A MORNING WITH JEFF BEZOS SEPTEMBER 2018 • WWW.FORBES.COM
MALAYSIAN METTLE KOON BROTHERS FORGED CHINESE ALUMINUM TIES FOR PRESS METAL BHD.
CEO Koon Poh Keong
AUSTRALIA...............A $12.00 CHINA....................RMB 85.00 HONG KONG................HK $80
INDIA............................RS 400 INDONESIA............RP 77,000 JAPAN.................¥1238 + TAX
KOREA........................W 9,500 MALAYSIA...............RM 24.00 NEW ZEALAND.......NZ $13.00
PAKISTAN....................RS 800 PHILIPPINES..................P 260 SINGAPORE..............S $12.50
TAIWAN......................NT $275 THAILAND......................B 260 UNITED STATES........US $10.00
CONTENTS — SEPTEMBER 2018
S PAGE 42
“WE GET ALL OUR BIG-TICKET ITEMS— RICE, OIL, FLOUR— FROM HERE” —Avenue Supermart’s loyal customers help launch it onto our Fab 50 list.
VOLUME 14 NUMBER 7
11 | FACT & COMMENT // STEVE FORBES Time to terminate “assisted dying.”
THE FAB 50 38 | THE LIST China is squeezing out the world, accounting for 30 of our best, big publicly traded companies. BY JOHN KOPPISCH AND ANDREA MURPHY
39 | PRESSING FOR SUCCESS Malaysian aluminum company Press Metal dominates the Southeast Asian market. BY ANIS SHAKIRAH MOHD MUSLIMIN
42 | SHOPPING SENSATION India’s Avenue Supermarts earn customer loyalty with their low-priced bulk goods. BY ANURADHA RAGHUNATHAN
45 | INVESTING MACHINE There’s a purpose behind Tencent’s frenzied dealmaking: Keep users coming back to its platform. BY YUE WANG
47 | NEW TO THE CLASS Notable newcomers to our list. Plus: companies that may soon be Fab 50 members.
COMPANIES, PEOPLE 14 | POLITICAL ROAST Taiwanese-owned cofee chain draws a VIP who is of-limits on the mainland. BY RALPH JENNINGS
16 | WHERE E-CASH IS KING China’s fintech giants are consolidating their gains and using their capital heft. BY SARA HSU
17 | MAGIC MIRROR A Chinese virtual fitting room startup boosts retailers’ revenues with big data. BY JANE HO
COVER PHOTOGRAPH BY JOSHUA PAUL GILBERT FOR FORBES 2 | FORBES ASIA SEPTEMBER 2018
UNLESS OTHERWISE SPECIFIED, ALL TOTALS AND PRICES EXPRESSED IN OUR STORIES ARE IN U.S. DOLLARS.
CONTENTS — SEPTEMBER 2018
VOLUME 14 NUMBER 7
18 | SEATS, THEN SERVICES The founder of co-working startup Kr Space says growth has to come before profits. BY YUE WANG
22 | MASTER BUILDER Multibillion-dollar app Procore brings the world’s construction projects onto the cloud. BY ALEX KONRAD
26 | BEZOS UNBOUND The richest person of all time tells Forbes that he’s only begun to grow. BY RANDALL LANE
34 | BITMAIN’S MAIN MAN The cryptocurrency-mining billionaire nobody has heard of. BY JASMINE TENG
52 | A REALLY BIG SCORE Can esports legend Andy Dinh continue to dominate as billionaire moguls enter the arena? BY MATT PEREZ
54 | BEST UNDER A BILLION: BLS S PAGE 92
“I LIKE RESULTS NOW.” —HTET MYET OO, 30 Under 30 member (2016) and founder of Rangoon Teahouse and other restaurants in Myanmar.
Shikhar Aggarwal builds a global challenger on dad’s frustration with lengthy visa queues. BY ANURADHA RAGHUNATHAN
64 | TWEENPRENEURS Social gaming unicorn Roblox teaches kids the rudiments of coding. BY ALEX KNAPP
68 | BETTER OVER TIME Sincere Watch scion embraces a new idea: sell older models. BY PAMELA AMBLER
77 | BILLIONAIRES TO BE: CIGARETTE BREAKERS The cofounders of Juul Labs have cornered the U.S. e-cigarette market. BY KATHLEEN CHAYKOWSKI
TECHNOLOGY 78 | BREAKING HEARTS T PAGE 84
WILFRED UYTENGSU JR. —Philippines’ 50 member and Ironman.
HeartFlow has raised $467 million for a heart-disease test, but it may not make patients better. BY ELLIE KINCAID
80 | GADGETMAN // BEN SIN Poker fanatic Xu Ke launches Ono, a social network based on blockchain technology.
THE PHILIPPINES’ 50 RICHEST 84 | THE LIST It has been a volatile year, with 19 members seeing a net worth shift of 20% or more. BY GRACE CHUNG
ENTREPRENEURS 90 | HAIR ON FIRE Nancy Twine went from trading commodities to building a luxury hair-care brand. BY CHLOE SORVINO
FORBES LIFE 92 | GOOD EATS IN MYANMAR A hungry 30 Under 30 entrepreneur comes home to feed his people. BY JANE A. PETERSON
94 | FROM THE EXPERTS Art, booze and timepieces to buy, hold and sell.
96 | THOUGHTS On advice.
4 | FORBES ASIA SEPTEMBER 2018
FORBES ASIA
SIDELINES Editor Tim W. Ferguson Editorial Director Karl Shmavonian
Rich, Yes. Crazy?
Art Director Charles Brucaliere Senior Editor John Koppisch Wealth Lists Editors Luisa Kroll, Kerry A. Dolan Statistics Editor Andrea Murphy Research Director Sue Radlauer Online Editor Jasmine Smith Reporter Grace Chung Editorial Bureaus Beijing Yue Wang Shanghai Russell Flannery (Senior Ed.); Maggie Chen India Editor Naazneen Karmali
Contributing Editors Bangkok Suzanne Nam Chennai Anuradha Raghunathan Hong Kong Shu-Ching Jean Chen Melbourne Lucinda Schmidt Perth Tim Treadgold Singapore Jane A. Peterson Taipei Joyce Huang Vietnam Lan Anh Nguyen Columnist Ben Sin Production Manager Michelle Ciulla
EDITOR-IN-CHIEF
Steve Forbes FORBES MAGAZINE CHIEF CONTENT OFFICER Randall Lane EXECUTIVE EDITOR Michael Noer ART & DESIGN DIRECTOR Robert Mansfield FORBES DIGITAL VP, INVESTING EDITOR Matt Schifrin VP, DIGITAL EDITOR Mark Coatney VP, PRODUCT DEVELOPMENT Salah Zalatimo VP, WOMEN’S DIGITAL NETWORK Christina Vuleta ASSISTANT MANAGING EDITORS Frederick E. Allen LEADERSHIP Loren Feldman ENTREPRENEURS Janet Novack WASHINGTON Michael K. Ozanian SPORTSMONEY
E
ven many of the favorable reviewers of the hit movie Crazy Rich Asians concede it is familiar romantic-comedy fare from Hollywood, save for the faces. Yet therein lies the basis of a cultural moment, as Asian characters assume mainstream roles for a largely Western audience. Of direct interest to Forbes Asia readers is the backdrop of the story (earlier a book by Kevin Kwan): the tussle between traditional and modern mores in an extremely wealthy Singaporean Chinese family. Of course this ilm is an entertaining caricature, although I trust it inspires conjectured likenesses to real clans. Singapore itself appears in several glam cameos. he vast ictional fortune itself, however, popularizes what this magazine has been reporting for years: the Asia-Paciic region’s extraordinary personal riches. If this cinematic staple is nevertheless a breakthrough on the far side of the Paciic, it is not the only one lately for those of Asian background. Amid the continuing and ever remarkable rise of immigrants and their ofspring from East and South Asia in North America, we are seeing their academic, artistic and inancial success extend gradually into the civic realm. A growing (if belated) presence in public and political life, through new candidates and constituencies, is rounding out the “cast” of North America’s real-life drama. Note two recent cases of similar theme: irst, an attempt by New York City oicials to soten the admission criteria for its prestigious specialized high schools, where a standardized-test cutof has resulted in a bulge of ethnic Asian enrollment. And second, a lawsuit aimed at the fuzzy measures by which Harvard University has arguably reduced the number of its ethnically Asian matriculants (Harvard being a proxy for elite colleges generally). In each case, Asians have been unusually outspoken in the debate. To be sure, solidarity is one thing, but tribalism is another, and such a scourge can take both let- and right-wing forms. It can cloud legitimate policy considerations. Take the increasing resistance in the West to mainland Chinese economic forays: Is this a bigoted response or an expression of strategic or security concerns? A culture warrior might see the former—ater all, look at China’s great companies on our Fab 50 (p. 38). But what of other Asian nations also recoiling from Beijing’s push? he world is getting smaller, and battles for turf are to be expected. Competition that is open and objective under the rules will make for happier endings.
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6 | FORBES ASIA SEPTEMBER 2018
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CONVERSATION OUR PROFILE of Myanmar tycoon hein Tun (“We Have to Worry,� July/August, p. 22) sparked this quote/comment from @TMclaughlin3: “ ‘In 2014 I did a stupid thing—I bought the Myanmar Times.’ A ringing endorsement of the newsroom from the boss.� Regarding the business climate that Tun is facing in Myanmar, the International Campaign for the Rohingya posted this on Facebook: “Further proof that genocide is bad for business. International condemnation of the Burmese government’s genocide of the Rohingya has led to widespread cancellations by Western tourists. More ominously, foreign direct investment also remains well of its 2015 highs and property values are down.� Regarding our story about four generations of women in hailand running a business (“Riverboat Queens,� p. 30), this from “Out & About in Southeast Asia� on Facebook: “It’s really interesting to read about the hard-nosed businesspeople in charge of such a venerable tourist institution—and the fact that women have led this company for four generations now is an arresting hook.�
Angelia Ang, Sharon Joseph, Sabrina Cheung CIRCULATION SERVICES
Taynmoli Karuppiah Sannassy, Jennifer Yim
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CORRECTIONS: In “Riverboat Queens� we incorrectly calculated the number of passengers carried by Supatra & Chao Phraya Express: he correct number is 1 million a month, not 100,000. Our blurb about John Lim (“Singapore’s 50 richest,� p. 83) stated that he owns a third of ARA Asset Management; he owns 19.85%.
CHIEF EXECUTIVE OFFICER Michael Federle CHIEF FINANCIAL OFFICER Michael York CHIEF REVENUE OFFICER Mark Howard
THE INTEREST GRAPH
EDITOR-AT-LARGE/GLOBAL FUTURIST Rich Karlgaard
Our list of Singapore’s wealthiest ran away with the most Web hits from last issue:
GENERAL COUNSEL MariaRosa Cartolano
Singapore’s Property Moguls Edge Out Facebook Billionaire For Top Spot
51, 141 page views
PRESIDENT, FORBESWOMAN Moira Forbes
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“I am not a crony; I am straight.�
“I knew I could make money if we did it our way.�
Singapore’s Wealthy Families Fund Hangouts For Millennials 4,222
Chinese Are Flocking To Gaming Site Bilibili, But Can It Make Money? 3,830
“Bilibili is like a community of young fans.�
FACT & COMMENT “With all thy getting, get understanding”
TIME TO TERMINATE “ASSISTED DYING” BY STEVE FORBES, EDITOR-IN-CHIEF
In 2002 Belgium legalized the murderously chilling act of euthanasia, whereby doctors and nurses kill patients with their supposed consent. Holland had formally done the same the year before. his practice, all too reminiscent of what Nazi Germany did before WWII to the mentally handicapped and to people with very serious disabilities, is justiied these days not by Hitlerian theories of “purifying the race,” of course, but as a “humane” way to deal with those who are suffering mortal illnesses and in extreme pain. Many thousands of patients have been disposed of since Holland and Belgium enacted these morally repugnant laws. Belgium now allows euthanasia to be applied even to children, acknowledging recently that between Jan. 1, 2016, and Dec. 31, 2017, two children, ages 9 and 11, who were alicted with a brain tumor and cystic ibrosis, respectively, and a 17-year-old, who had Duchenne muscular dystrophy, had been put to death. Apologists say these kids gave their consent, as did their parents. Good God! Are we to believe that youngsters should be making such decisions? Holland has been hit with scandals in which patients were administered lethal injections without their consent, in order to free up “needed” hospital beds. Ater all, the reasoning went, these people were going to die soon, anyway. In Belgium, according to a news report, a member of the Federal Commission for Euthanasia Control & Evaluation resigned last year “in protest at the unchecked killings of dementia patients.” What’s happening here is an ugly, slippery slope. Instead of working to alleviate the tribulations of the alicted and innovating ever better ways to do this, we simply “put them out of their misery,” the way we do with household pets. It’s not only in Belgium and the Netherlands that we’re seeing this awful phenomenon. A chronically ill man in Canada is suing the government because medical personnel allegedly and illegally tried to coerce him into going the assisted-suicide route to save money. “Why force me to end my life?” the plaintif asked. It’s one thing for people to declare in writing when they are in good health and of sound mind that no “heroic” measures are to be taken, that medical staf should “let nature take its course.” But it’s quite another for medical personnel
to actually kill patients, as is happening in Belgium, Holland and elsewhere. Research shows that many euthanasia and assisted-suicide victims are sufering from depression. hey should be treated, not abandoned. As for physical sufering, it’s hardly beyond the capabilities of modern medicine to efectively manage pain with older, well-established medications, as well as newer, better drugs. It’s true that in the U.S. we have a serious opioid crisis. Nonetheless, the response shouldn’t be a diminution in pain management but, alternatively, a focus on reducing and eventually eliminating the abuses. he temptation to use euthanasia as a solution will only increase as populations age and as cash-strapped governments and insurers scramble to ind ways to reduce growing healthcare costs. It should be axiomatic that life is sacrosanct, whether or not you are religious. In recent times we have seen enormous medical advances that not only prolong life but also improve the quality of life as we age. he answer to the rising costs of healthcare is the creation of genuine free markets, which always turn scarcity into abundance. here is precious little in the way of free markets in healthcare. hird parties, primarily governments and insurers—not the patients—still dominate. his is beginning to change in the U.S. Rapidly efecting this transformation should be our urgent goal, not surrendering to rationing or descending into the pit of euthanasia and “assisted dying.” Morally and pragmatically, such practices have no place in a truly civilized and humane society.
The End of Work: Why Your Passion Can Become Your Job John Tamny (Gateway Editions, $28.99) Everyone, regardless of age, income and occupation, will find this short, pithy and wisdom-rich book inspiring and instructive. SEPTEMBER 2018 FORBES ASIA | 11
FORBES
FACT & COMMENT
STEVE FORBES
Its thesis is simple yet profound: Greater prosperity gives more and more people the opportunity to match work with passion, the kind of work that “has you excited on Sunday nights.” Critical to this “luxury” is a growing economy. “The freer people are to earn as much as they can and keep it, the more likely it is that everyone will have the opportunity to make a living from his own unique skills and intelligence.” The way the author—a longtime and valued contributor to both Forbes magazine and forbes. com—illustrates this optimistic viewpoint is exciting and original. Sports is one area that’s been expanding as we’ve become more affluent, with vastly greater needs at all levels of play for coaches, assistants, training specialists, scouts and nerdy number crunchers to better evaluate players and prospects (the fascinating subject of Moneyball, both the book and the movie), as well as for agents, lawyers, marketers, publicists and broadcasters—not to mention the simultaneous explosion in infrastructure, such as ever better and more sophisticated equipment, player-monitoring de-
vices, playing fields and stadiums. Many people still regard football as a game of lumbering semi-Neanderthals. The NFL and serious college football are both tough and cerebral. “Few of us have the intelligence to play football on the professional level,” Tamny notes. “Players
have to memorize a playbook the size of the Yellow Pages.” Great football players—or those great at any sport—are intense students of the game. Athleticism isn’t enough. In fact, given the hard work and the immense physical and cerebral discipline necessary to master high-level college football, the sport, says the author, should be a major. Tamny entertainingly discusses the creation of numerous new kinds of jobs, such as coaches for teams of video game players (one competition can attract tens of thousands of fans) and dog walkers, as well as the rising remuneration (often in six figures) and sophistication of traditional, once seemingly simple tasks such as caddying (pro golf caddies are trusted and crucial advisors to players). With affluence, people’s tastes for finer things expands. Costco is today the biggest importer of French wine in the world. Tamny closes his enjoyable work with this thought: “In an economy of individuals, we’re all better off when each person gets to pursue what most amplifies his unique skills and intelligence.”
The Second Coming: A Thriller John Heubusch (Howard Books, $26) This fantastic tale of mystery and conspiracy will have you flipping pages at a breakneck pace to find out what happens next, with your heart racing as if you were running the 400-meter race at the Olympics. The novel is a sequel to last year’s spectacular bestseller The Shroud Conspiracy. In this second installment Heubusch continues the story of Jon Bondurant, who, despite being a skeptic of the legend, found himself investigating the Shroud of Turin, a relic many believers take to be the burial cloth of Christ. Bondurant quickly realizes that the shroud is not only authentic but
12 | FORBES ASIA SEPTEMBER 2018
also the nexus of a global conspiracy. A clone has been created from DNA contained within the shroud that carries a plague aptly named “the Devil’s Sweat.” The aim of the conspiracy is the ultimate cataclysm: to wipe out humanity via this unholy laboratory experiment. The race is on to save the human race. Does this apocalyptic plot sound too outlandish? It’s a tribute to Heubusch’s considerable gifts as a compelling storyteller that the characters and events feel all too real. I have only one question for the author: When does the next book come out? F
FORBES ASIA
GROUNDS FOR DEBATE
POLITICAL ROAST Taiwanese-owned chain draws a VIP who is of-limits on the mainland. BY RALPH JENNINGS
T
aiwan President Tsai Ing-wen’s summer stop at an 85C bakery cafe in Los Angeles let a bitter atertaste on both sides of the Straits. When word of Tsai’s visit reached China, accompanied by photos of the president with drink in hand, netizens on the mainland began calling for a boycott of the chain in their country because they saw the event as an endorsement of Taiwan’s independence. he chain’s parent company, Gourmet Master, saw its Taipei-listed shares slump nearly 14% in the weeks following, wiping out $224 million of its market value. Gourmet Master appeared on the 2012 iteration of Forbes Asia’s Best Under A Billion companies list. he day ater the presidential visit, the bakery-cafe chain announced its support for the “1992 Consensus,” an agreement between China and Taiwan to acknowledge that there is only “one China,” with each side having its own interpretation of what that means. China considers self-ruled Taiwan a part of its territory that will eventually be reuniied with the mainland. Tsai has not publicly endorsed the consensus since taking oice in 2016, which has resulted in mainland diplomats cutting of communication with their Taiwanese counterparts. “It is a kind of reality that Taiwan companies have to face so far,” says Wu Chung-li, a political science research fellow at Academia Sinica. “On one hand, they have to face the domestic issue, but on the other hand they have to also consider the great market of China, so that is why it’s no wonder the 85C cofee shop the next day declared their support for the 92 Consensus.”
