistant to bring him a favorite quotation. Written by his mother in Chinese and engraved on a steel plate, the aphorism reads:

“If my children and grandchildren can be like me, then they don’t require material inheritance. But if they are not like me, then of what use is my wealth to them?”

Those words beg the question investors in Kuok’s far-flung businesses are asking now more than ever: How like Robert Kuok are his heirs? - Bloomberg

Facebook profit plunges 79%, revenues gain 40%

San Francisco — Facebook (Nasdaq: FB) reported a plunge in fourth-quarter profit on higher spending Wednesday, even while it made long-awaited progress luring advertisers eager to reach mobile- device users.

Net income fell 79 percent to $64 million last quarter as operating expenses jumped 82 percent, Facebook said. That outpaced a 40 percent revenue gain to $1.59 billion and raised concerns that margins will come under pressure.

The stock fell 2.8 percent in German trading, paring a drop of as much as 11 percent in late U.S. trading as investors weighed near-term lower profit against the prospect of future growth.

Still, the company delivered fourth-quarter results above Wall Street's expectations and sought to show that it has finally transformed into a "mobile company" after rising to dominance as a Web-based social network.

"Everything was slightly better than expected," said Wedbush Securities analyst Michael Pachter. "I don't see anything here that would make me want to sell the stock."

The world's largest social media company earned $64 million, or 3 cents per share, in the October-December period. That's down 79 percent from $302 million, or 14 cents per share, a year earlier when it was still a privately held company.

Revenue rose 40 percent to $1.59 billion from $1.13 billion, surpassing analysts' expectations of $1.51 billion.

Advertising revenue grew 41 percent to $1.33 billion, increasing at a faster clip than in the third quarter, when it climbed 36 percent to $1.09 billion.

Excluding special items, mainly related to stock compensation expenses, Menlo Park, Calif.-based Facebook earned 17 cents per share in the latest quarter. Analysts polled by FactSet expected lower adjusted earnings of 15 cents per share.

Nonetheless, Facebook's stock fell $1.11, or 3.6 percent, to $30.13 in after-hours trading following the earnings report.

Chief Executive Officer Mark Zuckerberg plans to increase expenses, excluding certain costs, 50 percent this year to hire staff and roll out new tools for advertisers. That’s more than the 33 percent increase projected by Pacific Crest Securities LLC, and it underscores the urgency of capturing a bigger slice of the $6.97 billion U.S. mobile-ad market. Done right, the added investment will translate to profit growth, said Adam Schneiberg, a portfolio manager at BTR Capital Management.

“Wall Street tends to be forgiving of higher spending during high-growth periods when new products are being built,” Schneiberg said. “As long as eyeballs tune in and revenue keeps growing, the Street will believe that at some point the company can flip the switch on profitability.”

Facebook shares had advanced 1.5 percent to $31.24 at the close in New York just ahead of the earnings announcement, leaving them up 76 percent from a record low close on Sept. 4.

Mobile-Ad Push

Facebook’s increased investment is designed to help the company grapple with rising competition from larger rivals in the U.S. market for mobile advertising, predicted by EMarketer Inc. to surge 82 percent this year. Google Inc. is projected to grab 57 percent of that market, and Facebook will remain a distant No. 2 with 12 percent, EMarketer estimates.

“More mobile revenue means way more spending on the operations of selling ads,” said Brian Wieser, an analyst at Pivotal Research Group LLC, who has a hold rating on the stock. “This is an expensive company to run.”

Mobile contributed 23 percent of total advertising revenue, or about $306 million, according to Facebook. That compares with 14 percent in the third quarter. Analysts at JPMorgan Chase & Co. predicted mobile would contribute $384.2 million, or 27 percent of ad revenue, in the latest quarter.

Facebook’s engineers are making improvements to mobile applications, including those for Google’s Android software, Zuckerberg said on a conference call. Better mobile services can boost user engagement, he said.

‘Big Transition’

“We made this big transition, where now there are more people using Facebook on mobile every day than on desktop,” Zuckerberg said. “More people are starting to understand that mobile is a great opportunity for us.”

Facebook is investing in new products to attract users and keep them on the site longer. Earlier this month, the company announced a revamp of its search service that lets members find information on people, places, photos and interests. The company also has upgraded its mobile applications with new versions for phones running Google’s Android software and Apple Inc.’s iPhone.

“We’re investing heavily because we see big opportunities ahead for the company,” David Ebersman, Facebook’s chief financial officer, said in an interview. “So, we’re trying to invest to build the most valuable company we can for the long term and to really invest in areas that can drive engagement.”

Narrower Margin

Zuckerberg also said that he expects to hire aggressively, causing expenses to grow at a faster rate than sales in 2013. The company had 4,619 employees at the end of last year, according to data compiled by Bloomberg.

Facebook’s fourth-quarter operating margin declined to 33 percent from 48 percent a year earlier, while costs rose to $1.06 billion from $583 million.

Facebook reached 1.06 billion users during the fourth quarter, up from 1.01 billion in the third quarter. The number of mobile users was 680 million, up from 604 million in the third quarter.

Analysts had been pushing up ratings amid growing optimism for accelerated revenue growth. The proportion of analysts covering Facebook with a buy rating has risen to 65 percent from 52 percent on Oct. 23, when Facebook posted third-quarter sales that beat estimates, according to data compiled by Bloomberg.

“A lot of these products are pretty new,” said Scott Kessler, an analyst at S&P Capital IQ, who rates the stock a hold. “It’s just going to take some time.”

- The AP and Bloomberg

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