Saturday, April 21, 2007

Consummate trader

An interesting profile of a well-known businessman in Singapore under Raffles Conversation in Singapore's Business Times. Peter Kwee seems to be quite adept in trading car businesses, thanks probably to his first job as a trader in flour and and plastics in Indonesia when he was 18.

Business Times - 21 Apr 2007
For the love of cars and golf
The two passions of Group Exklusiv chairman Peter Kwee are also his money-making ventures, reports CONRAD RAJ

NOTHING brings out the passion, or even the ire, in Peter Kwee, executive chairman of car seller Group Exklusiv, than the subject of Volkswagen. This normally mild-mannered man breathes fire when the subject of Germany's largest vehicle maker is raised or even when the name is mentioned.

'He is trying hard to get it off his chest,' says his son Kevin.

After eight years, his partnership with Volkswagen, which began in 1999, broke up after the German manufacturer changed its business model and decided to import its vehicles for the Singapore market directly. Mr Kwee's Cars & Cars, part of Group Exklusiv, then became a mere dealer, one of several.

As a result margins eroded - to Mr Kwee they were little more than paper thin. 'The margins were in importing and distributorship, but we were left out of the most lucrative part,' he says with more than a hint of anger.

'All that hard work in raising the profile of the brand just came to nought,' he notes. 'Prior to Cars & Cars taking over the Volkswagen distributorship, the brand was selling fewer than 160 cars annually. In our first year we sold over 500 cars, despite the fact that although we took over the dealership in January 1999 we could only start selling the cars in the middle of the year.'

In the following years Cars & Cars sold between 750 and 1,000 cars. Things were going so well that Mr Kwee decided to invest $24 million in a brand-new showroom in Alexandra Road, which opened in 2004.

Before Cars & Cars, Volkswagen vehicles were sold first by Auto GTI and then Inchcape.

The relationship between Mr Kwee and Volkswagen began to sour about two years ago when a new set of German-led managers under managing director Olaf Duebal took charge of the Singapore office.

Recently Volkswagen decided to go into the retail business itself. While Volkswagen claims most of the issues with Cars & Cars have been settled, Mr Kwee claims there are still some matters outstanding.

Although Mr Kwee is passionate about cars, he started his working life as a trader.

Born in the hill resort town of Bandung on the island of Java, Indonesia, in 1947 of parents who came from Fujian, South China, Mr Kwee started a trading business in flour and plastics when he was 18.

The venture was fairly successful, with Mr Kwee importing 50 to 100 truckloads of flour and 200 to 300 tonnes of plastic on each shipment.

'I had no choice but to forgo further studies as I was the eldest of 11 children - eight sisters and three brothers,' he said. 'The need to make money became more urgent after my father passed away in 1966.'

He then joined his brother-in-law to move into textiles. But the partnership was short-lived and he branched out on his own, travelling extensively to Taiwan and Japan to bring in the textile machinery to Indonesia to sell to the mills that were starting out then in the country.

Then came the anti-Chinese demonstrations and riots in Indonesia in the mid-70s. Fearing for the safety of his family, he decided to move to Singapore. By 1978, the entire family - comprising himself, his wife, son Kevin and daughter Karen - arrived in Singapore. 'I have always felt that Singapore was a better place to bring up your family as it has a solid government and the streets are safe,' he says. 'The education here was also better. It's among the three best cities to live in. The others being Vancouver in Canada and Perth in Western Australia.'

But Mr Kwee still retains a trading business in Indonesia.

However, being unfamiliar with the business environment, his initial Singapore investment was in property. He bought a 45,000 sq ft piece of land in Nassim Road from the Cheng family of Wing Tai Holdings. Today his land holdings amount to some 200,000 sq ft, amost all in or around Nassim Road, Dalvey Estate and Ridley Park.

'Property, as the old saying goes, is all about location, location and location,' Mr Kwee, who lives in Tanglin Hill, says. With property prices hitting the roof and a recent transaction in the area fetching over $950 per sq ft, a conservative estimate of $750 a sq ft will place his property fortune alone at $150 million.

'By coincidence, the Renault distributorship then was up for grabs and I decided to go for it,' he recalled. He teamed up with the distributor of the sports car Porsche (which by the way is the major shareholder of Volkswagen) to take over the Renault marque.

But the partnership soon split and Mr Kwee went on to take over the distributorship of Renault himself. The Porsche distributorship went to Karsono Kwee, another Indonesian but no relation to Peter. 'In fact Karsono was a customer of mine,' Mr Kwee said.

'When we took over Renault, the brand sold only 50 cars a year. Although we lost money in the first seven years, we were able to grow the brand to over 2,000 cars a year,' Mr Kwee said proudly, adding that no one else in Asia sells that many Renault cars.

Then after 25 years Mr Kwee decided to sell the distributorship to Wearnes International, which also sells Jaguars and Bentleys. 'The manufacturers were setting impossible targets, but still the parting was on amicable terms,' he noted, contrasting it with his split with Volkswagen.

Despite losing his two main distributorships, Mr Kwee remains very much in the car business. He continues to sell Skoda cars, which are built by the Czech subsidiary of Volkswagen.

'For our Skoda business, we have found a niche market in the taxi segment. We have negotiated and sold more than 300 Skodas to taxi operators. And we have a contract to put more than 1,000 Skoda taxis on the road every year.'

While Mr Kwee is not saying anything, somehow one gets the feeling that right at the back of mind there is some fear that he might lose the Skoda franchise too. That is perhaps one reason that he is now an avid fan of China-manufactured cars. So now he wants to be the king of China-made cars in Singapore.