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But 85C’s attempt to appease its customers in China with the statement of support for the 1992 Consensus generated resentment in Taiwan, with one legislator suggesting that the cafe rebrand itself as 92C. A spokeswoman for 85C declined to elaborate further on the controversy or discuss any decline in sales at the chain’s China stores. he majority of 85C’s business comes from its 600 bakery cafes in China; it operates an additional 430 outlets in its homeland of Taiwan. he chain’s name stands for 85 degrees Celsius, which is
Tsai Ing-wen’s visit to cafe and bakery 85C in Los Angeles created a cafeine jag for parent company Gourmet Master.
thought to be the optimal temperature for brewing cofee, according to Wu Cheng Hsueh, the company’s founder and chairman. Customers associate the brand with its budget cofees, sea-salt-flavored cofee foam and birthday cakes. Retired people oten gather at its outlets to drink, read newspapers and chat. Gourmet Master’s earnings jumped by almost 23% last year to $70.3 million. he company’s revenue came in at $757 million in the same period, with about two thirds of sales coming from China. he company had allocated $59 million in the same peri-
od to accelerate the expansion of it 85C stores in China as well as the U.S. he company’s reluctance to comment further shows it wants to move on from the flap and get its business back to normal, says Liang Kuo-yuan, president of the Taipei-based think tank Polaris Research Institute. “If China doesn’t give it any more pressure, then it can get over this diiculty,” Liang says. But, he advises, Chinese oicials may be mulling more “limits on the freedom” of Taiwanese investors in its territory. F
SEPTEMBER 2018 FORBES ASIA | 15
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ONLINE FUNDING
Where E-cash Is King China’s fintech giants are consolidating their gains and using their capital heft. BY SARA HSU
C
hina has experienced a intech explosion in recent Yirendai and Lufax have also been successful in illing a demand years, with top companies dominating the industry. gap. Again, many consumers and small businesses have a hard time It’s not an accident that Alibaba spinof Ant Financial obtaining loans from China’s formal inancial sector—namely, from and Tencent rule digital payments, or that Yirendai banks. hey are oten forced to borrow on the curb market at very and Lufax are major players in the online lending high interest rates. With the advent of peer-to-peer (P2P) lending sector. All of these companies have garnered large amounts of incompanies, smaller borrowers with little to no collateral have found vestment, expanded into areas with high levels of demand and have themselves able to borrow for the irst time. he P2P lending sector successfully diversiied out of their core business. is going through a regulatory shakedown, as riskier companies Ant Financial is not yet publicly listed, but it received Series C with Ponzi-like business models are shut down. he larger irms, funding of $14 billion in June. While Tencent’s WeChat Pay is not like Yirendai and Lufax, have shown their compliance with the new part of a subsidiary, it continues to reap funding from Tencent inves- regulations, which require opening a custodial account for funds tors. Tencent (see p. 45) is a juggernaut whose Hong Kong Stock and company registration. he crackdown is likely to drive of some Exchange shares, even ater a recent dip, have risen 100-fold since lenders associated with the smaller irms, but it would be impossible its IPO in 2004. Its market cap reached a high of $577 billion in to eliminate the high demand for funds among small borrowers. January. Creditease’s peer-to-peer lending company Yirendai is also hese borrowers likely will turn to the likes of Yirendai and Lufax. listed, on Nasdaq with a market cap of $1.2 billion. Ping An-ailiatFinally, all of these irms have diversiied out of their core busied Lufax has reportedly postponed a possible listing in Hong Kong nesses into areas that successfully complement and add value to but was said to be targeting another funding injection of $2 billion. their mainstream activities. Ant Financial has Alipay and also ofers All of these companies have plenty of capital, even as funding for a wealth-management product called Yu’e Bao, which has become smaller startups, by some accounts, has already slowed. his means the world’s largest money market fund, drawing customers seekthat, despite China’s slowing economy, these irms have the means ing better returns than what savings accounts typically ofer. he to continue growing. combination of Alipay and Yu’e Bao has helped Ant Financial attract It’s not just about money, however. hese irms have hit the customers to its inancial services that help them both spend and mark when it comes to meeting pent-up demand for their intech save. Tencent has added digital content and membership subscripservices. For Ant Financial’s Alipay and Tencent’s WeChat Pay, that tions sold through WeChat. Yirendai and Lufax both ofer wealthdemand for digital payments has proved to be massive, as Chinese management products in addition to loans, giving Chinese investors consumers require faster and safer transactions. Both applicamore alternatives for where they can park their money. F tions have other beneicial features. With Alipay, users can obtain consumer or seller loans, credit that is oten unavailable via banks. Alipay can be used for oline or online purchases, particularly on Alibaba’s e-commerce websites. WeChat Pay ofers WeChat users the ability to send money to one another even if they don’t have a bank account. WeChat Pay can also be used oline and online, such as to purchase goods pushed by WeChat. Chinese regulators, increasingly concerned about potential risks to the inancial system, imposed a series of curbs that will crimp the companies’ revenue streams and curtail their rapid pace of expansion. For example, both Alipay and WeChat Pay are now required to process payments through a central clearing account, and the payments they receive have to be deposited at commercial banks in accounts that pay no interest. Previously, they had generated interest income from the payments Demand for digital payments by Chinese consumers has been massive. they were holding in their own escrow accounts.
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PULSION
Magic Mirror A Chinese virtual fitting room startup boosts retailers’ revenues with big data. BY JANE HO
A
t a busy mall in Shanghai, shoppers are lining up to create their own personal avatars to try on new clothes. he store, named Moda Polso (Italian for “fashion pulse”), gives customers the chance to see themselves wearing diferent garments without the hassle of actually changing clothes, allowing them to make their choices more quickly and easily. Moda Polso opened in May as a pilot project of Shanghai’s “new retail” apparel company, Pulsion. New retail, a term coined by Alibaba’s Jack Ma, refers to the integration of online and oline resources in order to revolutionize the retail experience. “[Virtual itting rooms] connect consumers, products and stores, providing a novel and convenient shopping experience,” says Zhang Tianbing, a retail analyst at Deloitte China. Revolutionary or not, the Moda Polso outlet certainly doesn’t look like a typical apparel store. A third of its space is dedicated to displaying merchandise and ten touchscreens, including one called the “magic mirror” because of its large size. he rest of the area is reserved for changing rooms and a storage room accommodating 3,000 pieces of roughly 1,000 designs. “A typical store is able to at least quadruple its portfolio using Pulsion’s system,” says Tu Zhenghui, the company’s 32-year-old chief executive. It can also be used to save space, reducing rental expenses, a major cost for oline stores. Working with the world’s largest database of Asian women’s body types (6 million), the sotware uses just 20 parameters to generate more accurate 3-D models that showcase how clothing drapes on a person’s body. As impressive as that sounds, Pulsion’s new store, which carries a dozen Chinese brands, is likely to be its only one.
“An experimental pilot,” as Tu calls it, the store was opened to test and optimize Pulsion’s system. he company’s virtual itting rooms are an extension of its garment store management system, which promises to predict consumer demand and allow retailers to increase sales while reducing inventory costs. Pulsion’s system does Pulsion’s fitting library aims to change the retail experience. this by analyzing shoppers’ buying patterns, enabling retailers to renew Zhongsheng in 2013 under the name Haotheir product lineup in a more timely maiyi, or “easy-buy clothes.” Huang saw fashion—idle items typically account for an opportunity in virtual itting rooms. roughly half of an oline store’s portfolio. “he sector was gaining popularity at the he system can also predict what is liketime, but no one was able to provide [good ly to sell in the future, allowing brands to enough] technology with low cost,” the make adjustments to reduce excess inven33-year-old founder and chairman recalls. tory. “Such prepurchase behavioral data he company spent over three years is almost impossible for traditional brickand more than $10 million investing in reand-mortar stores to collect,” Tu says. search before launching its irst sotware in According to Pulsion’s research on 40 2016. he same year, Pulsion began proChina-listed apparel irms, their total inviding sotware services to Alibaba’s Tmall ventory value of $4.5 billion is seven times online stores for Chinese brands, such as greater than their combined annual earnOchirly, a leading women’s garment label, ings. “he apparel sector could be as lubut the partnership to provide its virtual crative as real estate if you bet on the right try-on service to Tmall lasted only a year. portfolio,” says Tu. “While our sotware helped consumers Once consumers create a proile linked discover what it them better, it resulted in to their cellphone number or WeChat aca drop in those stores’ sales, as most people count, Pulsion’s system can keep in touch don’t look as good as models,” says Tu. with them ater they’ve let the store to recRenaming itself ater ending the virommend new arrivals. When they revistual try-on partnership, Pulsion changed it the store and log onto one of the deviccourse to target oline businesses. And es, they’ll see customized product displays Huang sought help from Tu, his old college based on their behavioral data. friend and former partner in a food delivPulsion’s revenue is derived from keepery startup. Tu admits that the virtual iting sales commissions in the low single ting room segment, although growing fast, digits. It expects to generate $550,000 in is unlikely to last long on its own. Many ofmonthly revenue by the end of this year fline stores are using the technology as a and $20 million in 2019. gimmick to attract customers, he says. Pulsion was initially set up by Huang A itting result? F
SEPTEMBER 2018 FORBES ASIA | 17
FORBES ASIA
COMMUNAL OFFICES
Seats, Then Services Like WeWork, its big Chinese rivals don’t make a profit from work-share space. Kr Space founder Liu Chengcheng says growth has to come first. BY YUE WANG
M
yriad charts and igures of the latest real estate transactions in Chinese metropolises flash across the laptop of Liu Chengcheng as he talks, but one magazine article sits conspicuously on his immaculate desk, marked up with bold red lines. It tells the story of the co-working giant WeWork. “We pay a lot of attention to data,” Liu said in his high-rise oice in central Beijing. “Especially the data of our competitors.” Liu, 30, is the founder of Chinese co-working startup Kr Space. He’s going all out to defend his home market from WeWork, which is already in 26 countries and flush with cash, having just raised $1 billion more from investors. he New York company, valued last year at $20 billion, has built a global brand with its industrial-chic décor, large common areas, inspirational signs and perks like free beer and yoga sessions. But Liu is conident that Kr Space will come out on top in China because his team knows the local market better. “here are so many China-speciic requirements,” Liu says. “I
SPACE WARS NAME WEWORK CHINA
LOCATIONS/ TOTAL OFFICE SPACE CITIES (SQUARE METERS) 45/3
N/A
UCOMMUNE
160/35
558,000
KR SPACE
40/11
270,000
MYDREAMPLUS
40/5
300,000
N/A: NOT AVAILABLE. SOURCE: COMPANIES.
18 | FORBES ASIA SEPTEMBER 2018
don’t think WeWork really understood all of these in its early days here, which was why they were expanding slowly.” Essentially, Kr Space operates along the same lines as WeWork. It leases oice space from developers and renovates them before subleasing to freelancers and companies for 1,000 yuan ($147) to 6,000 yuan per seat a month, depending on the location. he local knowledge he is leveraging against WeWork can include everything from complying with building and safety regulations and inding the best contractors to creating oice designs better suited to China’s work culture. Kr Space says the free beer and Ping-Pong tables ofered by its rival don’t it with the heavy workloads and the grueling “996” schedule (9 a.m. to 9 p.m., six days a week) that’s become pervasive among Chinese companies. It has instead opted to provide no-charge add-ons like inancial and legal consulting services. Kr Space oicially launched in Beijing in 2016 as a spinof of the now Alibaba-backed technology news site 36 Kr, which Liu founded in 2011 and still chairs today. His latest venture manages 270,000 square meters of oice space in 11 cities across the country, as of June, while serving 40,000 members MEMBERS VALUATION (the company calls them “users”), according to a spokesman. 20,000 $5 BIL Investors are also moving in. Kr Space 150,000 1.8 BIL will soon close another funding round 40,000 1 BIL that should raise $200 million at a valuaN/A N/A tion north of $1 billion, according to three
On Asia: “This is a market we must take,” says founder Liu Chengcheng.
people with knowledge of the matter. Early talks of an IPO in the U.S. have also been taking place. A Kr Space spokesman declined to comment on the funding but says there are no IPO plans yet. (Liu won’t say what stake he is retaining.) Also very much in the hunt is China’s Ucommune, led by Mao Daqing, a former executive of real estate giant Vanke. It was valued at $1.6 billion ater merging with local rival Wujie Space in March. he domestic challenges are also better at controlling costs, according to Jeacy Yan, a partner at investment irm IDG Capital. “Oice sharing is a very localized business where you have to focus closely on operations,” Yan says. “Local companies have a much bigger chance of becoming the winner.” Ken Xu, a partner at investment irm Gobi Partners and an investor in Kr, points to Liu himself as one of the key factors in the company’s growth. His experience running 36 Kr has enabled him to build a network among local entrepreneurs and better understand their needs. WeWork, meanwhile, still leads in brand awareness, and domestic irms are working to catch up, according to IDG’s Yan. he company recently clinched a separate $500 million funding for its China-focused subsidiary from investors that included Singapore’s Temasek. WeWork acquired Chinese rival Naked Hub for $400 million in April, and it plans to expand to 40 locations and attract 40,000 members
by the end of the year. Talks between Adam Neumann, WeWork’s billionaire cofounder, and Liu in Beijing fell apart because they couldn’t agree on who would have control of the combined entity, according to one knowledgeable party. A WeWork spokeswoman declined to say whether Neumann had met with Liu. he Chinese market, according to Beijing consultancy iResearch, reached 5.5 billion yuan and should nearly double by 2019. It beneits from government policies that encourage startup businesses to spur domestic innovation. Like WeWork, which last year reported a loss of $933 million on revenues of $886 million, the unicorns Kr Space and Ucommune are well short of proitability. hey plan ultimately to monetize advertising and premium services, which can be more lucrative than leasing seats, says iResearch analyst Yu Kexin. For his part, Liu doesn’t see making money as a priority because Kr Space is currently focused on expansion. And he is already looking beyond mainland China: In May, Kr Space entered Hong Kong, leasing seven floors at the One Hennessy building in Wan Chai. It’s also expanding into Bangkok, Seoul, Singapore and Tokyo, with the goal of catching up with WeWork in terms of total oice space managed by 2021. “WeWork is just entering Asia, so we are at the same page here,” he says. “his is a market we must take.” F
SEPTEMBER 2018 FORBES ASIA | 19
PROMOTION
HANDA WATCH WORLD AMBASSADOR MANNY PACQUIAO The Filipino boxing legend gives fans a good reason to keep coming back to the ring.
Manny Pacquiao (left) and Haruhisa Handa (right)
Manny Pacquiao, the only eight-division world champion in the history of boxing has added a new designation to his major world titles: ambassador for luxury watch boutique HANDA Watch World. He joins fellow philanthropist Haruhisa Handa, president of Japanese trading company Misuzu and owner of the boutique, in envisaging a world without poverty.
Childhood Memories There are countless stories about Manny Pacquiao. Inside the ring, the 39-year-old Filipino boxer defeats his opponent like a ferocious carnivore going after its prey. But outside the ropes, his gentle smile is always turned toward the poor and needy, reminding fans of the late American boxer and humanitarian Mohammed Ali. Pacquiao, whose real name is Emanuel Dapidran Pacquiao, was born in the Philippines in 1978. He started to box professionally at age 15, and just five years later defeated
Thai champion Chatchai Sasakul to earn the world flyweight title. He has since gone on to win multiple major world championships. In addition to his boxing career, he has also made a name for himself as a basketball player and coach, and in 2016 won a six-year term in the Philippine senate.
World Class Champion In April, Pacquiao attended the grand opening of HANDA Watch’s Tsukamidori store in Osaka. He also had another objective for his visit: to meet face to face with Haruhisa Handa, the president of Misuzu, which runs the boutique. Handa, a successful businessman whose portfolio includes a college preparatory school, is well known for his philanthropic work, such as building more than 130 schools in China for disadvantaged children. Handa’s projects have won enthusiastic support from business executives and celebrities around
the world, and past events hosted by Handa’s company have attracted big names, including former New Zealand Prime Minister John Key and Hong Kong actor Jackie Chan. For Pacquiao, who grew up in extreme poverty, his encounter with Handa had a very special meaning. “We discovered we both share the same enthusiasm to help the poor. It is truly an honor to be able to envision a plan together for such an endeavor,” he said.
Shared Respect The feeling is mutual. “Pacquiao wasn’t fighting only for himself,” said Handa. “He grew up in a poor family and as a child shared his food with six siblings. He started boxing at age 11; at age 14 he left home for Manila to receive professional training as a boxer. He grew both in heart and body, with a pressured determination that he would not be able to feed his family unless he continued to win. Pacquiao's
PROMOTION
success provides moral support for all those facing poverty.”
A True Champion In the world of boxing, merely becoming a world title holder does not instantly translate to international fame as it does with other sports. Only those who win the big matches are recognized as true champions. Pacquiao has triumphed against the sport’s superstars, such as British professional boxer Ricky Hatton and Puerto Rico’s Miguel Cotto. He started his career in the light-flyweight division, which has a maximum limit of 112 pounds, and eventually accomplished the feat of winning major world titles across six weight divisions, putting on more than 20 kilograms over the years. Handa shared one of the many unforgettable stories that illustrates Pacquiao’s physical prowess. “Although it was a non-title battle, the match with Oscar De La Hoya in 2008 was just awesome. It gave me goose bumps. De La Hoya was much bigger both in height and weight, but Pacquiao did not change his style and was aggressive from the start without any hesitation. Eventually in the eighth round, he knocked out De La Hoya with a TKO [technical knockout]. I was simply amazed with Pacquiao, who constantly aims high no matter what,” Handa said.
Setting an Example Pacquiao’s matches are always extraordinary, but the fight money is also legendary. When he fought against five-division world champion Floyd Mayweather Jr. in Las Vegas in 2015, the match was billed as the biggest fight of the century, and the combined prize money exceeded US$365 million. In only 36 minutes of fighting, they grossed more than the annual income of high-earning athletes such as tennis player Roger Federer and footballer Lionel Messi. He uses his fight money to continue giving to children in the world suffering from poverty. “We have launched several projects so far, but there are still numerous things we must do,” Pacquiao said. “Now that I have become the ambassador, I want to promote this watch as a means to contribute to society.” Pacquiao’s feelings are well understood by Handa, who already has several ideas in mind, including a project to build “Manny Pacquiao Hospitals” in poor and remote areas, and Handa is prepared to extend his support. Following his visit to Japan, Pacquiao had an opportunity to regain glory once again, in a match that took place in Kuala Lumpur
Grand opening celebrations at HANDA Watch World · Shinsaibashi-Tsukamidori store (1-12-10 Higashi Shinsaibashi, Chuo-ku, Osaka-shi, Osaka prefecture, 06-6245-8685 Opening hours are 10:30-20:00, closed on Wednesdays).
on July 15. Prior to the fight, Pacquiao commented “it is quite significant that such a big event is being held in Asia. I am sure it will be an exciting match. In the coming match, I want to do my best for the people of Asia.” From the start, Pacquiao dominated his opponent, World Boxing Association welterweight champion Lucas Matthysse. He sent his opponent to the canvas three times in total, with a seventh-round TKO to reclaim his title as world champion. The fight was an overwhelming victory reminiscent of his
golden days of boxing, and had the 16,000 fans on their feet. Handa muses, “Pacquiao will keep coming back to the ring, representing the feelings of Asians, and wishing for peace in Asia. And this is precisely why I want all of us to closely watch his matches, one by one.” Contact information: Misuzu Corporation 81-3-3247-5585 www.misuzu.com
FORBES ASIA
JOB-SITE TECH
Master Builder Tooey Courtemanche has crafted one of tech’s biggest secrets in Procore, a multibillion-dollar app bringing construction projects onto the cloud.
