This paper is an analysis of the leadership qualities and effectiveness of Kwek Leng Beng, Chairman of Hong Leong Group, one of the largest property developer in Singapore, in the context of what has been covered in the Preston MBA module MG 6030 Leadership along the guidelines of the core text, Leadership in Organizations (Yukl, 1988). It should be noted that many of the observations about the leadership were based on my own personal experiences while working as Deputy Director of Design in the organization from December 1997 to February 2000.
3. THE FOUNDING OF HONG LEONG GROUP Kwek Leng Beng is Chairman of the Hong Leong Group, one the largest conglomerate in Singapore which has often been hailed as one of the success stories of the modern Singapore business environment. The company was founded in 1950 by his father, Kwek Hong Png, a poor immigrant from China. Kwek Leng Beng rules the conglomerate with an iron hand and will. Total sales in 2001 topped US $2 billion. The Hong Leong Group is involved in everything from manufacturing plastics to property development to hotel management.
It is the majority shareholder of City Developments Limited, the second largest public-listed property development company in Singapore with a market capitalization of about US$4 billion. Other listed companies in the stable include Millenium & Copthorne International Limited, Hong Leong Asia, Republic Resorts & Hotels and Singapore Hong Leong Finance. The original patriarch, the late Kwek Hong Png started as a merchant, having left China to work as a coolie for the British traders in Singapore in the 1940s right after the Second World War.
Having worked for years and gained some degree of prosperity, he moved into property related business and then into any business deemed profitable. Although the group’s core activity is property development, it had in the past ventured into business every which way as opportunity arises. The conglomerate comprises some fifty companies, as it had tended to expand by adding on lots of little companies, rather than simply working on expanding several core companies.
Shell companies are often set up to own other companies, so that the profits and revenues of the group can be centralized in the one place. The group is therefore defined more by its disparate parts sharing a common owner. Kwek Leng Beng was born in 1941 in Singapore where he grew up and spent his youth before heading to London for further education. He graduated from University of London with a law degree in 1963 and returned to join the family business. He was initially sent to Malaysia to take care of Hong Leong’s Malaysian operations.
In 1969, he initiated the takeover of City Developments Limited, a listed property developer which was in financial trouble then and turned it around. City Developments Limited rode on the boom of the Singapore economy in the 1970s, early 1980s and early 1990s to become one of the largest property players in South East Asia. In 1979, Kwek launched a takeover of listed Singapore Finance, and boosted the size of Hong Leong’s operations. These takeovers gave Kwek the necessary experience when he began buying up hotels to build up his global CDL Hotel chain.
Time and again, Kwek proved his foresight by snapping up major hotels at bargain prices, particularly the high profile purchase of The Plaza Hotel of New York, helped by Saudi prince, Alwaleed Bin Talal Alsaud. 4. THE RISE OF THE CHINESE FAMILY BUSINESSES IN SINGAPORE Sound economic planning by the government, the prodigious productivity of the workforce, and the able leadership of Singapore’s longest serving Prime Minister resulted in a remarkable economic boom despite the scarce natural resources, since gaining independence from the British in 1957.
To develop into an international city and to attract foreign investment, the government put in place many policies to spur this growth. The well documented efforts of the Chinese family businesses such as Hong Leong Group were catalysts in Singapore’s economic success and these alongside with government-linked companies such as Port of Singapore Authority, Singapore Technologies and Jurong Town Corporation, came to dominate the Singapore economy.
Although they had been criticized for their ” octopus-arm” style of expansion – characterized by aggressive infringement on the operations of small businesses, ruthless business tactics, and a concentration of wealth in small, select groups of people- these Chinese family businesses had been part of the backbone of the Singapore economic growth. 5. INFLUENCE OF CONFUCIANISM
Top down decision making was common in Chinese family businesses, and without exception, the management philosophy affected the process of planning, development, and implementation of business strategies for the Chinese family businesses. These practices reflected the pervasive effect of Confucianism on the Singaporean psyche. Westerners were mystified by the influence of a secular code of conduct like Confucianism, but an understanding of its profound impact on Singapore’s social fabric was key to understanding Singapore’s modern corporate culture.
The main Confucian virtues – love of humanity, consideration of others’ feelings and emotions, treatment of each person according to his or her social role, respect for others’ rights, sincerity, and truthfulness of purpose were viewed as necessary for proper interaction with others in Singaporean society. Moreover, the Confucian ethical standard defined five basic hierarchical relationships: father/son, king/subject, husband/wife, older brother/younger brother, and friend/friend. Age was the prime determinant of how one should be treated and how one should treat others.
For example, the oldest person entered the room first, was seated first, and began eating before anyone else at the table. Of course, social position was also important and commanded respect. In most cases, however, the older people were, the higher their social positions became. Chinese relationships were vertical, not like the horizontal “all men are equal” relationships of the West. The relationship between a father and his oldest son was the backbone of the Chinese family system.
The oldest son was traditionally the heir of his father’s assets and role in the family and, therefore, was given priority over younger siblings in terms of educational and other opportunities. The power of the father passed to the oldest son. Within the family, the oldest son was responsible first for his parents, then for his brothers (in the order of their birth), and finally for his sisters. Imprinted by the Confucian ethos, Singaporean corporations based their identities on intangible values like harmony, challenge, power, and determination.
In contrast, U. S. corporations tended to rely on visual and symbolic forms of identity, like logos, slogans, and rituals. In addition, the Confucian ideals underlying Singaporean corporate philosophies were very strong: employee loyalty to the corporate family, and employees’ self-sacrifice for the company and country. Corporate culture provided the Chinese family businesses with a set if written or unwritten rules, beliefs, norms, guidelines, philosophies, or patterns to be followed by members of the organization.
These morals were so powerful that any that failed to abide by them usually developed feelings of guilt, isolation, or failure to “keep up”. Such feelings were a response to pressure – both from within and from other members of the organization- to conform to the ideal culture. Because Chinese family businesses had a relatively short history, many founders still held top management positions. The question of succession is important because, according to the tenets of Confucianism, the founders owed much of their successes to the Chinese concept of family.
Nepotism and paternalism, which is viewed negatively in the West, is prevalent in the Chinese family businesses. At Hong Leong, Kwek employed at least 12 relatives who closely manage 50 Hong Leong companies including 6 public ones. The expansion of the businesses followed the dictates of his upbringing, the culture and experiences possessing a Confucian emphasis on the family, and employed the Confucian perspective of societal relationships as extensions of, yet subordinate to, familial relationships.
The Confucian emphasis on personal relationships, with the historical lack of institutional support from government agencies, reinforced the organization’s emphasis on personal relationships. These combined factors also ensured that the families and their businesses never separated. The family still controls the companies outright or through their networks’ partners with whom the families share projects and interlocking directorates.