To those still wondering why he gave up Volkswagen and Renault for China-made cars Mr Kwee comes up with some observations and a few interesting statistics: 'The European market has been quite stagnant here for over 10 years. Market share has been hovering around 10-15 per cent.

'Do you know that the two Korean brands here sell more cars than the over 25 European brands in Singapore? Between January and September last year, there were 11,800 Korean cars sold here. In that same time period, 9,200 European cars were sold, shared between 25 brands.

'The figures are clear for all to see. Consumers are looking for competitively priced cars. That is why, some six years ago, we started looking to bring in reasonably priced, reliable Chinese cars to Singapore.

'Since we started with Geely in November, we have collected more than 300 orders. Not bad for a new brand with only a single model. But not only are we going to bring in more Geely models, including an automatic version, but also other Chinese brands. Geely is only the beginning.'

Mr Kwee hopes to sell between 1,500 and 2,000 Geelys within a couple of years. Despite being cheap, the Geelys come with a three-year warranty and have met all the tests, even impressing members of the Land Transport Authority here who have visited the manufacturing plant in China.

Together with Skoda and two other Chinese brands, Dung Fung and Soyat, that Exklusiv plans to introduce to the market here soon, Mr Kwee hopes to sell around a total of 3,000 cars this year.

Since 1990, Mr Kwee has ventured into the leisure business. 'It's fortunate that I'm in the two businesses that I'm passionate about - cars and golf. I believe that in life, you should do something you like in order to succeed. For me, I love cars, that is why I went into the car business. Then I discovered golf. I see greenery and open space on the fairways and I forget my worries. Work solutions come up unexpectedly in the midst of a game,' he says.

His enthusiasm for cars has led him to accumulate a fleet of more than 20, including a couple of Bentleys, a Lamborghini, a Ferrari and a Jaguar. Although he is a tycoon worth at least $250 million, Mr Kwee prefers being at the wheel to being chauffeured around by his driver.

He says: 'We at Group Exklusiv are always looking for new opportunities in cars and in our leisure business. We are well known in Singapore for being in the car business for a long time now. Many are less aware that we are also serious players in the lifestyle and golf business.'

The leisure business began in 1990 with a golfing trip to Perth where Mr Kwee was persuaded to take an initial 24.5 per cent stake in Joondalup Country Club. Today with other partners selling out, he and Singaporean TK Low each own 49 per cent of the club.

Ten years later he and Mr Low bought the Meadow Springs Golf & Country Club, also in Perth. Both are favourites with Singapore golfers going to Perth, many of whom have also bought residences in Joondalup developed by the club.

In 2001, Mr Kwee bought over the Laguna National Golf & Country Club from NatSteel for a reported $100 million, including absorbing the club's considerable debts. NatSteel had invested some $230 million in developing the club. Despite recent problems with NatSteel over some payments, Mr Kwee claims that Laguna with its 3,000 members is profitable. Members also have reciprocal rights with Mr Kwee's clubs in Western Australia.

He also assures me that The Pines, formerly the Pinetree Town & Country Club in Stevens Road, which was purchased soon after Laguna for over $100 million, has started turning around. That purchase and its one-time dwindling membership - from a peak of 4,700 members to just over 1,400 - and some subsequent sale of a couple of properties led to some speculation that he was in some kind of financial bind. But he dismissed the rumours, pointing out that his debts were less than a third of the worth of his properties, which have continued to rise in value.

He also thinks that building a hotel on the club site for members and their guests will help with the cash flow. Both Laguna and The Pines are seen as long-term investments, but then as any businessman will tell you, 'everything has its price'. But for the present Mr Kwee says he intends to buy even more clubs to provide members with better value.

He also notes that more and more world-class sports events are taking place in Singapore and the region. 'The Singapore Masters is not the only world-class sporting event here. We have the Lexus Ladies PGA also played at Laguna, and there are ongoing talks to bring in A1 and F1 races. The world's spotlight is on Singapore. We are building our reputation as a world class sporting and leisure destination. The plans that we at Group Exklusiv have, for our lifestyle business, will focus on building this reputation.'

As to how he runs things, he says: 'In business you have to have perseverance and stamina and you must be focused. Nothing comes instantly. High profits come with high risk. One must therefore not be too greedy.'

The man has also had his share of failures, including the Old Melbourne Club, which had to be sold off at a 'big loss'. However, his biggest failure resulted 'from trusting people too much'. His faith in a couple of 'friends' who persuaded him to invest in several projects led to a loss of more than $20 million. 'How to consider them friends?'

As to taking his company public, Mr Kwee says: 'Not for the time being. Anyway it's too much of a hassle and I have to deal with too many shareholders.' Perhaps this comes from his experience in sometimes having to deal with disgruntled club members.

However, at 60 Mr Kwee is now beginning to feel the strain of his hectic life. So he has begun to pass on more responsibilities to his son Kevin, 37, and his daughter Karen, 35, to run an empire with a turnover of over $300 million and more than 600 employees.

Both his children have recently become parents themselves - and guess who dotes on their kids?

'Besides my golf, me and my wife now spend more time with our grandchildren. We love bringing them around,' Mr Kwee says like any proud grandparent.

5 comments:

Anonymous said...

think this guy is over rated n not quite raffles conversation material. i like conrad's style of using "me'' in his commentaries

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kwwk said...

Peter Kwee has 7 sisters, not 8 sisters!!!

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