O
n a quiet street in Montecito, California, a suburb of Santa Barbara, Procore CEO Craig “Tooey” Courtemanche is considering how best to break into his own house. It was amid the frustration of renovating this Spanish-modern-style three-bedroom 18 years ago that he built a simple app to track comings and goings of workers on-site. Now he’s using the app to redo the house again, this time to beit the CEO of one of tech’s fastest-growing companies. he app, called Procore, is the most popular piece of sotware in the $1 trillion U.S. construction industry, used on hundreds of thousands of projects from sports stadiums to high-rises. Sales are approaching $200 million, good for ith place on the 2018 Forbes Cloud 100 list (forbes.com/cloud/100). But on this dusty July day, none of that matters as Courtemanche, 51, squeezes between palm trees and then a gap in his fence. We’re dropping by unexpectedly so Courtemanche can show me the front steps, which will look like they’re floating in water, and the bay doors to the new ininity pool, which he’s coded to open by voice. Downstairs is the yoga studio for his wife, an instructor, and the new guest room, where his 20-yearold son, a full-time Procore partnerships manager, can crash. Back at work in nearby Carpinteria, Courtemanche can watch the house come together on Procore, tracking worker schedules and
22 | FORBES ASIA SEPTEMBER 2018
ielding questions from his contractor and subcontractors, comparing progress photos to the drawings and inding out how far over budget he’s going. Employees are used to catching Courtemanche in meetings or at lunch checking progress on his home via the app. “Who else gets bug reporting from their CEO?” he says. Other CEOs carry on courtside at NBA games; Courtemanche is excited to have lunch with construction celebrities like Dirty Jobs host Mike Rowe. But when it comes to ambition, Procore and its CEO it right in with the brashest highfliers in tech. “We believe we’re just in the early days,” Courtemanche says. “I want Procore to be the single source of truth for everything in construction worldwide.” AT ORIENTATION AT Procore’s headquarters, a record batch of 59 new employees and summer interns gladly take a break from a log-in credentials lecture to meet their CEO. Courtemanche, oozing beach-dad charm, has dropped in to tell a few jokes and take questions. Procore’s founding legend comes up. Does he still own the house that inspired all of this? “I still have my Land Rover from 1998, the same house, even the same family,” Courtemanche quips. “hat house is Procore.” In 2002, when he founded Procore, Courtemanche was a moderately successful tech executive in Silicon Valley, making custom interfaces for online
HR sotware. On the road constantly, Courtemanche had received an ultimatum from his wife four years earlier: She and their son were moving south to Santa Barbara, and he was welcome to join. She’d picked a home, too—one that would need a lot of work. At irst flying down on weekends, Courtemanche found progress on the house moving at a glacial pace. So he did what he knew best and coded his own program to keep track. By 2004 Courtemanche had signed up contractors for Hollywood stars like Eddie Murphy, Ben Stiller and Barbra Streisand to monitor their home renovations with Procore. Courtemanche spoke the language of construction fluently. Growing up in the aluent La Jolla area of San Diego, Courtemanche was an indiferent student, more interested in girls than schoolwork. But construction was another story. Ater school he’d sweep out the floors of a cabinet shop, and by 17 he’d become a journeyman carpenter ater completing a six-month apprenticeship. A disastrous year at the University of Arizona, where he flunked out with a 0.3 GPA, led to a security guard job and then community college, where Courtemanche got the grades to be accepted into a premed program in San Francisco. Once north, he got caught up in the construction boom of the early 1990s, “swinging a hammer” for two years. Feeling burned out, he took up a family friend’s ofer to learn the
ETHAN PINES FOR FORBES
BY ALEX KONRAD
Procore CEO Tooey Courtemanche: “We are making the lives of construction people better.”
SEPTEMBER 2018 FORBES ASIA | 23
FORBES ASIA
JOB-SITE TECH telephony sotware business, then taught himself HTML. By 1993 he was a sotware engineer; by 1996 he’d founded a tech consultancy. When Courtemanche built the prototype for Procore ive years later, he was shocked. Construction made up nearly 10% of America’s economy, but even as late as 2002 its workers barely used the internet. “Holy crap, I’ve been given a time machine,” he thought. For a fledgling sotware business, Santa Barbara was no San Francisco. But what it did have was plenty of well-heeled refugees from the Bay Area and Los Angeles looking for a quieter life. One investor, Steve Zahm, who had founded and then sold the e-learning company Dig-
manche mortgaged his house and, along with Zahm, cut his salary to zero. All but ive employees were laid of. Investors expected to hear that the startup was shutting down. But Courtemanche was stubborn. He was convinced that construction would need IT eventually. When it did, Procore would be ready. Slowly, trends shited in Procore’s favor. Construction companies began revisiting their work flows; younger workers, who expected sotware to be part of their job, entered the industry. In 2010 Apple launched the iPad, bringing a sturdier device to worksites, which increasingly had access to Wi-Fi. A decade into operations, in 2012, Procore was still small, with sales of just $5 mil-
“WHO ELSE GETS BUG REPORTING FROM THEIR CEO?” italhink for $120 million, joined Procore as president in 2004 (a role he still holds today). A bigger ish, DoubleClick cofounder Kevin O’Connor, wrote Procore’s irst institutional check, leading a $950,000 seed round and joining the startup’s board. Procore grew, but more modestly than hoped. here’s a saying in investing: If you’re early, you’re just as good as wrong—and Procore was very early. In 2006, four years ater Procore was founded, the iPhone was still one year into the future and Wi-Fi was virtually nonexistent. Procore ran on laptops and required internet connections, still rare on job sites. Courtemanche and Zahm were known to fly across the country to rig up homemade hot spots for clients at a loss. When Courtemanche brought the app to Sand Hill Road to meet Silicon Valley venture capitalists, he was laughed out of town. At Sequoia Capital, a low-level analyst told him that focusing on one industry vertical was a sucker’s play. “Make it a social network and I’ll write you a check right now,” Courtemanche remembers him saying. When the inancial crisis hit in 2008, home building froze in its tracks. Courte-
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lion, but growth started to hockey stick. Silicon Valley inally took notice: In 2014 Bessemer Ventures led a $15 million investment round, then poured in another $30 million alongside Iconiq Capital ten months later. Procore’s customers were starting to get much bigger. Managers at Wieland, a 61-year-old Michigan contracting irm that operates $325 million of projects a year, have used Procore since late 2015. At Wieland’s multimillion-dollar paper mill project in Wapakoneta, Ohio, team leaders and managers are equipped with iPad Pros so they can check drawings and updates on Procore at all times. Because Procore doesn’t charge by head count but by subscription, subcontractors and partners working with customers like Wieland end up using Procore for free and then oten spread it to their other projects. “We have a motto, and it’s simple: 100% Procore,” says Rob Krueger, Wieland’s CEO. As Procore has added features to cover things like safety inspections and inancing, it’s been able to crack some of the industry’s biggest players, like Mortenson, a $4 billion-in-sales construction giant based in Minnesota, which pays an esti-
mated seven igures a year to keep 2,000 employees on the app. Landing these bigger customers has allowed Procore to raise a war chest of $180 million in funding since 2015, reaching a valuation of about $1 billion in late 2016. Construction tech is now red-hot, and Procore has attracted challengers both big and small. Sotware giants Oracle and Trimble each made $1.2 billion acquisitions in the space in the past six months, and VCs who missed out on Procore are now backing newer startups. And at least one rival quietly bid several billion dollars for Procore in the past and was rebufed, sources say. Procore declined to comment on the overture. Still, thanks to its years of survival, Procore’s product looks to have a head start. “I don’t think there are many companies challenging Procore that can hold a candle to their size and strategy,” says Derrick Woods, an analyst at Cowen. In a little clifside clearing overlooking the Paciic on Procore’s campus, the management team, sweating in the July heat, forms a half-circle around Courtemanche for their morning stand-up meeting. Now at 1,200 employees, Procore instituted the meetings companywide several years ago as a salve for the chaos of its rapid growth. Later that day Procore will announce a partnership with Sage, an accounting sotware maker and erstwhile rival. Elsewhere, cross-functional teams are working on additional versions of Procore’s app for property owners, subcontractors and enterprise-size customers. hose releases could be the last touches Procore needs before iling to go public ahead of an IPO, which insiders say is likely to come in early 2019. In internal meetings and with customers, Procore is already acting like a public-company-to-be, battening down the hatches for Wall Street to get its irst close look at the numbers of an ugly duckling startup turned cloud leader. Courtemanche says that ater all these years, he’s not planning to hang up his hammer once he rings the market bell. As with his house, the vision for Procore may grow grander, but it’ll be the same foundation. “I’m a dog on a bone,” Procore’s CEO says. “I won’t be able to walk away.” F
FORBES ASIA
JEFF BEZOS
Bezos Unbound
America’s most innovative—and feared—business leader is coming of a three-year run that has made him the richest person of all time. Now he tells Forbes he’s only begun to grow. Corporate America, you’ve been warned.
U
nlike America’s other tech giants, Amazon doesn’t have a traditional campus. he 45,000 or so employees and executives in Seattle, out of 575,000 worldwide, fan across numerous high-rises downtown and in the South Lake Union neighborhood. Amazon’s “headquarters” defaults to where Jef Bezos, the company’s founder and CEO, happens to be, currently Day 1 Tower. Its name comes from a perpetual Bezos maxim: that, relatively, we’re still at “day one” of the internet—and, by extension, that Amazon is just getting started. hat’s getting harder to say with a straight face, with sales, proits and the stock price all soaring, the latter up 270% over three years and 103% in the past 12 months. Amazon is closing in on Apple to become the world’s most valuable company, and Bezos, whose personal net worth approaches $160 billion, has in the process become the planet’s richest person by far. Nevertheless, Bezos talks about Amazon like it’s a giddy startup that just closed its Series A. “For all practical purposes, the market size is unconstrained,” says Bezos, his rolled-up sleeves showing of Popeyelike forearms, the product of midlife weight training that has produced buzzed-about results for the 54-year-old. His growth rationale comes from a “super-lucky” conflu-
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ence: he retail market, Amazon’s original quarry, is “many trillions,” as is, he says, the cloud market that Amazon Web Services (AWS) pioneered. “here are diferent businesses where the market is limited,” adds the man whose company should hit $210 billion in revenue this year. “But we just don’t have that issue.” If Jef Bezos is already the world’s most feared businessperson, the prospect of him “unconstrained” should sober every corporate leader. Yes, he’s ruthless and a master of the long game, but Bezos’ greatest strength, borne out over the past few years, has been his ability to shape-shit Amazon into adjacent businesses—some of which were adjacent only in retrospect—on a massive scale. “What Jef Bezos has done and is likely to do is perhaps the most remarkable achievement I’ve seen,” Warren Bufett told me last year, ater I asked him, open-ended, to name the most impressive business mind in his almost eight decades of market-watching. “Because he’s taken two very major industries, and simultaneously, and sort of under the nose of competitors, he’s become in effect the leader and is redeining them and succeeding at really big businesses.” hough Bezos and Bufett were referring to retail and the cloud, Bezos is actually unconstrained in far more ways. First, thanks to AWS, the company famous for emphasizing growth over proitability is inally spit-
ting out billions—and Bezos has the market credibility to reinvest it in pretty much any way he wants. Second, the scale that Amazon needs for growth practically demands aggressiveness. And, inally, by dominating retail and digital business services, both of which touch almost every other industry, he’s now positioned to move adjacently into just about any business where he inds added value. He’s playing in the multibillions in at least four markets—healthcare, entertainment, consumer electronics and advertising—that constitute many of the companies not already terriied of Amazon. It’s no coincidence that each of those four either hits or approaches the “trillions” potential Bezos alluded to. While his pioneering peers of the irst dot-com era embraced and popularized the “open kimono,” Bezos has always viewed stealthiness as an asset, masking new initiatives inside larger expenditures and feigning disinterest in burgeoning favorites. As Bezos’ public proile has expanded, public utterances and interviews (despite his ownership of the Washington Post) have become increasingly rare. Bezos refuses to discuss Donald Trump, who has taken to beating up on him and the Post on Twitter, but he clearly understands he has a target on his back. When asked, as the head of an ascendant advertising company, whether he took any lessons from Facebook’s travails last year, his
MICHAEL PRINCE FOR FORBES
BY RANDALL LANE
CREDIT TK
SEPTEMBER 2018 FORBES ASIA | 27
PROMOTION
PURE DIAMOND FARM: THE FUTURE OF LAB-GROWN DIAMONDS ENHANCED WITH BLOCKCHAIN TECHNOLOGY IS HERE. AND IT’S VERY BRIGHT INDEED. Lab-grown, or cultivated, diamonds with the same chemical structure of natural diamonds are gaining popularity in markets such as the U.S. Now Japanese company Pure Diamond Farm is building on existing technology and utilizing blockchain technology to create gems unlike any the world has ever seen. Shigy Ishida, president of Pure Diamond Co., Ltd., and Hideyuki Abe, co-founder of Pure Diamond Lab, Ltd., spoke about their plans to bring diamonds made in Japan to the international market.
Please describe the state of the diamond industry and its growth potential. How do lab-grown diamonds fit into the picture?
they were produced—can be guaranteed, they are also able to offer buyers peace of mind about the ethics of their purchase.
How did the Pure Diamond Farm project begin? Ishida: Japan is the world’s third-largest diamond market, at around 680 billion yen (US$6.1 billion). The global market, valued at around 8.8 trillion yen (US$79 billion), with the U.S. accounting for nearly half. It’s been relatively stable these past few years and is ex pec ted to continue along these lines. However, there are a lot of people who would like to purchase diamonds that haven’t yet, and we want to tap into that sector, for example by making diamonds more accessible and increasing opportunities to buy engagement or special occasion rings. Abe: Recently, people have become aware of the adverse effects of diamond mining around the world, such as problems with the blood-diamond trade, environmental destruc tion and child labor. There is a new market of consumers who want diamonds but don’t want to support harmful practices. Lab-grown diamonds possess the same beaut y of natural diamonds, but because their provenance—when and where
Abe: I first heard of lab-grown diamonds from Mr. Ishida, who knew of their growing popularity in America and approached me about expanding into Asia. By coincidence, I discovered that there was a maker of cultivated diamonds in Japan and wanted to introduce Mr. Ishida. Ishida: Yes, I had originally consulted Mr. Abe about importing lab-grown diamonds from the U.S. into Japan but hadn’t considered domestically produced gems at all. I figured that while the technology may exist here, the level of quality probably didn’t compare to those produced in the U.S. However, I was surprised when they showed me the Japanese diamonds because they were incredibly beautiful. I knew that we would have no problem introducing stones of this quality on the international market. Throughout history, diamonds have always been imported into this country, so I was excited by the prospect of exporting Japanese-made diamonds overseas.
Unlike synthetic gems such as cubic zirconia, lab-grown diamonds are made of pure carbon, with a chemical structure identical to naturally occurring diamonds. The production process simulates the geological conditions that lead to the formation of diamonds deep below the earth’s surface, resulting in brilliant stones completely free of impurities. “You can think of it as similar to growing vegetables in a greenhouse,” observes Pure Diamond Co., Ltd., president, Shigy Ishida.
PROMOTION
How will lab-grown diamonds affect the natural diamond market? Ishida: Ninety-eight percent of natural diamonds contain impurities, while lab-grown diamonds are composed entirely of pure carbon. There are a lot of inferior-quality diamonds being sold cheaply, so one effect might be that these stones will disappear from the market, as jewelry made with lab-grown diamonds offers a better, reasonably priced alternative. Labgrown diamonds may pose a threat to traders dealing with natural diamonds, but natural diamonds will still retain their value as natural products. We’ll have to create different standards of value for cultivated diamonds. Actually, lab-grown diamonds may boost the entire market. As we’ve seen in the U.S., shops that carry both lab-grown and natural varieties have seen increases in overall sales.
Pure Diamond Farm is currently the only company that is combining lab-grown diamond production with blockchain technology. What are the advantages of this? Abe: With blockchain technology, we’re able to trace the entire histor y of a diamond—where it was made, who handled it previously—much like reading the story of a person’s life. In this way, the product becomes imbued with a different significance. We were inspired by an IBM project that uses blockchain to trace natural diamonds in order to ensure that they’re conflict-free, but we have taken this idea further by using the information to create new value beyond the gem’s beauty as an object. We can record the individual differences of each stone, and this gives consumers another reason to buy it. For example, you might wish to purchase a diamond that was made on your birthday, or to commemorate a special event.
What kind of new products will be possible with this cultivation technology? What is your business plan going forward? According to the Fancy Ishida: The number of flat gemColor Diamond Research stones that can be conventionFoundation (FCRF), prices ally mined are only a few. It’s not of blue diamonds rose possible to produce 100 pairs of 5.5% in 2017, thanks to earrings with natural diamonds robust demand for colored of this shape, but we can make diamonds in Asia. Pure them with lab-grown diamonds Diamond Lab is currently because we have the technology researching how to produce to cut diamonds in a way that reduces carat size while maxi- red, two-toned and rainbowcolored stones. mizing surface area. That means that we will be able to provide more of these kinds of products at an affordable price. This is only possible with lab-grown diamond technology. Abe: It’s the same with colored diamonds. We’re now researching how to produce a rainbow-colored diamond—after all, Japan is known for perfecting techniques to bring new, innovative products to market. We already have the technology to produce a pink diamond, so the next step will be to make a red diamond—a naturally occurring object of rarity. Then, we plan to work on a t wo-toned diamond. The market for fancy-color diamonds is growing, and there is potential for further expansion. We will also be able to collaborate with designers and make artistic pieces. Really, the possibilities are endless.
PROFILES HIDEYUKI ABE Born in 1976, Hideyuki Abe is the co-founder of Pure Diamond Lab, Ltd. He has served as an advisor to Samsung Mpeon Asia, the Dailan Brothers Record Company and Enterprise Cruises. In 2015, he became an authorized agent for Chia Tai Group, a subsidiary of the investment conglomerate Charoen Pokphand Group. In the same year, he was named representative director of consulting firm Siam Partners and continues to wear many hats as the representative director of Japanese companies Otobotoke and 21Lady.
SHIGY ISHIDA
(L-R) Hideyuki Abe, co-founder, Pure Diamond Lab, Ltd; Shigy Ishida, president, Pure Diamond Co., Ltd.
Born in Tokyo in 1962, Shigy Ishida is the president of Pure Diamond Co., Ltd. After graduating from Tokai University in 1984, he studied at Tel Aviv University in Israel. In 1986, he joined the diamond trading company AP, before serving as a representative for the Antwerp Diamond Exchange in Belgium. Ishida became the president of AP in 1993. In his spare time, he enjoys combat sports and became the director of the Japanese Shoot Boxing Association in 2013.
FORBES ASIA
JEFF BEZOS answer was succinct, political and inconceivable. “No,” says this advocate for corporate learning, pausing for a few seconds to underscore that he wasn’t going there. Ditto questions about becoming a data company. “I’ve never really thought of Amazon in that way,” says the man who runs as data-driven a company as any, before reverting to his stump speech. When it’s suggested that it’s at least a tool, Bezos quickly interjects: “One of many tools.” Nevertheless, during the morning he spent with Forbes outlining how he channels innovation and chooses where to expand, a road map for Amazon’s future emerged. Given Amazon’s size, it moves both vertically and horizontally, each direction portending a lot more disruption. Even ive years ago, Bezos seemed content merely to try to sell everything to everybody, becoming the bane mostly of retailers and wholesalers. But this master innovation artist now has the ultimate palette: any industry he chooses. FOR THIS UNCONSTRAINED era, the
most important word at Amazon is yes. Bezos explains, correctly, the traditional corporate hierarchy: “Let’s say a junior executive comes up with a new idea that they want to try. hey have to convince their boss, their boss’s boss, their boss’s boss’s boss and so on—any ‘no’ in that chain can kill the whole idea.” hat’s why nimble startups so easily slaughter hidebound dinosaurs: Even if 19 venture capitalists say no, it just takes a 20th to say yes to get a disruptive idea into business. Accordingly, Bezos has structured Amazon around what he calls “multiple paths to yes,” particularly regarding “two-way doors”: decisions that are oten based on incremental improvements and can be reversed if they prove unwise. Hundreds of executives can green-light an idea, which employees can shop around internally. “He knows and we know that you can’t invent or experi-
ment without some failure,” says Jef Wilke, the longtime Bezos lieutenant who runs Amazon’s consumer and retail operations. “hose we sort of celebrate. In fact, we want them to occur all over the place. Jef doesn’t need to review those. I don’t need to review those.” But regarding the larger ideas and verticals—a.k.a. “one-way doors”—that change the direction of the company, Bezos prides himself on playing “chief slowdown oficer.” He’s looking for three things. First, originality. “We have to have a diferentiated idea. It can’t be a ‘me too’ ofering,” he says. Second, scale. “We’re gited with some very large businesses we’ve built over time, and we can’t aford to put our energies into something that if it works, it’s still going to be small.” And, inally, a Silicon Valley-worthy ROI. “Even at substantial scale, it has to have good returns on capital.” Ultimately, the ideas that hit that troika, Bezos says, emanate from one of two models. Either by looking backward at customer needs—as in we’ve noticed people act a certain way, so let’s try to serve them with a product. Or peering forward—we know how to do something valuable, so let’s ind customers. he Amazon juggernaut ultimately stems from the latter. Originally a niche player, Bezos could have easily focused just on becoming the world’s digital bookstore, the way crats belong to Etsy and shoes to Zappos (now owned by Amazon, naturally). But in mastering selling books, Bezos saw that he could use those tools—from inventory management to recommendation engines—to move adjacently: irst into music and DVDs, then toys and electronics, then pretty much anything that can be sold at retail. And he again leveraged that knowledge audaciously (and successfully) in opening up Amazon as a platform for independent sellers, who were formerly competitors—cementing his legacy as a transformative retailer, in the pantheon with the likes of Sam Walton, Aaron Montgomery Ward and
Sears Roebuck’s Julius Rosenwald. his is where the story should have ended. But as the Western world’s dominant online retailer, Amazon was also solving huge technological and logistical problems, and rather than view those skills merely as accretive to the core business, Bezos saw them as businesses unto themselves. An internal need for part-time developers led to Mechanical Turk, one of the world’s irst crowdsourcing gig marketplaces. Building a staggeringly eicient delivery infrastructure led to the Fulillment by Amazon service, and mastering how to take money for each purchase led to Amazon Pay. Most important, as Amazon began building enormous capabilities to store its data in the cloud, Bezos igured out that other businesses might want to store their data there as well. In 2017, AWS had $17.5 billion in revenue. Even those customer-driven concepts create skills-based dividends. Take the Kindle reader, Amazon’s irst foray into hardware, back in 2007. Wilke, who came from AlliedSignal, remembers protesting to the board. “I spoke up and said, ‘I don’t agree. I think we’re likely to miss our planned delivery date. Our yields are gonna be too low. We’re gonna underproduce. We’re gonna frustrate customers. Hardware’s hard. We’re a sotware company.’ “Jef said, ‘Well, I’m willing to concede that all those things will happen, and I still think that the right vision for our company is to be really good at building hardware, so we need to get started learning.” And so they did. Kindle is a romanticized product at Amazon, both because of the hardware breakthrough and because it harks back to the company’s roots in books. It didn’t transform the company, though, and other hardware failures, like the disastrous Fire smartphone, followed. But Bezos’ decision also eventually led to the Amazon Echo smart speaker, a true game-changer. “We have a lot of hardware experience today, but back then we didn’t have those skills,” says Bezos, laughing. “You have to be patient. It’s not going to be just time to $8.7
$7.8 Billion
Billion
$1.6 Billion
YEA R Forbes 400 Rank
19 9 8 102
$5.1
$4.7 $1.2 Billion
1999 18
30 | FORBES ASIA SEPTEMBER 2018
2000 48
2001 189
$1.8
Billion
Billion
$4.3 Billion
$4.8 Billion
$3.6 Billion
Billion
2002 100
2003 32
2004 38
2005 42
2006 70
2007 35
learn a skill. It might take time for the thing to really flower.” In other words, if you study the skills Amazon is learning, you’ll have a fair idea of what it will soon be selling. And right now Bezos is learning about healthcare. It’s America’s biggest industry—18% of GDP—and one of its most ineicient. Last year, Bezos, along with Bufett and JPMorgan Chase CEO Jamie Dimon, announced that their three companies would pool their eforts, hiring high-proile CEO Atul Gawande to lead a nonproit initiative to deliver better care at a lower cost for their own employees, with the idea of creating a scalable, clonable model. It’s no small thing: hose three companies employ 1.2 million. Add in their dependents, and it’s like running a pilot project for everyone in Oregon or Connecticut. Bezos is adamant about Amazon’s intentions here. “his is a nonproit initiative, as you guys know. It’s very diferent,” he interjects, before even a full question can be asked about it. Bufett, for his part, concurs, having explained to me a few months ago: “We were deluged by people ater the announcement who said, ‘We want to join in.’ And we said, ‘You don’t have to join in. Steal everything we get, if we get anything.’ ” he “if we get anything” is key. “Like Columbus leaving, we don’t know where the hell we’re going exactly,” Bufett added. “But we hope there’s another continent out there and we don’t go of a shelf at some point.” But even if they do sail of the Earth, Bezos wins, as Amazon burnishes its skills accounting for around one ith of the domestic economy. While any breakthroughs developed with Bufett and Dimon “would still be inside that nonproit entity,” Bezos says, “each of the companies can pursue their own initiatives.” Bezos has already started. In June, Amazon agreed to pay almost $1 billion for PillPack, a startup that delivers prepackaged daily prescription envelopes. It’s everything that Amazon is good at: fulillment, customization
TO INFINITY AND BEYOND
and dependability. And it’s another toe in the healthcare pool. Bezos is also going to school in advertising. Amazon’s most recent quarterly performance revealed a startling number: Amazon is on pace to exceed $8 billion in advertising revenue this year—roughly double last year’s total. And why not? Google might know what you’re interested in buying, Facebook might be able to deduce what you’d be inclined to buy, but Amazon knows what you’ve actually bought or even whether you showed intent to buy. hat raises all sorts of issues. Bezos talks exuberantly about his consumer obsession, but there are few customers who want to be targeted with more ads. Bezos says the trust that Amazon has built with its customers will ensure the company doesn’t cross a line—and that customers, in turn, will give him the beneit of the doubt. “It’s very valuable, and so you would never do anything to jeopardize it,” he says. “It’s what allows you to expand the business.” If Bezos can walk that line, it’s easy to envision the Facebook-Google advertising “duopoly” gaining a third major entrant.
$1581 Billion
JEFF BEZOS’ NET WORTH AND RANK ON THE FORBES 400
$81.5 Billion
WHEN YOU WALK AMONG THE Seattle high-rises, the most interesting building in Amazon’s neighborhood—with apologies to a stunning new biosphere designed to serve as something of a company commons—is a food store that pokes out from the bottom of Day 1 Tower. Amazon’s $13 billion Whole Foods purchase last year is only the second-most-interesting grocery initiative at Amazon; the irst is Am$47 azon Go, an 1,800-square-foot exBillion periment in frictionless brick-andmortar purchases that opened in January. Go, a food store, might be the most Am-
$67 Billion
$30.5 $27.2
Billion
Billion
$23.2 Billion
$12.6
$19.1 Billion
Billion
$8.7
$8.8
Billion
Billion
2008 33
2009 28
1
BASED ON 8/27/2018 STOCK PRICE.
2010 18
2011 13
2012 11
2013 12
2014 15
2015 4
2016 2
2017 2
2018 1
SEPTEMBER 2018 FORBES ASIA | 31
FORBES ASIA
JEFF BEZOS
APRIL 3, 1995
Books. First sale: Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought.
APRIL 22, 2004
NOVEMBER 2000
Jewelry: $10,000 engagement rings to $10 charm bracelets.
Amazon Marketplace: Thirdparty sellers start selling everything from cameras to dollhouse furniture on the site.
JUNE 11, 1998 Compact
discs: more than 125,000 albums in 60 genres.
NOVEMBER 2, 2005 Mechanical
SEPTEMBER 22, 2003 Sporting goods: tennis rackets, electric scooters, team jerseys.
Turk: micropayments to humans performing tasks computers can’t.
FEBRUARY 2, 2005 Amazon
Prime: initially just free twoday shipping for $79 a year.
JULY 16, 2002 Amazon Web
Services: renting computing power, database storage and content delivery to (mostly) small businesses. NOVEMBER 10, 1999 Home improvement (cement mixers, smoke detectors), software (Microsoft Office 2000, Photoshop), video games (Game Boys, Where in the World Is Carmen Sandiego).
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azonian thing at Amazon. Bezos has always stressed frugality, and here are his employees (and a few Seattle residents and tourists) shopping for their lunches, buying them from Amazon and in doing so also providing the company with reams of data to hone its skills. More important, Go demonstrates what’s possible when diferent aspects of Amazon’s myriad operations come together. Go encompasses knowledge gained from purchases at Whole Foods; from Amazon’s increasingly sophisticated algorithmic and hardware capabilities, in the form of AI, camera and sensor technologies, which combine to igure out what’s taken of the shelf (and put back)
32 | FORBES ASIA SEPTEMBER 2018
SEPTEMBER 7, 2006 Amazon
Video: thousands of TV shows and movies, from Star Trek to Buffy the Vampire Slayer, to download.
NOVEMBER 7, 2002 Apparel: clothing from
more than 400 brands, including Gap, Nordstrom, Ralph Lauren and Eddie Bauer.
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and who did the taking; and from Amazon Pay, which seamlessly handles the transaction once the company’s app registers the inputs. Grabbing a chocolate milk here on the way out feels like shopliting— no checkout lines, no scanning, no swiping. If healthcare and advertising represent huge expansion verticals on Amazon’s de facto vertical campus, Go brings together what’s possible horizontally when Amazon puts all the pieces together. he most important aspect of it all is Prime. At its core, it’s a marketing tool, a way to encourage buying—and generate recurring subscription revenue (an estimated $10 billion in 2017)—in a simi-
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lar vein to warehouse clubs like Costco and BJ’s Wholesale. But as it grows, it’s surged into a way to shower its 100 million-plus subscribers with perks and privileges. And those perks create endless new adjacencies and business lines. Prime explains why Amazon has started to encroach on Netflix and is expected to spend $5 billion on programming this year, including the highly touted Marvelous Mrs. Maisel. In just three years, “Prime Day”—an annual 36 hours of special deals just for members, with participants spending billions on more than 100 million products this July—has become a shopping holiday with a mania surpassed in the U.S. only by Black Friday and Cyber
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3,000 AUGUST 28, 2017
Whole Foods: forks over $13.6 billion in cash for grocery chain.
NOVEMBER 16, 2010
Amazon Studios: film and TV production. Manchester by the Sea is its first big hit.
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1,000
500
JANUARY 2018 Amazon Go:
NOVEMBER 19, 2007
new kind of store, with no checkout required, opens to public in Seattle.
Amazon’s Kindle ebook reader.
THE AGE OF AMAZON
100
IN THE PAST 21 YEARS, AMAZON’S STOCK HAS RISEN A STAGGERING 98,000%—AS THE COMPANY WENT FROM HUMBLE ONLINE BOOKSTORE TO SELLING EVERYTHING FROM APPLES TO VIDEOS.
JULY 22, 2009
Zappos: buys ecommerce shoe retailer for just under $1 billion in stock.
50
JUNE 28, 2018
Pillpack: announces plans to buy online pharmacy; deal hasn’t closed.
2013 Amazon Fresh:
grocery delivery service expanded to L.A. and San Francisco.
10
5 NOVEMBER 14, 2011 Kindle Fire:
streaming access to 100,000 movies and TV shows.
JUNE 23, 2015 Amazon
Echo: first smart speaker; uses virtual assistant Alexa.
SEPTEMBER 15, 2008
Motorcycles and ATVs.
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Monday. Access to Prime is how Amazon gets its outside retailers to pay more for Fulillment by Amazon. Prime also underpins Amazon’s brickand-mortar strategy. Prime’s same-day deliveries and pickups require more physical beachheads, which in turn help underwrite expansion into all sorts of ields Amazon could never have justiied, such as food, the kind of perishable product that doesn’t it into the classic Amazon model. Ater years as a bookstore killer, the company now has 16 permanent Amazon Books locations across 11 states. And Amazon recently opened a second Go in Seattle. “hey have to have some-
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thing that’s special and new,” Bezos says. “And that’s what you’re seeing if you’re paying attention to our physical-stores strategy.” Prime, in short, has become Amazon’s central nervous system, connecting everything in the company—and giving Amazon a path to expand into new markets while also juicing its core retail business— without really being it’s own thing. “It can’t be a stand-alone business because it’s completely tied in to our consumer ofering,” Bezos says. Similarly, as seen with Go, artiicial intelligence will increasingly connect what previously seemed like disparate product
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lines, from cloud to retail. Take the wildly successful Echo, which has made Jef Wilke’s existential question about Amazon— is it a hardware or a sotware company?— moot. It’s an efective piece of hardware empowered by AI-driven sotware, which drives Amazon’s retail sales, leverages Amazon’s content and so on. “he most interesting thing about machine learning as opposed to a lot of other technologies is just how horizontal it’s going to be,” Bezos says. “here’s not a single category of business or government or anything, really, that can’t improve itself.” Corporate America, take note—either innovate or Jef Bezos will do it for you. F
SEPTEMBER 2018 FORBES ASIA | 33
FORBES ASIA
BITMAIN’S MAIN MAN
Crypto Boss The mining billionaire no one has heard of. BY JASMINE TENG
W
ith rumors, controversy and news buzzing about its upcoming IPO, Chinese cryptocurrency-mining chip irm Bitmain has been thrust into the spotlight in recent months. Jihan Wu, Bitmain’s cofounder and co-CEO, has gotten most of the media coverage, largely because of his prominent online social presence. Meanwhile, Micree Zhan, Bitmain’s other cofounder and co-CEO, has kept a much lower proile but owns a much bigger stake in Bitmain than Wu does. Zhan is Bitmain’s technical mastermind and owns 36.58% of the company, while Wu’s stake is 20.5%, according to the leaked pre-IPO investor decks. he Beijing-based company is conident that it will achieve a $14 billion market capitalization once it ofers shares to the public, according to its pre-IPO investor materials. hat would make Zhan’s stake worth at least $5.1 billion and Wu’s stake worth nearly $2.9 billion. Forbes isn’t so bullish. Ater talking with analysts, we estimate Zhan’s net worth at around $4 billion and Wu’s at close to $2.3 billion. Forbes valued Bitmain by applying price-tosales ratios from comparable companies including Nvidia, AMD, Qualcomm, Mediatek and Cisco. It is important to note that there are no directly comparable companies given the unique nature of Bitmain. We picked these companies because they are also fabless chip makers, companies that design and sell chips and hardware but outsource production to other manufacturers, according to Daiwa Capital Markets analyst Rick Hsu’s guidance. Bitmain is not purely a semiconductor company; a portion of its revenue is also derived from its mining pools, BTC.com and Antpool. And given the novelty and volatility of the current cryptocurrency industry, the application of these mining chips is uncertain, according to Mark Li, a senior technology analyst at Sanford C. Bernstein & Co. Brett Simpson of Arete
34 | FORBES ASIA SEPTEMBER 2018
Research noted that Bitmain should be viewed as an earlystage version of Cisco, when there was plenty of uncertainty in the future of IP. Despite his role as the technical backbone behind Bitmain, little is known about Zhan, an engineer who developed the custom application-speciic integrated circuit (ASIC) chips that have propelled the global growth of the largest crypto-mining chip producer. Even his LinkedIn proile is stark, listing only “CEO at Bitmain” and nothing about prior jobs or education. Here’s what we know so far. Ater graduating from Shandong University with a degree in electrical engineering in 2001, Zhan received a master’s in engineering from the Chinese Academy of Sciences’ Institute of Microelectronics in 2004. He went to work at Tsinghua University as a research and development engineer at the Research Institute of Information Technology. In 2006 he began a new job as the head of research and development and manager of the integrated circuit department at Chinese company Unitend Technologies, which specializes in circuit design. At Unitend, Zhan oversaw the design and development of speciic chips for digital television; the shipment volume of these chips exceeded one million during his time there. He’s also published numerous papers and patents about circuit chips and helped write the national standard for universal transport interfaces, a protocol used in digital television devices. In 2010 Zhan founded DivaIP Technologies, a Beijing-based startup to develop TV set-top boxes. He met Wu by chance when the startup was canvassing the streets of Beijing, and Zhan sought advice from Wu regarding funding, Quartz reports. hough Wu was unable to help in that speciic regard, the two would meet up again three years later. he younger of the duo, Wu graduated from Peking
SEONGJOON CHO/BLOOMBERG (TOP)
University in 2009 with a dual degree in economics and psychology. According to his LinkedIn proile, he worked as an investment manager at private equity irm China Grand Prosperity Investment from 2010 to 2013 before he cofounded Bitmain. A cofounder of 8BTC, a China-based Bitcoin forum launched in 2011, Wu is reportedly the irst person to translate the bitcoin white paper—the original report written by Satoshi Nakamoto that explained the fundamentals of bitcoin—into Mandarin. He also drew attention to himself in 2016 when he tweeted a vitriolic response to someone who criticized his support for Bitcoin Cash. In 2013, Wu approached Zhan about founding Bitmain together. Wu sought Zhan’s expertise in chip design to develop the mining chips needed for virtual currency mining. Mining bitcoins and other cryptocurrencies requires brute force that these ASIC chips provide, in order to solve the complex math problems that verify transactions on a blockchain. he morning ater their meeting, Zhan spent two hours poring through the Wikipedia page about bitcoin and promptly agreed to join the venture, Bloomberg reports. Four years later, in 2017, Bitmain brought in $2.5 billion in revenue, predominantly from sales of its cryptocurrencymining equipment, according to the investor decks. In the irst quarter of 2018 alone, Bitmain had $1.9 billion in revenue. he company hopes to complete its IPO on the Hong Kong Stock Exchange before the end of the year, but little is
Jihan Wu is the public face of Bitmain, but his low-profile cofounder, Micree Zhan, has a much bigger stake.
known thus far. his could be a monumental step not just for Bitmain but also for the larger cryptocurrency community. he industry has been attempting to nudge its way back into the spotlight ater a brief frenzy over cryptocurrencies that began at the end of 2017. Ater the investor decks were leaked, however, uncertainty over mining-rig sales in 2018 have raised doubts over the feasibility of a $14 billion-size IPO. So watch this space. F
SEPTEMBER 2018 FORBES ASIA | 35
PROMOTION
DSM IN MOTION: DRIVING SUSTAINABILITY Sustainability is a core platform for the Netherlands-based group as it transforms its businesses to capture growth opportunities in health, nutrition and materials, according to management board member Dimitri de Vreeze.
DSM is developing fortified rice as part of an integrated approach to optimal nutrition. In recent years, worldwide concerns over greenhouse gas emissions and their critical impact on the environment have picked up pace. Anticipating the growing need to address climate change, Royal DSM, the world’s largest maker of vitamins by volume, has stayed ahead of the curve. It decided nearly a decade ago that corporate profit cannot come at the expense of society or the environment, rather, sustainability is synonymous with driving profitability. The global chemicals company is transforming its health and material-based businesses by focusing on developing sustainable, innovative solutions that address nutrition and health, climate and energy, and resources and circularity, where the life cycle of materials is maximized, and products are regenerated. “DSM’s strategy is to be a purposeled, science-based company in nutrition, health and sustainable living,” said Dimitri de Vreeze, who sits on the group’s
managing board and oversees operations in Asia. “We will deliver on performance to earn the right to be a purpose-led business,” underscoring DSM’s earnings growth over past years. “Ten years ago, people were saying either you want to help the world or you want to make money and decide [between the two],” said de Vreeze. “That is, either you are a NGO [nongovernmental organization wanting to help the world] or a private company wanting to make money.” “But we said no—that goes hand in hand as over time, customers won’t accept the products and services of companies who ignore their impact on society,” he said. Most for-profit businesses are aware that their operations have a significant impact on others. While balancing the need to perform competitively, shifting expectations have led businesses to publish separate sustainability and annual financial reports.
DSM has published a fully integrated annual report for the past five years as the firm believes its finances, its impact on society and the planet’s sustainability are mutualistic. The group’s strong earnings growth underpins the strength of its revised corporate strategy, which focuses on innovative solutions across its nutrition and materials business units: nutrition and health, climate and energy, and resources and circularity. It s first-quar ter net profit for 2018 more than doubled year on year to €331 million (US$388 million) as sales rose 13% to €2.4 billion (US$2.8 billion), prompting the company to raise its full-year earnings expectations. The firm set two financial targets for 2019-2021: a high single-digit annual percentage increase in adjusted Ebitda, and an about 10% average annual increase in adjusted net operating cash flow.
PROMOTION
DSM project Clean Cow is focused on developing a safe animal feed additive that reduces methane emissions created through the digestive process of cattle. DSM’s evolution into a nutrition, health and sustainable living company continues to keep the 116-year old organization ahead of the competition. The company started off as a small, coal-mining outfit before moving onto petrochemicals. When it was privatized in 1985, DSM shifted from chemicals to specialty chemicals. Over the past 15 years, the Euronext-listed group expanded its scope, adding nutrition and life sciences businesses to its market line-up. De Vreeze has been part of that journey for 27 years, having worked across the world in countries that included Italy, Switzerland and Hong Kong in addition to the Netherlands, as DSM embarked on new challenges every two to three years. He is a firm believer in transforming DSM into a purpose-led business, or a company where corporate decisions are based on a purpose beyond profit and are aimed at improving the world, through the three focus areas of sustainability: nutrition, climate change and renewable energy, and the circular economy. These, according to de Vreeze, are the critical points where DSM can make a difference.
Future-Proofing Much of the world’s population suffers from too much or too little food, which has led
to nutrition becoming a key sustainability focus area for DSM. About 500 million people in Asia suffer from malnutrition, which poses a severe threat to global health. At the other extreme, there has been a worldwide surge in obesity-linked diseases such as cardiovascular conditions and cancers, which have been linked to processed food with low nutritional value. ‘’Among the solutions DSM has developed to address malnutrition is fortified rice. While rice is a staple food across many regions, when consumed by itself, it tends to have insufficient nutritional value,” said de Vreeze. DSM provided the technology to fortify rice kernels, where rice is blended with essential nutrients, as a solution to meet nutritional requirements, and have seen improvements in the health of migrant workers in Singapore. One serving of fortified rice is estimated to have 10 times the nutritional value of regular rice. DSM is also working on introducing fortified rice to other parts of Asia, plugging nutritional gaps in school-age children in China, India and Cambodia as well as Indonesia. With its unique science-based competencies, DSM is working with its associate firm, digital health company Mixfit, on a device that analyzes an individual’s diet
with personalized health goals. The resulting data recommend prepared drinks needed to meet nutrition requirements throughout the day. Beyond human nutrition, DSM also produces animal feed—but with a difference. Targeted at markets with high dairy production, it is developing a safe animal feed additive to reduce methane emissions from cow eructation (burps) by as much as 30%. As part of the sustainability initiative around climate change and renewable energy, DSM’s efforts toward reducing the world’s carbon footprint involves lowering greenhouse gas emissions across its value chain. The company’s focus on using renewable energy can be seen in several investments with wind farms and solar plants. In India, DSM will utilize a solar plant to meet a quarter of its Pune plastics facility’s electricity upkeep. This aligns with the country’s existing plans to have renewable power account for 40% of its total installed capacity by 2030, up from the present 20%. China is even further ahead in sustainability efforts as the nation harnesses solar power. The country was accountable for almost half of the world’s investments in renewable energy last year, according to Bloomberg’s New Energy Finance forecast. The company also produces Dyneema —a fiber several times stronger than steel with a low carbon footprint. Dyneema is a core material in manufacturing electric vehicles, playing a significant role toward reducing global emissions. The third pillar of its sustainabilit y focuses on a circular economy, aiming to reduce new waste creation through smarter product design, and reusing and recycling of base materials. Carpets are a major source of landfill around the world, but new technology from DSM-Niaga allows for recycling, de Vreeze said. The product and technology behind DSM-Niaga produces carpets that are recyclable, in part by reducing the number of materials used. With several, intricate steps taken to ensure sustainability today and tomorrow, the company’s future looks bright. At the same time Asia is leading the way in advocating for sustainability for firms and end-users through planet-friendly initiatives. DSM hopes to create further significant value for its partners and end-users through organic growth, with a coherent set of business activities toward sustainable living.
FORBES ASIA
FORBES ASIA’S LIST OF THE BEST PUBLICLY TRADED BIG COMPANIES.
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companies joining the list for he the irst time, 9 come from outside AsiaChina (see pp. 47–49). Pacific Once again India puts the second-largest region often feels number of companies on the list—seven, down one dominated by China. from last year. Five Japanese outits crack the lineup, the most since 2007. That’s certainly true when it comes to our anhree of them are newcomers, starting up only since 1997. Vietnam never had nual list of the best big listed companies from a company make the Fab 50 before 2016, but now it’s had three, including a Japan to Australia to India. Once again China newbie this year. grabs the most spots—a record 30 of the 50 Capitalist churn means some companies can’t keep up. his year four regulars companies hail from the mainland, up from failed to make the cut: India’s HDFC Bank ater a record 11 appearances, South 28 last year. Korea’s Naver ater 8, and China’s Baidu and Great Wall Motor ater 6 apiece. And once again, the corporate stars that shine To arrive at the Fab 50, we start with a pool of 1,744 publicly traded the brightest are Tencent (see story, p. 45) and companies that have at least $2 billion in annual revenue and have been listed Alibaba. he two Chinese internet giants boast for at least a year. We then knock out companies that are losing money or vastly greater market capitalizations and enjoy whose revenue is less than it was ive years ago. Next we toss far higher proits than any of out companies carrying long-term debt that’s equal to more the other companies on the list. BY JOHN KOPPISCH than half their total capital, or that have more than 50% state Tencent’s net proit soared 71% last AND ANDREA MURPHY ownership. he goal is to highlight well-run entrepreneurial year, to $10.6 billion, while Alioutits. Companies that are more than 50%-owned by listed baba’s climbed 49%, to $9.7 billion. parents are also culled. Finally we run the remaining contenders through a China’s hold on the list is squeezing out other battery of more than a dozen inancial measures. he goal is an honor roll of countries. Only 7 placed companies on the list; high-performing blue chips, the region’s best of the best. F 12 did in 2016. Taiwan has none for the irst time Reporting by Grace Chung, Rebecca Feng and Anuradha Raghunathan since the Fab 50 started in 2005. But of the 17
38 | FORBES ASIA SEPTEMBER 2018
The Fab 50 PRESS METAL
Pressing for Success In 1986 Koon Poh Keong and his six brothers decided to start an aluminum company. Smart move. Today Malaysia’s Press Metal dominates the Southeast Asian market. BY ANIS SHAKIRAH MOHD MUSLIMIN
THERE ARE 17 NEW MEMBERS ON OUR LIST, AND CHINA LEADS THE WAY AGAIN WITH 30 ENTRIES. CHINA
AAC Technologies YEARS ON LIST: 3 CONSECUTIVE YEARS: 3 INDUSTRY: ELECTRONIC COMPONENTS SALES: $3.1 BIL MARKET CAP: $13.8 BIL TOP EXECUTIVE: KOH BOON HWEE
Alibaba Group YEARS ON LIST: 3 CONSECUTIVE YEARS: 3 INDUSTRY: INTERNET RETAILING SALES: $37.8 BIL MARKET CAP: $462.7 BIL TOP EXECUTIVE: JACK MA
Anta Sports Products Ì
INDUSTRY: SPORTS APPAREL SALES: $2.5 BIL MARKET CAP: $14.7 BIL TOP EXECUTIVE: DING SHI-ZHONG
China Aoyuan Property Ì
INDUSTRY: PROPERTY DEVELOPMENT SALES: $2.8 BIL MARKET CAP: $2 BIL TOP EXECUTIVES: GUO ZIWEN, GUO ZINING
Country Garden YEARS ON LIST: 4 CONSECUTIVE YEARS: 3 INDUSTRY: PROPERTY DEVELOPMENT SALES: $33.6 BIL MARKET CAP: $32.6 BIL TOP EXECUTIVE: YEUNG KWOK-KEUNG
Dali Foods Ì
INDUSTRY: FOOD & DRINK SALES: $2.9 BIL MARKET CAP: $9.8 BIL TOP EXECUTIVE: XU SHIHUI
Foshan Haitian Flavouring & Food YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: CONDIMENTS SALES: $2.1 BIL MARKET CAP: $27.5 BIL TOP EXECUTIVE: PANG KANG
Geely Automobile YEARS ON LIST: 5 CONSECUTIVE YEARS: 3 INDUSTRY: MOTOR VEHICLES SALES: $13.7 BIL MARKET CAP: $19.9 BIL TOP EXECUTIVE: LI SHU-FU
HLA 3 JOSHUA PAUL GILBERT FOR FORBES
YEARS ON LIST: 3 INDUSTRY: APPAREL SALES: $2.7 BIL MARKET CAP: $6.8 BIL TOP EXECUTIVE: ZHOU JIAN-PING
CEO Koon says his company “cannot continue to be restrained to just a family-run operation.”
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oon Poh Keong knew what he had to do, but the risks were immense. He was betting his entire company on a bold plan to build a factory in China and invade the mainland aluminum market. But Chinese competitors were killing his Malaysian outit, leaving him little choice. “We couldn’t compete with them,” he says. So Koon spent $24 million to buy land and build a plant outside Foshan, Guangdong. It was 2005, and that sum equaled the entire value of his listed company, Press Metal. But the bet paid of. From $113 million in annual revenue back then, the company now generates $2 billion, with a net proit of $138 million last year. And the market capitalization tops $4.7 billion. hat track record puts it on the Fab 50 list for the irst time. “China is the best thing that ever happened to Press Metal,” says Koon. “China transformed us.” Koon, 58, may be the face of Press Metal, as well as the chief executive, but the company has always been a family afair. In 1986 he was fresh out of college with a degree in electrical engineering from the University of Oklahoma and was returning home to Malaysia during a recession. Unable to ind a job, he started Press Metal with his six brothers (he’s the youngest of seven). He knew hardly anything about aluminum, but he had worked at his family’s small hardware business, which traded aluminum bars. “We thought that since we’re trading these bars, why not make them?” he says. he brothers pooled $50,000 and began an aluminum-extruding company in a rickety rented factory, equipped with secondhand machines. Today, Koon, who has been at the helm since the beginning, runs the business with four brothers (the other two have died). He calls the shots, but big decisions always go to the board. “Our families are quite united; every person plays their [part],” he says. “I get a lot of support from all of them.” Together the Koons own 60% of Press Metal, with Koon being the largest shareholder, with a 40% stake, giving him an estimated net worth of nearly $2 billion. One brother, Koon Poh Ming, the executive vice chairman, holds a 9% stake, worth around 40 | FORBES ASIA SEPTEMBER 2018
$425 million; the other brothers hold smaller stakes. “We started from ground zero without much expertise, but we are able to learn quickly,” says the CEO. Seven years ater it started, Press Metal moved into its own factory in the West Malaysia city of Kapar. hen in 1999 it listed on the main board of the Malaysian Stock Exchange. “hat gave us good access to the market and publicity to grow further,” says Koon. “We attracted more support from inancial institutions—banks are more likely to support you if you’re a public company.” hat same year the company began exporting to Europe, Australia and New Zealand, becoming the irst Malaysian company to sell aluminum products outside the country. And it opened a subsidiary in the U.K. and became a major supplier there. Six years later Koon landed in the rural outskirts of Foshan. he area lacked any proper infrastructure so “the big question [people] ask is, ‘Why did you choose a place like this?’ ” he laughs, recalling the plant’s opening ceremony. “hey say you are mad to come to a place like this.” But nearby Guangzhou was the hometown of Koon’s parents, which made it an easy choice when looking for a cheap location. he brothers also speak Cantonese, the local language. Now Press Metal had to switly get the operation up and running. It bought a local aluminum smelter and hundreds of acres of industrial land to put up its irst factory overseas. “We needed to get it started to demonstrate to the banks and the government that our outit [was] successful,” recalls Koon, meaning there was no room for trial and error. hat also meant spending a large chunk of his time in China. “Part and parcel of doing business is you have to put in your efort,” he says. “If you put your money there, you better put yourself there.” China changed Press Metal in many ways. It adopted Chinese technology for its smelters, allowing it to lower its production costs and give it an upper hand against Western rivals. And its unusual status as an international outit in China made it more attractive to customers. “Many Chinese companies try to export, but there’s a language barrier,” says Koon. “We are Westerneducated, so for us to bring the product
out to Australia, for example, is a lot easier. Customers are happy to get products from China, but from an international company.” What’s more, the Chinese market taught Koon a lot about how to build a company quickly and about the aluminum business as he traveled to almost every province in China. “he ‘China speed’ is very exciting,” he says. “If we didn’t choose to go to China, we would have grown as a company but certainly not at this pace. It’s about the pace. If you are slow, the market does not wait for you. he market wants you to be there when they need you.” Until this point Press Metal was largely in the aluminum extrusion business—making aluminum products for diferent uses from aluminum alloy. But in 2009 it set up Malaysia’s irst aluminum smelting plant, producing billets and ingots in the coastal town of Mukah in Sarawak. he rationale? “he business of extrusion has low barriers to entry, and there are many players,” says Koon. “But upstream requires a lot of capital and players are consolidated. From a business perspective, that’s where you want to be.” he local government spurred the company’s move when it was seeking industrial companies to buy electricity generated by the Bakun Dam—the largest in Southeast Asia—ater plans to send the electricity to peninsular Malaysia through undersea cables were cancelled because of the high cost and the uncertain feasibility. “Sarawak itself does not need all this energy,” says Koon. “So the government decided to make it into a manufacturing hub. hat’s how we became a bigger outit.” Press Metal got lucky again in 2012, when a rival, mining giant Rio Tinto, scrapped plans to build an aluminum smelter in Samalaju that would have also gotten its electricity from the Bakun Dam. Instead, Press Metal opened its second
JOSHUA PAUL GILBERT FOR FORBES
FAB 50 — PRESS METAL
The Fab 50 Huadong Medicine
smelter at that site later that year. Altogether it’s spent $1.2 billion on its smelting plants in Sarawak, and their capacity of 760,000 tons a year is the largest in Southeast Asia. Koon says the location in Mukah makes Press Metal one of only two aluminum producers facing the South China Sea, helping it secure a nearly 15% market share in Japan, South Korea, Taiwan and Southeast Asia. But inding the right workers for its smelters is “always a challenge,” says Koon. “We worked with the government, universities and technical schools to develop skilled workers. Sarawak is not known to be
“It’s all about the size of the battery,” he says. “Aluminum is the key to [lighter batteries].” By 2030 electric vehicles are expected to use nearly 10 million tons of aluminum, a tenfold increase from last year, according to a report by U.K.-based metal consultants CRU. hat will help Press Metal: It’s expected to produce $2.3 billion in revenue in 2020, with net proits nearly doubling to $270 million, according to analysts polled by Bloomberg. Koon has no immediate plans to retire, but he has mulled over the question of whether the company should be led by family members indeinitely, hinting at bringing in outside
YEARS ON LIST: 4 CONSECUTIVE YEARS: 4 INDUSTRY: PHARMACEUTICALS SALES: $4.1 BIL MARKET CAP: $9.9 BIL TOP EXECUTIVE: LI BANG-LIANG
Inner Mongolia Yili Industrial 3 YEARS ON LIST: 3 INDUSTRY: DAIRY PRODUCTS SALES: $10 BIL MARKET CAP: $23.6 BIL TOP EXECUTIVE: PAN GANG
Jiangsu Hengrui Medicine Ì INDUSTRY: PHARMACEUTICALS SALES: $2 BIL MARKET CAP: $37.5 BIL TOP EXECUTIVE: SUN PIAO-YANG
Logan Property 3 YEARS ON LIST: 2 INDUSTRY: PROPERTY DEVELOPMENT SALES: $4.1 BIL MARKET CAP: $7.0 BIL TOP EXECUTIVE: KEI HOI PANG
Longi Green Energy Technology Ì
INDUSTRY: SEMICONDUCTORS SALES: $2.4 BIL MARKET CAP: $5.3 BIL TOP EXECUTIVE: LI ZHENGUO
Luxshare Precision Industry YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: OPTICAL TECHNOLOGY SALES: $3.4 BIL MARKET CAP: $11.2 BIL TOP EXECUTIVE: WANG LAICHUN
Midea Group YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: HOUSEHOLD APPLIANCES SALES: $35.6 BIL MARKET CAP: $41.2 BIL TOP EXECUTIVE: PAUL FANG
NetEase
“IF WE DIDN’T CHOOSE TO GO TO CHINA, WE WOULD HAVE GROWN AS A COMPANY BUT CERTAINLY NOT AT THIS PACE.” a manufacturing place, and we needed to develop a lot of these skills.” One issue that hasn’t afected Press Metal, however, is U.S. President Donald Trump’s 10% tarifs on aluminum imports. “We don’t sell a lot to the U.S. because it’s very far,” he says. “Logistics costs in America are very high so it hasn’t been our major market. So the trade war doesn’t afect us directly.” he transportation industry is the biggest driver of aluminum demand, along with construction, and Koon expects aluminum to play a major role in the rise of electric vehicles.
leadership in the future. “We have been, traditionally, a family-run business, but this business has to be professionally run, so we are hoping that we have this young breed of talent who can bring us new perspectives on how to grow the company,” he says. “It cannot continue to be restrained just to a family-run operation.” In any event, he’s expecting the demand for aluminum to only grow: “Over the last few years, we see aluminum replacing other materials. To be greener, aluminum is the way.” F
YEARS ON LIST: 4 CONSECUTIVE YEARS: 4 INDUSTRY: INTERNET SERVICES SALES: $8 BIL MARKET CAP: $27.5 BIL TOP EXECUTIVE: WILLIAM DING LEI
Rongsheng Petrochemical Ì INDUSTRY: CHEMICALS SALES: $10.4 BIL MARKET CAP: $10.7 BIL TOP EXECUTIVE: LI SHUIRONG
S.F. Holding YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: COURIER SERVICES SALES: $10.5 BIL MARKET CAP: $26.6 BIL TOP EXECUTIVE: WANG WEI
Shanghai Fosun Pharmaceutical YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: PHARMACEUTICALS SALES: $2.7 BIL MARKET CAP: $11.4 BIL TOP EXECUTIVE: GUO GUANGCHANG
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Shopping Sensation Thanks to its “everyday low prices” model, Avenue Supermarts storms into the Fab 50. BY ANURADHA RAGHUNATHAN
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t didn’t take long for Indian retailer Avenue Supermarts to break into the Fab 50. It listed its shares in March of last year, so it’s eligible for the list for the first time because companies must be publicly traded for at least a year. 42 | FORBES ASIA SEPTEMBER 2018
Thanks to a 31% increase in revenue and a 75% jump in net profit over its previous fiscal year, Avenue had no trouble joining the elite ranks. Investors agree—they’ve bid up the stock by 66% in the past year, pushing the market capitalization to $14.1
billion and making Avenue one of the world’s most valuable hypermarket companies. It runs supermarket chain DMart, which sells everything from groceries and apparel to toys and games and generated $2.3 billion in revenue for the year ended March 31. “DMart
The Fab 50 Shenzhou International Group 3 YEARS ON LIST: 2 INDUSTRY: APPAREL SALES: $2.7 BIL MARKET CAP: $19.7 BIL TOP EXECUTIVE: MA JIAN-RONG
Sunny Optical Technology YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: OPTICAL TECHNOLOGY SALES: $3.3 BIL MARKET CAP: $14.2 BIL TOP EXECUTIVE: YE LIAONING
Tencent Holdings YEARS ON LIST: 10 CONSECUTIVE YEARS: 10 INDUSTRY: INTERNET SERVICES SALES: $35.2 BIL MARKET CAP: $434.5 BIL TOP EXECUTIVE: MA HUA-TENG
Tianneng Power International Ì
INDUSTRY: BATTERY MANUFACTURING SALES: $4 BIL MARKET CAP: $1.4 BIL TOP EXECUTIVE: ZHANG TIANREN
Unisplendour Ì
INDUSTRY: INFORMATION TECHNOLOGY SALES: $5.8 BIL MARKET CAP: $10.1 BIL TOP EXECUTIVE: YU YING-TAO
Vipshop Holdings YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: INTERNET RETAILING SALES: $10.8 BIL MARKET CAP: $4.1 BIL TOP EXECUTIVE: ERIC SHEN YA
Yonghui Superstores YEARS ON LIST: 3 CONSECUTIVE YEARS: 2 INDUSTRY: RETAILING SALES: $8.6 BIL MARKET CAP: $10.6 BIL TOP EXECUTIVE: ZHANG XUAN-SONG
YTO Express YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: COURIER SERVICES SALES: $2.9 BIL MARKET CAP: $5.1 BIL TOP EXECUTIVE: YU HUI-JIAO
Zhejiang Chint Electrics 3
Rice and easy does it: shoppers at a DMart supermarket in Thane.
DHIRAJ SINGH/BLOOMBERG
is way ahead of most competitors,” says Abneesh Roy, senior vice president at Mumbai’s Edelweiss Securities. “Their debt levels are negligible. Their positioning is watertight and the management is really focused. Retail is all about execution. Anyone can talk strategy, but they
have executed year after year.” DMart operates on an “everyday low cost, everyday low prices” model, similar to U.S. chain Walmart’s. Shoppers get hooked on the low prices and become loyal customers. Take Ashish Sood, a software manager who shopped at DMarts
YEARS ON LIST: 2 INDUSTRY: ELECTRICAL EQUIPMENT SALES: $3.4 BIL MARKET CAP: $7.2 BIL TOP EXECUTIVE: NAN CUN-HUI
Zhejiang Dahua Technology YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: SECURITY EQUIPMENT & SERVICES SALES: $2.8 BIL MARKET CAP: $6.7 BIL TOP EXECUTIVE: FU LI-QUAN
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DMart’s loyal customers become hooked on the low prices, like Walmart shoppers in the U.S.
in Hyderabad and Bangalore. After he moved to Chennai he kept looking for an outlet until one opened up in the suburb of Virugambakkam. The store sports black-and-white signs saying some products are 6% cheaper than the maximum retail price set by the manufacturer, whether cereal, butter or shampoo. “We get all our big-ticket items—rice, oil, flour—from here,” he says while shopping with his wife to stock up on a three-month supply. “We are able to save a lot on the bill.” DMart can hold down costs because it owns most of the real estate. Also, it buys directly from manufacturers. “DMart’s product mix has been almost the same in the last five years,” adds Roy. “This has helped it retain lower prices, compared with other retailers.” Based in Mumbai, DMart opened its first store in 2002 and only nine more over its first eight years. The founder, Radhakishan Damani, who shares a $12.2 billion fortune, wanted to understand the nuances of the business before ramping up. DMart now counts 157 stores across the country. Along with the soaring stock are 44 | FORBES ASIA SEPTEMBER 2018
rising concerns that Avenue is overvalued. “Everything but the stock is on discount,” says a research report from Mumbai’s Ambit Capital. “Even Walmart never enjoyed such rich valuations.” Brokerage houses are also concerned that if the company expands with leased stores as opposed to company-owned stores, it could hurt its profit margins. And while DMart seems to have mastered offline retailing, online retailing is rabidly competitive. “[As in] many countries, concerns of disruption for brick-and-mortar retail businesses longer-term can’t be ruled out,” says an equity report from Mumbai’s Citi Research in May. The e-grocery segment alone is expected to more than quadruple by 2020, to at least $4 billion. Large players include the Walmart-Flipkart combination, online grocery major BigBasket.com, Amazon and Reliance. In June, Reliance Retail announced an ambitious e-commerce plan that would involve online sales and an offline system for delivery through millions of mom-and-pop grocery stores across India. “We
see merchants as critical customer-fulfillment points who will share a beneficial relationship with us,” said Reliance Industries chairman Mukesh Ambani at the company’s annual meeting in July. As companies scramble to build their e-commerce operations, DMart launched its own click-and-pick offering, called DMart Ready. Customers order online and then pick up their groceries from smaller DMart Ready stores in their neighborhood or have them delivered at a small cost. But DMart Ready ofers fresh vegetables on only a limited scale, and that’s expected to hurt growth. What might help DMart is the Indian government’s proposed ecommerce policy. That would give brick-and-mortar stores—especially mom-and-pops—a boost by curbing the deep discounts that e-commerce players thrive on. It also calls for tighter scrutiny of mergers and the appointment of an e-commerce regulator to shield domestic e-commerce players from foreign competition. Meena Ganesh, a BigBasket.com cofounder, says some elements of the government’s plan are not acceptable. “Companies need to do disruptive things in order to change consumer behavior,” she says. “This could be free delivery, deep discounting, subscription packages or financing. The government should not be in the business of defining what is deep discounting or how bulk purchases should be done. This is clear interference.” No matter what the government decides, Avenue should continue to post gaudy results. Sales in the organized brick-and-mortar retail segment are expected to more than double in the four years ending in 2020, to $115 billion. F
ANIRUDDHA CHOWDHURY/MINT VIA GETTY IMAGES
FAB 50 — AVENUE
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The Fab 50 H O N G KO N G
TENCENT
China Gas Holdings
Investing Machine There’s a purpose behind Tencent’s frenzy of dealmaking: Keep users coming back to its platform. BY YUE WANG
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hinese Web giant Tencent has long relied on its online games and the WeChat social media application to attract users. But it has another growth strategy that is increasingly taking center stage: investing in startups to hatch new services for its core business. he Shenzhen company, which appears on the Fabulous 50 list for the tenth straight
year, has quietly become a very active technology investor. So far this year it has participated in 68 deals with a combined value of $54.7 billion—already surpassing its $31.1 billion in 72 deals last year, according to Dealogic. he number also eclipses its archrival, Alibaba, which this year has taken part in 52 deals that are worth $25.6 billion. Globally, Tencent’s rapid investment pace puts it in the realm of the acquisitive
YEARS ON LIST: 4 CONSECUTIVE YEARS: 2 INDUSTRY: GAS UTILITIES SALES: $6.8 BIL MARKET CAP: $16.6 BIL TOP EXECUTIVE: LIU MING-HUI
Sino Biopharmaceutical YEARS ON LIST: 3 CONSECUTIVE YEARS: 3 INDUSTRY: PHARMACEUTICALS SALES: $2.2 BIL MARKET CAP: $16.6 BIL TOP EXECUTIVES: THERESA TSE, TSE PING INDIA
Ashok Leyland Ì
INDUSTRY: BUSES & TRUCKS SALES: $4.6 BIL MARKET CAP: $5.5 BIL TOP EXECUTIVE: DHEERAJ HINDUJA
Avenue Supermarts Ì
INDUSTRY: RETAILING SALES: $2.3 BIL MARKET CAP: $14.1 BIL TOP EXECUTIVE: IGNATIUS NAVIL NORONHA
InterGlobe Aviation YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: TRANSPORTATION SALES: $3.6 BIL MARKET CAP: $5.3 BIL TOP EXECUTIVES: RAHUL BHATIA, RAKESH GANGWAL
Motherson Sumi Systems YEARS ON LIST: 6 CONSECUTIVE YEARS: 6 INDUSTRY: AUTO PARTS SALES: $8.7 BIL MARKET CAP: $9.3 BIL TOP EXECUTIVE: VIVEK CHAAND SEHGAL
Sun Pharmaceutical Industries 3 YEARS ON LIST: 6 INDUSTRY: PHARMACEUTICALS SALES: $4.1 BIL MARKET CAP: $21.1 BIL TOP EXECUTIVE: DILIP SHANGHVI
Tech Mahindra 3 YEARS ON LIST: 4 INDUSTRY: INFORMATION TECHNOLOGY SALES: $4.8 BIL MARKET CAP: $10.2 BIL TOP EXECUTIVE: C.P. GURNANI
TVS Motor Ì
INDUSTRY: MOTOR VEHICLES SALES: $2.5 BIL MARKET CAP: $3.8 BIL TOP EXECUTIVE: VENU SRINIVASAN J A PA N
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CyberAgent
Tencent is the top shareholder of Pinduoduo, which celebrated its listing in late July.
YEARS ON LIST: 3 CONSECUTIVE YEARS: 3 INDUSTRY: INTERNET SERVICES SALES: $3.3 BIL MARKET CAP: $6.9 BIL TOP EXECUTIVE: SUSUMU FUJITA
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FAB 50 — TENCENT
Sotbank: he Japanese conglomerate has participated in 97 deals with a combined value of $62.5 billion this year, Dealogic data shows. Tencent is investing to ind products that can help it wring more revenue out if its big user base, says Ken Xu, a partner at venture capital irm Gobi Partners, which has invested alongside the company. It is casting a wide net in sectors such as video game broadcasting, inancial services and online shopping. It usually begins with a 10% to 20% stake in either early-stage startups or more mature outits. he company encourages its portfolio companies to compete against each other and lends support only to the last ones standing. Alibaba, by comparison, is more focused on retail and e-commerce. The Hangzhou company is also more involved in the startups it invests in, sometimes with the goal of eventually acquiring them. “Alibaba usually hopes for some degree of control in the companies it invests in,” says Xu, who has worked with the e-commerce giant as well. “What Tencent wants are partners that can leverage the company’s resources and bring additional services.” For example, Tencent’s WeChat app 46 | FORBES ASIA SEPTEMBER 2018
is getting a boost from the company’s investment in the budget-shopping service Pinduoduo, or PDD, according to Nomura analyst Shi Jialong. he Nasdaqlisted PDD operates under a groupbuying model similar to Groupon’s. But PDD bases this on WeChat, allowing its 3 million active users across the socialmedia platform to form purchase groups and get more discounts. his, in turn, has led to more frequent usage of WeChat’s payment function as users pay for PDD purchases with the app. “Many of PDD’s customers are in remote areas, and they weren’t very familiar with digital payment to begin with,” said Shi in a recent conference call. “But as this site took of, it is helping WeChat recruit more users for its digital wallet.” Tencent is also reaping huge rewards when it cashes in its investments. Since the beginning of last year, 12 of its portfolio companies have gone public—more than any investment irm or corporate investment arm worldwide, according to CB Insights. At the time of those exits, Tencent’s stakes in the companies, such as China Literature and the gaming platform Sea, was worth more than $20 billion. And it has plenty of listings in the
pipeline. Recently, three Tencent-backed companies—China’s local-services site Meituan Dianping, news-aggregation platform Qutoutiao and electric-car maker Nio—iled to go public. he investment spree, however, isn’t without a downside. Some of the recent initial public oferings have tanked, suggesting that Tencent’s support by no means guarantees success. And there is also concern that Tencent’s free-spending ways are diluting its focus. “he company has evolved into a sort of VC irm, with gaming and social networking sidelines,” says Brock Silvers, managing director of advisory irm Kaiyuan Capital. “his resulted from a cocktail of massive access to capital, government encouragement and perhaps a dash of corporate hubris.” But Gobi Partner’s Xu says it makes sense for Tencent to keep investing. WeChat, for one, has more than 1 billion users, but Tencent doesn’t have ways to make money of them beyond advertising and linking them to its online games. It must explore outside services that can be brought onto its platform so users can become more engaged and stay for longer periods. “Tencent can’t do everything on its own,” he says. “So it now sees a lot of value in investing.” F
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Wired: Workers setting up Pinduoduo’s new office in Shanghai. PDD uses WeChat’s digital payment function to process sales.
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The Fab 50 Group, it’s chaired by Dheeraj Hinduja, a third-generation scion of the clan. It turns 70 this month, but the Hindujas bought a stake only in 1987.
Making Their Debut THESE COMPANIES ARE JOINING THE ELITE 50 FOR THE FIRST TIME AFTER OUTPERFORMING THEIR RIVALS IN INDUSTRIES RANGING FROM MOBILE GAMING TO MOPEDS.
ASHOK LEYLAND INDIA The Chennai vehicle maker is India’s second-largest producer of commercial vehicles and ranks No. 4 globally in buses. Notching a 34% jump in revenue in its last fiscal year, the company boasts nine manufacturing plants—seven in India, one in the Middle East and one in the U.K. The flagship of the Hinduja
CHINA AOYUAN PROPERTY GROUP CHINA Headquartered in Guangzhou, the company develops high-end residential and commercial properties. Guo Ziwen started it in 1996 to tap the Hong Kong market. He later moved the company to the mainland and switched to developing sports properties. It now boasts properties in 80 cities in China, Australia and Canada. Guo and his brother, Guo Zining, own 54.1%.
DALI FOODS GROUP CHINA Headquartered in Fujian, the company makes and sells snacks and beverages. Founded in 1989 and listed in 2015, it operates 30 production bases. Its three most famous brands—Daliyuan baked
Nidec 3 YEARS ON LIST: 3 INDUSTRY: MOTOR MANUFACTURER SALES: $13.4 BIL MARKET CAP: $42.5 BIL TOP EXECUTIVE: SHIGENOBU NAGAMORI
Open House Ì
INDUSTRY: REAL ESTATE BROKERAGE SALES: $2.7 BIL MARKET CAP: $3.1 BIL TOP EXECUTIVE: MASAAKI ARAI
Outsourcing Ì
INDUSTRY: RECRUITING SERVICES SALES: $2.1 BIL MARKET CAP: $2 BIL TOP EXECUTIVE: HARUHIKO DOI
Welcia Holdings Ì
INDUSTRY: DRUGSTORES SALES: $6.2 BIL MARKET CAP: $4.8 BIL TOP EXECUTIVES: TAKAMITSU IKENO, HIDEHARU MIZUNO M A L AY S I A
Batu Kawan YEARS ON LIST: 4 CONSECUTIVE YEARS: 4 INDUSTRY: CHEMICALS SALES: $5 BIL MARKET CAP: $1.7 BIL TOP EXECUTIVES: LEE OI HIAN, LEE HAU HIAN
Press Metal Aluminium Ì
INDUSTRY: ALUMINUM PRODUCTION SALES: $2 BIL MARKET CAP: $4.7 BIL TOP EXECUTIVE: KOON POH KEONG S O U T H KO R E A
Amorepacific 3 YEARS ON LIST: 3 INDUSTRY: COSMETICS SALES: $4.5 BIL MARKET CAP: $16.2 BIL TOP EXECUTIVE: SUH KYUNG-BAE
Netmarble Ì
INDUSTRY: MOBILE GAMING SALES: $2.1 BIL MARKET CAP: $9.2 BIL TOP EXECUTIVE: BANG JUN-HYUK VIETNAM
Mobile World Investment
ANTA SPORTS PRODUCTS
SEAN GARDNER/GETTY IMAGES
CHINA The Fujian company was the first Chinese sportswear outfit to reach 10 billion yuan in annual sales. Started in 1991 as a shoemaker, the company now boasts 11,316 stores across China, its revenue split between footwear and apparel. It designed outfits for Chinese athletes in the Winter Olympics in South Korea this year and will be the official sportswear partner for the 2022 Winter Olympics in Beijing. Its roster of superstar endorsers includes Filipino boxer Manny Pacquiao; Kevin Garnett, once the NBA’s highest-paid player; and former World No. 1 women’s tennis player Jelena Janković.
YEARS ON LIST: 2 CONSECUTIVE YEARS: 2 INDUSTRY: ELECTRONICS & APPLIANCES RETAILING SALES: $2.9 BIL MARKET CAP: $1.7 BIL TOP EXECUTIVE: NGUYEN DUC TAI
Vingroup Joint Stock Co. Ì
INDUSTRY: PROPERTY DEVELOPMENT SALES: $3.9 BIL MARKET CAP: $14.1 BIL TOP EXECUTIVE: PHAM NHAT VUONG
ÌNEW TO LIST 3RETURNEE SEPTEMBER 2018 FORBES ASIA | 47
R
SA
SIA
FO
BE
LONGI GREEN ENERGY TECHNOLOGY pastry, Haochidian biscuits and Copico chips—led the company into markets that imports had previously dominated. Last year it branched into healthy and organic food and introduced a soy milk brand, Dou Ben Dou (“soybean itself ”). Its founder and chairman, Xu Shihui, is now a billionaire and owns 85% with his wife and daughter. he company has close to zero debt.
CHINA his Xi’an company makes solar cells and modules. Started in 2000 and listed in 2012, It counts 17,700 employees and branches on four continents. Its net proit grew by 126% last year. Founder Li Zhenguo, his wife, Li Xiyan, and a schoolmate from Lanzhou University, Li Chun’an, together own 31.3%. Despite the 30% tarif on Chinese solar panels shipped to the U.S. since February, the company signed a $600 million contract in July to sell solar modules there.
OPEN HOUSE JAPAN Founded in 1997 in Tokyo by Masaaki Arai, who is now a billionaire, this real estate broker also develops single-family homes in the country’s biggest cities. Its motto: “Let’s ind a house in Tokyo.” Listed in 2013, it has served more than 13,000 people in and around Tokyo and has sold more than 5,000 properties.
OUTSOURCING INC. JAPAN Haruhiko Doi started this Tokyo stafing company in 1997; he remains the chairman and chief executive. It targets companies in the manufacturing, engineering and service industries and now lists 88 subsidiaries in 17 countries on four continents. In April it bought 56% of OTTO Holding, which supplies staf in the Netherlands and Germany through its recruitment network in eastern Europe. Sales grew 71.4% last year, thanks to the increasing mobility of workers across borders.
RONGSHENG PETROCHEMICAL CHINA Li Shuirong started making polyester cloth in a Hangzhou factory in 1989. Today the company produces polyester products and chemicals from coal with 7,900 employees, and Li is a billionaire. Recently the government gave Rongsheng’s state-backed joint venture the green light to import 5 million tons of crude oil, paving the way to build an oil-reining complex on the island of Zhoushan, near Shanghai.
SOUTH KOREA The country’s largest mobile gaming company saw net profit jump 83% last year to nearly $275 million. Its fantasy-based Lineage 2: Revolution has become a hit around the world, but especially in nearby markets such as Taiwan and Japan. In April the Seoul outfit invested $190 million in K-Pop sensation BTS and says it will release a game based on the seven-member boy band this year. Bang Jun-Hyuk, a high school dropout, started the company in 2000; it now employs more than 3,000 people and attracts players from 155 countries.
48 | FORBES ASIA SEPTEMBER 2018
CHINA China’s largest electric vehicle battery supplier started in 1986 and listed in Hong Kong in 2007. Based in Zhejiang Province, the company employs more than 19,000 people and operates nine production centers. Most of its revenue comes from sales of batteries for electric bikes and cars. Chairman and founder Zhang Tianren owns 36.5% of the company with his wife.
SEONGJOON CHO/BLOOMBERG
NETMARBLE
TIANNENG POWER INTERNATIONAL
VINGROUP JOINT STOCK CO. VIETNAM This Hanoi conglomerate was started by Pham Nhat Vuong, the wealthiest Vietnamese and the country’s first billionaire. He made his first fortune when he sold his instant noodle business to Nestlé in 2010. He then started Vincom, a developer of high-end townships, and Vinpearl, which builds luxury resorts and hotels. They merged to form Vingroup in 2012. A year ago Vingroup launched Vinfast, an automaker aiming to produce up to 500,000 vehicles annually by 2025. Last month it announced plans to build a tech hub in Hanoi to expand into artificial intelligence and big data and employ 100,000 technology students within ten years.
TVS MOTOR INDIA he 39-year-old Chennai company is India’s last moped maker and also makes scooters, motorcycles and three-wheelers. It runs four manufacturing sites—including one in Indonesia—and saw revenue climb 36% and net proit surge 33%, to $101 million, in its last iscal year. In December it took a stake in Bangalore electric vehicle startup Ultraviolette Automotive.
UNISPLENDOUR
GEORGES LIS/AGEFOTOSTOCK/NEWSCOM
CHINA Founded in 1999 in Beijing, this company provides information technology services. It traces its roots to the city’s Tsinghua University, and its former chairman, Victor Zhao, is a Tsinghua alumnus and now a billionaire. Hailing from a village in Xinjiang Province, Zhao worked his way through college by helping friends write sotware and ixing their television sets.
Last year the company saw a 90.1% jump in net income thanks to the government’s growing eforts to promote high-tech industries.
WELCIA HOLDINGS JAPAN his Tokyo-based retailer operates 1,747
drug and cosmetics stores around the country. Started in 2008, the company primarily sells over-the-counter products, which produced a 39.7% proit margin last year. It also ofers counseling services and long-term at-home eldercare. Many Welcia drugstores stay open until midnight or 24 hours.
WAITING IN THE WINGS THESE RISING STARS ARE PRIMED TO CRACK THE FAB 50 IN THE YEARS AHEAD. COMPANY
COUNTRY
BUSINESS
ARISTOCRAT LEISURE
AUSTRALIA
BETTING MACHINES
BEIJING ORIGIN WATER TECHNOLOGY
CHINA
ENVIRONMENTAL SERVICES
CRYSTAL INTERNATIONAL GROUP
HONG KONG
APPAREL PRODUCTION
EXIDE INDUSTRIES
INDIA
INDUSTRIAL BATTERIES
GLOBAL TOP E-COMMERCE
CHINA
FOOTWEAR & APPAREL
HOA PHAT GROUP
VIETNAM
IRON & STEEL
JUNEYAO AIRLINES
CHINA
AIRLINES
KUSURI NO AOKI
JAPAN
FOOD & DRUG STORES
SQUARE ENIX HOLDINGS
JAPAN
COMPUTER GAMES
SUNWODA
CHINA
INDUSTRIAL BATTERIES
VIETJET AVIATION
VIETNAM
AIRLINES
ZTO EXPRESS
CHINA
AIR FREIGHT
SEPTEMBER 2018 FORBES ASIA | 49
FORBES GLOBAL CEO CONFERENCE
The Forbes Global CEO Conference is an annual gathering for some 400 global CEOs, tycoons and entrepreneurs. Under the theme of ‘The World Reboots’, this year's conference will examine how CEOs, companies and countries must all face the challenges—and opportunities—coming from accelerating HMWVYTXMSR SQI PMOIR XLMW IVE XS XLI JSYVXL KPSFEP VIZSPYXMSR 8LI [SVPH MR QSHI [MPP EǺ IGX LS[ companies are built and led, where money is made or lost, and how all of us live, work and play. For more information, please email info@forbesasia.com.sg or visit forbesglobalceoconference.com
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Miwako Date President & CEO, Mori Trust
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William E. Heinecke Chairman & Group CEO, Minor International
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Carrie Jones-Barber CEO, Dawn Foods
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Jean Eric Salata Chief Executive, Baring Private Equity Asia
Preetha Reddy Vice Chairperson, Apollo Hospitals Enterprise
V Shankar CEO & Partner, Gateway Partners
Hans-Paul Buerkner Chairman, The Boston Consulting Group
Binod K. Chaudhary Chairman, CG Corp Global
Jack Leslie Chairman, Weber Shandwick
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ESPORTS
A Really Big Score Andy Dinh made his bones as the Derek Jeter of esports. Now the 26-year-old gaming legend owns one of the world’s most successful teams. But can he continue to dominate as billionaire moguls enter the arena? BY MATT PEREZ
T
housands of screaming fans packed the stands and floor space at Boston’s TD Garden in September 2017— to watch a video game championship. At Center Court was an elevated stage with ten computers running the competitive game League of Legends. Four massive screens were mounted above to display the action. When confetti inally rained down on the crowd, the threepeating champs jumped around between smoke machines as a familiar chant broke out—“T-S-M! T-S-M! T-S-M!”—much like Alabama fans cheer “S-E-C! S-E-C! S-E-C!” in Tuscaloosa. TSM—short for Team SoloMid—is one of the most recognizable brands in esports, and its victory in Boston built on its success as the winningest North American team in League of Legends, competitive gaming’s top title. But its founder, CEO and owner, Andy Dinh, who emerged from the sidelines to hug his players onstage, had only one thought ater the team’s sixth championship: What’s next? “I want TSM to be a household brand; I want us to be the Dallas Cowboys and the Yankees,” says the perpetually kinetic 26-yearold, who was featured on Forbes’ 30 Under 30 list in 2017. “It’s not enough for me just to be successful in North America.” Esport companies like TSM ield competitive teams in video games that are as fun to watch—whether live in a stadium or online on a game-streaming service like Amazon’s Twitch—as they are to play. he basic premise of League of Legends has two teams of ive at opposite ends of an intricate map trying to destroy each other’s bases. hroughout a match, typically 30 to 40 minutes, players kill monsters (and, of course, opposing players) to earn gold and “experience” to buy new upgrades and become stronger than their opponent. Billionaire owners of professional sports teams such as Robert Krat (of the New England Patriots) and Jerry Jones (Dallas Cowboys) are among the most signiicant new owners in esports. Because they own (or operate) venues where esports competitions can be held, these moguls have a front-row seat to the industry’s explosive growth, and they are spending millions in hopes of building franchises as big as TSM. Worldwide, the esports industry is projected to reap nearly $1 billion in revenue this year and is building an ever-growing global viewership. hat’s nothing compared with NFL football ($13.2 billion in 2016), but it is rivaling second-tier sports like Major League
52 | FORBES ASIA SEPTEMBER 2018
Soccer ($644 million in 2016). ESPN has been broadcasting esports for several years, and last year’s League of Legends World Championship inal had an online viewership of 57.6 million—about half of last year’s Super Bowl TV audience. Major brands are also spending millions to get in front of this young and rabid male audience. Video gaming might even be an Olympic sport someday soon. League of Legends has already taken the irst step, appearing as a demonstration event at the 2018 Asian Games. he concept of revenue sharing, particularly of broadcast income, among teams—common in traditional sports leagues—is still in its infancy in esports, so sponsorships dominate the space. he Amsterdam-based market researcher Newzoo estimates that 40% of overall revenue this year will come from sponsorship deals. Some brands partner with the league and tournament organizers, while others invest on the team side. TSM features Geico and Gillette on its jersey, creates “Team Soda Mid” commercials with Dr Pepper and uses Logitech keyboards and mice during competitions. he paucity of reliable ROI metrics have led advertisers to look at social media and streaming to help make decisions about where to spend. TSM and its players have 60 million followers across various social networks. Forbes estimates that TSM had revenue of $21 million for 2017, on the high end for an esports company. Despite all this success, Dinh admits TSM could better take advantage of new opportunities in the rapidly evolving market. he next big opportunity may be the 2017 video game Fortnite, a billion-dollar sensation that 125 million play around the world, including celebrities such as Drake and Chance the Rapper as well as pro gamers who stream their matches online to tens of thousands of viewers every day. Fortnite is like a mix of he Hunger Games, Minecraft and Lord of the Flies: 100 players drop down on an island and battle it out until only one player or team is let standing. One superstar gamer, 19-year-old Ali “Myth” Kabbani, was signed by TSM early this year as the team’s Fortnite stud. he signing soon led to a $1.5 million investment by TSM: he team now leases a 4,300-square-foot house for its roster of four to live, practice and stream for hours a day. he seven-igure bet is already paying of. Kabbani has become the second-biggest star on Twitch, with 4.1 million followers, driving new fans to the TSM brand. hat ever-
Trophy life: TSM founder Andy Dinh with the 2017 League of Legends North American championship hardware. He used to give $20-an-hour gaming lessons to Steve Arhancet, now co-CEO of rival Team Liquid.
ETHAN PINES FOR FORBES
growing audience helped bring about a new sponsorship from Chipotle, which sees TSM as a means to intersect with pop culture. hough it’s undeniably a blockbuster game, there are still questions about Fortnite’s potential as an esport. And while the game’s creator, Epic Games, is ofering $100 million for prize pools across a year of tournaments, it’s unclear how these competitions will be structured or even broadcast. But TSM and Dinh are used to leaps of faith. From a working-class family of nine in Campbell, California (his parents immigrants from Vietnam), Dinh was a perennial C student in high school but found his calling ater discovering League of Legends in 2008, when he was 16. Playing under the name Reginald, he soon became the top-ranked player in the world and started his own team in 2009. He and his brother Dan decided to create community websites and author guides for the game. Long before ESPN and Amazon thought to broadcast League of Legends competitions, Dinh was hosting and streaming them. Soon ater, Dinh dropped out of college and borrowed $5,000 from his mother to invest in his vision. His gaming-guide site, solomid.net—named ater his position in League of Legends— attracted millions of visitors, which meant Dinh was pocketing around $60,000 a month. In 2013 Dinh, then 21, retired as a player
to focus on his business, which still includes gaming sites. Five years later, he remains hungry, taking aggressive new steps in the industry he helped pioneer. In July he received $37 million in Series A funding from a group of investors that included the A-list venture capital irm Bessemer Ventures Partners, the Hall of Fame NFL quarterback Steve Young and the three-time NBA champion Steph Curry. “It only made sense to go with the best of the best,” says Curry, who plans to use his cachet to help TSM reach even more young men. With the new capital, Dinh plans to double staf to 100 and use up to $15 million to build a 25,000-square-foot training facility and operational headquarters in Los Angeles next year. he new headquarters will generate revenue through sponsorships and fan events and serve as a base where players can train, influencers can create content and TSM can develop as a household name for a new generation—and much of this is well under way. At TSM’s Fortnite game house, Myth Kabbani recalls watching TSM play when he was in middle school and realizing esports was a realistic career goal. When the organization reached out to talk about a partnership, he says, his heart started to beat out of his chest: “Joining TSM is less like joining an organization and more like ighting crime with your favorite superhero.” F
SEPTEMBER 2018 FORBES ASIA | 53
FORBES ASIA
BEST UNDER A BILLION — BLS
Faster Tracks Aggarwal son builds a global challenger on dad’s frustration with lengthy visa queues. BY ANURADHA RAGHUNATHAN
W
hen Shikhar Aggarwal joined his New Delhi family business in 2014—providing visa, passport and consular services—he was eager to crack new territories. he Indian government and its embassies abroad made up the bulk of revenues at BLS International—with small outsourcing contracts from Portugal, Greece and Hungary. “We needed to explore new clients and projects,” says Aggarwal, who came on board as a joint managing director when he was just 23. He was pursuing an accounting career and doing an Indian internship at Grant hornton when he decided to veer toward the family business. He set in motion a series of changes at the company that was founded in 2005 by his father— overhauling the technology for capturing biometrics like ingerprints and iris scans; reducing the processing time for documents; and revamping the website and call centers. He roped in employees from diferent nationalities to bid for projects in new geographies. In the four years since Aggarwal 54 | FORBES ASIA SEPTEMBER 2018
joined, BLS has nearly doubled revenues to $122 million and broadened its reach to operate in 62 countries. In addition to India, it now works with 36 other client governments. Proits at the company— which debuted on Forbes Asia’s Best Under A Billion list this year—have jumped more than fourfold to $15 million from iscal 2014 to iscal 2018. “We are a lean, fast-growing and cost-eicient company that’s hungry for new business,” he says. Mumbai research irm HDFC Securities projects a 15% compounded growth rate for revenues and 21% for proits over the next two years. (he irm is a lender to BLS.) Aggarwal, now 27, is looking beyond the niche visa-processing industry by ofering government services ranging from issuance of birth, death or marriage certiicates to providing citizen, identity and voter cards. He’s also providing conveniences like mobile biometric services targeted at wealthy individuals, the aged or the physically challenged. Applicants don’t have to travel to a visa center and waste an entire day standing in queues. he visa service comes to them—at an extra
The young and the restless: 27-year-old Shikhar Aggarwal.
ABHISHEK BALI FOR FORBES
SEPTEMBER 2018 FORBES ASIA | 55
FORBES ASIA
BEST UNDER A BILLION — BLS cost. his is targeted at large groups of employees, students, sports players and performance groups. “We want to be the world’s biggest player in the visa-outsourcing industry” says Aggarwal. hat’s an ambitious target: he sector leader is Dubai’s VFS Global—part of Swedish private equity group EQT. With a presence in 139 countries, VFS had half the market and revenues of $459 million in 2017. But BLS has scored signiicantly in recent months. In May it reported a $140 million contract from the U.K. government, under which it’ll be supporting a French irm to enable visa renewals. And in December 2016 it won a $200 million, ive-year contract from the Spanish government for setting up visa processing centers across the world. “hey need to have regular wins like this to keep the momentum going,” says Ankit Kedia, research analyst at Mumbai’s Centrum Broking. “But they also have the challenge of maintaining the cost structure while maintaining the quality.” BLS has to contend with inancial risks too because of the heavy dependence on ickle governments. For instance, its $220 million, ive-year e-governance contract in 2016 with the northern Indian state of Punjab was canceled in 2018 because of inancial stress for the government and the lower-than-expected volume. No deiciency in service was reported for the termination. he Punjab government floated a new tender, and BLS has won this contract, too. But it will operate with fewer centers, and the Punjab government still owes BLS $31 million on the earlier deal. (he company expects to be paid this iscal year.) A plus is that the state will now provide the computer gear as well as the premises for providing the services. “We are positive on the new contract,” says Amit Chandra, research analyst at HDFC Securities. “In this model they’ll collect money directly from the citizens and give the government its cut. he new model is better, asset-light in nature and similar to the visa model.” Aggarwal has teams in Europe, the Middle East and Asia scouting for new 56 | FORBES ASIA SEPTEMBER 2018
work. “Sometimes the tender floated by a foreign government will be a small ad in a local newspaper in the regional language,” says Aggarwal, who has traveled to 25 countries in the last three years to meet with diplomats and work with consulates. BLS is prequaliied for several upcoming global tenders and will be bidding extensively. It regularly hosts client governments to show its processing centers. “Clients can look at what’s happening in real time in our centers,” Aggarwal says. “hey can do mystery audits. We send them a list of customer complaints and show them how we tackle them.”
TOURIST BOOM
2.09 billion
Expected international tourist arrivals in 2028, up from 1.39 billion in 2018.
11.7%
Travel industry’s estimated portion of global GDP in 2028.
30%
The Asia-Pacific region’s expected portion of tourist arrivals by 2030. SOURCES: UNWTO; WORLD TRAVEL & TOURISM COUNCIL.
As it expands, BLS is focused on China as a key market. “Outsourcing hasn’t happened much in China, but it is a huge travel market,” says Aggarwal, who’s building a team there. he company has 18 Chinese oices—3 for Indian visas and the rest for Spain. BLS’ growth is expected to be supported by the spurt in global travel as well as the rising trend of visa outsourcing by governments. Globally only a third of the visa work is currently outsourced. his is projected to grow as governments oload more of the nonjudgmental processing. BLS is now among the top ive international players, competing not only with VFS Global but also France’s TLScontact, CSC of the U.S. and China’s Bank of
China. VFS Global pioneered the industry in 2001—in India, where it got its irst contract from the U.S. government. It was BLS founder Diwakar Aggarwal’s experience with endless lines when going for his own visas that got him into the business, signing the Portuguese embassy as his irst client. he privately held BLS Group, now at $1.2 billion in revenues, is mostly in education and polymer manufacturing. It’s run by Diwakar and his three older brothers, all of whom live in the same Delhi bungalow along with their families, straddling three generations. BLS processed 10,000 visa applications in 2005. hat’s surged to 11 million visas and citizen service applications in iscal 2018. Shikhar Aggarwal believes agility is the key. For instance, in Moscow the company had to expand its Spanish service center from 12,000 square feet to 20,000 square feet because volumes surged on new popularity for holidays and it started handling 500,000 applications a year. Meanwhile, in Yemen, it had to shut down a center when war broke out in 2015. “We are very flexible,” says Aggarwal. “In this business, requirements keep changing, and we are willing to change based on what the client wants.” But it’s a people-heavy business. BLS employs nearly 9,000 people across the globe to handle the operations. he employees in each location collect, process and dispatch documents. here’s a lot of training and retraining that’s required to keep them updated on the latest law changes. BLS also has to tweak its services to suit diferent cultures—providing separate counters for women for biometric recording in Saudi Arabia, ofering more premium lounges in the Middle East or assisting with illing forms when there’s a language barrier. Aggarwal recognizes the stif and sophisticated global competition. He’s setting up an accelerator division to acquire startups with new technologies to help in visa processing and e-governance. “We are the underdogs,” he accedes. “We want to be the underdogs until we become a $10 billion company.” F
FORBES ASIA
FROM THE VAULT
One of a Kind: Oct. 15, 1965 BY ABRAM BROWN
ONE DAY IN June 1957, the president of a small company arrived at Forbes’ Manhattan oice and gave a presentation about his business to a group of editors assembled in the boardroom. he bespectacled executive made a charming impression—appearing “sincere, enthusiastic . . . extremely articulate”—but his irm seemed too small (just $24 million in revenue, about $214 million today) and not well enough established to warrant a story in Forbes. he man was Joseph C. Wilson, who had taken over his grandfather’s Haloid Corp. a decade prior. About three years ater his Forbes meeting, Wilson changed the workplace forever, introducing the irst plain-paper automatic oice copier, the Xerox 914. he machine weighed 648 pounds, could make 100,000 copies a month and cost $95 a month (roughly $800 today) to rent. By 1965 the company, now called Xerox, had revenue of $400 million ($3.2 billion), and Wilson wasn’t just in Forbes but on the cover. “Few companies have ever generated the momentum we have,” he said. “We can’t let it go.” Over the ensuing decade, Xerox would follow up with additional innovations, developing one of the earliest personal computers, the Alto, as well as pioneering laser printing and Ethernet.
SIGN OF THE TIMES
Mega Bus
HULTON ARCHIVE/GETTY IMAGES; GRANGER; XEROX
Over a decade, Greyhound Corp.’s sales had risen more than 50% to $348 million, some $2.8 billion today. “The real reason for Greyhound’s boom is the vast Interstate Highway program,” the 41,000-mile network across America that President Eisenhower modeled on Germany’s autobahn. Twenty percent of Greyhound trips used interstate highways in 1965, up from 5% a decade earlier.
NEWSWORTHY AND NOTABLE
Love Me Dough “It’s ridiculous. Those devils hit the jackpot every time,” said John E. Wall, president of EMI, the British music publisher. He was talking about the Beatles, who had sold 145 million albums for EMI in under three years. EMI revenue surpassed $280 million—roughly $2.2 billion in 2018 dollars—making it the largest record business in the world. That prompted a waggish Forbes to ask, “Who says the British can’t compete in world markets?”
AMAZING ADS
Moonshot Inc. Douglas Aircraft, today a part of Boeing, supplied several crucial components of the Saturn rockets, which would propel man to the lunar surface four years later.
SEPTEMBER 2018 FORBES ASIA | 57
1
JAPAN
SPECIAL ADVERTISING SECTION
JAPAN OPEN UNIVERSITIES: THE INTERNATIONALIZATION OF JAPANESE EDUCATION Q ”Students, faculties and institutions as a whole have achieved great steps toward internationalization.”
Part of the Japanese government’s overarching strategy to open up to a more globalized world is the internationalization of Japan’s universities, which are welcoming more international students, sending more Japanese students abroad and offering more classes in English. Traditionally a closed society, Japan has been making efforts to open up to the world with “globalization,” “internationalization” and “going global” becoming buzz words in recent years, both in the business and education spheres. In 2014, the Ministry of Education launched the Top Global University Project, which aims to help selected universities comprehensively internationalize their educational programs and campuses. Since the launch of the initiative, there has been a significant increase in the number of courses offered in English, the number of Japanese students studying abroad, and the number of international students coming to Japan. “The numbers don’t lie. This reform has been a major success. Students, faculties and institutions as a whole have achieved great steps toward internationalization. Through international exchanges we have created a truly multicultural environment, and our alumni have acquired the international communication skills they once lacked,” says Yoshimasa Hayashi, Japan’s Minis-
ter of Education, Culture, Sports, Science and Technology. “To complement the achievements of the Top Global University Project and to foster the next generation of students, we have transformed our entrance examination. These two reforms combined will drive Japanese higher education toward achieving the highest international standards. “We have also implemented many measures to welcome both students and teachers to Japan. Furthermore, we are advancing the start of foreign language education from fifth grade to third grade. By 2020, initiation to foreign language activity will be set to begin in third grade, and foreign language will become a subject of its own, with evaluations, credits and scores, in fifth grade.” Ninety percent of international students in Japan originate from Asia, where Japan is regarded by many as the most reputable destination for higher education, learning and advanced research. “Our education system is one of the best in Asia, particularly in fields
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YOSHIMASA HAYASHI, Minister of Education
such as science and advanced technologies,” says Sakuji Yoshimura, president of Higashi Nippon International University (HNIU). Located in the city of Iwaki, Fukushima, HNIU is made of up of two faculties: the Faculty of Economics and Management and the Faculty of Health and Welfare. In line with the goals of the Top Global University Project, it plans to offer more English languages classes and lectures in English to its Japanese students, and encourage them to study abroad. The university has several partnerships with universities in China, South Korea, the U.S. and the U.K, and is “very much looking forward to increasing the number of students studying abroad and extending partnerships all over Asia and Africa. We want to send more Japanese students abroad so that they can ‘internationalize’ their thoughts by expanding their way of thinking,” says Yoshimura.
The university president also wants to increase the number of international students coming to HNIU, particularly students from Asia, offering intensive Japanese language courses, a variety of innovative programs and the opportunity to discover the unique beauty and culture of the Fukushima region. “Today, international students make up 15% of students in our university and we hope to reach 30%. We have noticed an increase in Thai students, Nepalese students, Vietnamese students and also students from Myanmar. Our intensive Japanese course will help them to understand Japanese culture and to live together with local people,” says Yoshimura. He says that Japan is seen as a “closed” country, but that is something HNIU and other universities are trying to change through numerous reforms. “I believe that attracting international students to Japan is one of the solutions to the country’s demographic problem (characterized by an aging and shrinking popula-
һ ʹ ઓ Δ"ՃՁ%Λ '()Β +,+Β-Δ./0 123. /4+ֶ5ɻ 7 8͠: ҭ<Λ=>?0ҭ ͠·Aɻ Cultivating new educators who champion ‘active rather than passive learning,’ adding a special edge to a teaching certificate.
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tion). We would like to see an ‘Asian Union’ like a European Union. Our successes and failures depend on one another; we need to exchange knowledge, experience, fresh minds and visions,” Yoshimura says. The Kake Group controls a number of Kake Educational Institutions, which consists of private universities, high schools, elementary schools and vocational schools throughout Japan. Being active in every tier of the Japanese educational system has allowed Kake to instill an international mindset at an early age. At the Hiroshima Kake Educational Institution, the group started an English immersion program at the elementary school 11 years ago. Today, Kake has about 100 partnerships with schools from all around the world, giving students an opportunity to study abroad at an earlier stage than university age. “We feel this gives our students the opportunity to broaden their minds on a global level,” says Vice Chairman Mamoru Kake. “Japan has a reputation of being quite isolated. I personally believe it is caused by the language barrier, so it is essential for our students to become luent in English. With the English language, we give our students the tools to communicate,” he says. With faculty and staff coming from China, Korea, the Democratic Republic of Congo, the U.S., the Philippines, among others, Kake is a truly international institution. “We want our students to experience different types of teaching, to hear different opinions and to broaden their perspective. Out of 50 faculty members, 21 are nonJapanese. We are very proud of this,” says Kake.
Q ”Japan is facing demographic issues and we will have to internationalize ourselves in the future. One of the easiest ways to do so is to invite students from all around the world to come study in Japan.” MAMORU KAKE, Vice Chairman, Kake Group Kake’s universities also welcome a number of international students every year, offering a one-year intensive course in Japanese language and culture, which is recognized by the Japanese Ministry of Education. “So, if companies are interested in establishing ties with Japan, they could send some of their employees to Japan for a year to study Japanese and those employees could go back to their companies and be the bridge or liaison with Japan,” he adds. Like HNIU, the Kake Group hopes to increase that number by offering more courses and lectures in English. “We are in the process of internationalizing our organization, but one of the main issues is still the English language. We need to offer courses in English to attract more
Q ”Our education system is one of the best in Asia, particularly in fields such as science and advanced technologies.” SAKUJI YOSHIMURA, President, Higashi Nippon International University and more international students,” says Kake. Kake boasts one of the highest graduate employment rates among universities in Japan, thanks to its partnerships and contacts with companies in the private sector as well as its excellent career guidance services, such as its career center. “This service is not limited to Japanese nationals, as our international students also benefit from our career center. Our overseas liaison officers help them to find a job in their home country, so they are completely prepared when they graduate from our universities,” explains Kake. Taking a similar view to HNIU’s president, he recognizes “Japan is facing demographic issues and
we will have to internationalize ourselves in the future. One of the easiest ways to do so is to invite students from all around the world to come study in Japan,” he says. An international mindset and understanding of different cultures is critical to the hospitality and service industry. The Bunri University of Hospitality in Sayama, Saitama tries to teach its students the best of both Western practices and the Japanese concept of hospitality, known as omotenashi. “To get the high quality of hospitality that brings omotenashi and the Western style together, you need people who can not only apply the skills and techniques, but innovate and think of new things,” says former Bunri president, Koen Tokuda. “Bunri revolves around four C’s: creativity, critical thinking, communication and collaboration. And when it comes to personal character qualities—curiosity and openmindedness—are also things we try to develop here at the university,” he says. The university also welcomes a large number of international Asian students, who can take the valuable service skills and knowledge acquired at Bunri and apply them in their home countries. “We’re also working on changing our curriculum. We want to offer an omotenashi course in English to reach non-Japanese speaking students,” adds Tokuda. Japanese universities and educational institutions across the country are making efforts to internationalize. And these efforts will be felt throughout Japanese society, business and the economy as the nation looks to open up to a more globalized world.
DISCOVER THE BEAUTY OF JAPAN THROUGH HIGASHI NIPPON INTERNATIONAL UNIVERSITY
www.shk-ac.jp/eng
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We are Higashi Nippon International University, a private university located in the city of Iwaki, Fukushima, Japan. We offer various courses such as Sports Management, economics and even Egyptology!
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FOSTERING THE LEADERS OF INDUSTRY 4.0 Japan wants to be at the forefront of the Fourth Industrial Revolution and key to its aspirations are the nation’s universities, which are training a new generation of engineers that will drive the industry of tomorrow. With the emergence of technologies such as robotics, artificial intelligence and the Internet of Things, the world is witnessing the dawn of a new era hailed as the Fourth Industrial Revolution (or Industry 4.0). Simultaneously, Japan is undergoing a period of economic revitalization that is underpinned by technology and innovation. Consumer electronics and automobile industries played a major role in turning Japan into a global economic powerhouse in the 1970s and 80s, before the onset of what is known as the “lost decade.” But The Land of the Rising Sun is ready to rise again, leveraging on its technology pedigree to put itself at the forefront of the Fourth Industrial Revolution. Indeed, the nation’s universities will be crucial to this pursuit. Many are carrying out groundbreaking research in robotics AI and adopting new skills-intensive programs to foster the future leaders of Industry 4.0. “Japan is at the forefront of Industry 4.0. We are making breakthrough advances in smart technologies, such as AI and IoT. Consequently, local universities have to be focused on teaching upto-date and practical skills in order to create a capable workforce,” says Japanese education minister, Yoshimasa Hayashi. “More seriously, Japan is at the forefront of Society 5.0. AI, IoT,
ate key technologies in the field of ICT,” says AU president, Ryuichi Oka. “Since its establishment, the university has continuously focused on AI, robotics, big data analysis and other related fields. Therefore, our university is at the forefront of many promising fields of research and other developments that will undeniably shape our future.”
automation, robotics … introducing these kinds of ideas and technologies into society requires social stability and acceptance. With our aging population and our shrinking labor force, the innovative technologies of Society 5.0 come as a perfect match.” “By combining all of these advantages, Japan will become the solution number one country. And this time, we will be the ones with a head start. Therefore, I want to invite international students and faculty to come here and to learn from the front runners of Industry 4.0. Come study in Japan, and together, let’s build the society of the future,” he says. University of Aizu Established in 1993, The University of Aizu (UA) in Fukashima was the first university dedicated
to computer science engineering in Japan. UA’s Research Center for Advanced Information Science and Technology (CAIST) specializes in five emphasized fields of research, or “clusters”: robots, space science, biomedical engineering, cloud, and high-performance computing. At the Aizu Research Cluster for Robots (ARC-Robot), UA says it will apply its information communication technologies to robotics in order to take robots to the next stage, as well as creating a new field of study in computer science and engineering from the experience it gains in robotics development. “Twenty-five years ago, UA was established. The mission of the university is to confirm that ICT is a critical field in order to advance knowledge for humanity, and it has therefore become our motto. Our university’s goal is to endlessly cre-
Q “Japan is at the forefront of Industry 4.0. We are making breakthrough advances in smart technologies, such as AI and IoT. Consequently, local universities have to be focused on teaching up-to-date and practical skills in order to create a capable workforce.” YOSHIMASA HAYASHI, Minister of Education One of the key perks that UA can offer its students is the opportunity to travel to another hive of innovation across the Pacific Ocean: Silicon Valley. Each year, the university sends talented students to the U.S. to gain experience working with engineers and to show their own products to potential investors in the technology hub. Oka says students are energized by the unique atmosphere of Silicon Valley, where they also can learn how to commercialize their products.
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“We have a dual degree program that allows foreign students to pursue multiple degrees. Foreign and Japanese students can take the opportunity to visit Silicon Valley as well as take part-time jobs in ICT companies around the University of Aizu,” he adds. “We can provide a unique environment by mixing the Japanese and Western way of research, and it is a unique one for creating original algorithms in ICT technology. The Japanese way of thinking is holistic, while the Western one is analytic. By mixing both educations, we create a unique and complete educational system. We want each of our students to graduate with special skills that will allow them to develop tomorrow’s technologies,” Oka says. Robotics Powerhouse In 2014, Prime Minister Shinzo Abe unveiled a plan to maintain the country’s position as an international robotics superpower by creating a new industrial revolution driven by robotics, a market that Mr. Abe hopes will reach a value of US$21 billion by 2020. Academic research is central to Japan’s robotic aspirations. There are more than 70 university-sponsored robotic laboratories in Japan, according to the Robotics Society of Japan. Leading labs include the facilities at Kyoto University, Yokohama National University, Osaka University and the Nagoya Institute of Technology. Public research organizations involved in robotics development include the Japan Aerospace Exploration Agency
Q “As a solution, we invite professors and lecturers from Asia to learn about robotics and other high technologies here at SIT. Robotics is an interesting field of research and of education. We are therefore expanding this field not only in Japan and SIT, but also in other Asian countries.”
Q “Since its establishment, the university has continuously focused on AI, robotics, big data analysis and other related fields. Therefore, our university is at the forefront of many promising fields of research and other developments that will undeniably shape our future.”
MASATO MURAKAMI, President, Shibaura Institute of Technology
RYUICHI OKA, President, University of Aizu
(JAXA), the National Institute of Informatics and the National Institute of Science and Technology. The Shibaura Institute of Technology established its robotics research center in 2015 and has 40 professors working there full time as it aims to advance in this exciting segment of the Fourth Industrial Revolution. It invites professors and researchers from all over Asia to come work at the center. “I believe Japan is number one in the world in the field of robotics technology, and it is an area of interest for many students. Because it is
such an advanced technology, it is difficult to find professors with a major in robotics to create international partnerships,” explains SIT president, Masato Murakami. “As a solution, we invite professors and lecturers from Asia to learn about robotics and other high technologies here at SIT. They then go back to their countries to establish a new department. We promote international collaboration with SIT graduates who have become professors. Robotics is an interesting field of research and of education. We are therefore expanding this field
Project Team: Antoine Azoulay (Country Director); Aline Ouaknine (Project Director); Alexandre Marland (Editorial Director); Fabrizio F. Farina (Regional Director of Institutional Relations); Jonathan Meaney (Chief Editor)
#TheWorldfolio #JapanTheWorldfolio
not only in Japan and SIT, but also in other Asian countries,” he says. Like most universities in Japan, SIT is in the process of becoming a more international university and is a member of the Top Global University project. Murakami explains the mission of SIT is to foster engineers and scientists who can learn from the world and contribute to global sustainability. To accomplish this goal, it encourages its students to see the world. The university is also encouraging more foreign students to come and experience the unique learning atmosphere that SIT has to offer. “Most industries in Japan are already globalized. It is now the turn of Japanese universities to globalize. In fact, higher education in the STEM [science, technology, engineering, and mathematics] field itself is borderless. Performing higher education in a global environment is important in the internationalizing process of Japanese universities,” says Murakami. “Thus we are increasing the number of international students and faculty at Shibaura Institute of Technology. I also encourage my students to go abroad and see the world. By sharing the traditional values of Monozukuri, or craftsman spirit and tradition, Japan can grow into the teacher of Asia. Students from Asia are also intelligent and industrious, and inspire Japanese students. International students as a whole—not just those from Asia—are very important for education and research at SIT. Hence, we wish to invite more international students,” he says.
Produced by The Worldfolio. Forbes Asia magazine did not participate in its preparation and is not responsible for its content.
ENGINEER YOUR PATH TO THE FUTURE The Shibaura Institute of Technology in Tokyo is the only private technology university to be selected for the Japanese government’s prestigious Top Global University Project.
www.shibaura-it.ac.jp/en
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JAPAN’S MOST INTERNATIONAL UNIVERSITY Q “About 97.8% of our international undergraduate degree students are not here on an exchange basis. They’re here to stay at least four years. This means their involvement in the curriculum, in extracurricular activities, and involvement in the local community is very serious.”
A small university with a grand vision, Ritsumeikan D(3C C13 1 43%0)(3'" C3+( '* /*('0) 2)CH&C'0( $3'L C4 international mindset—global citizens with the power to 1LC420 'L0 $*),H C4H ,0CH 'L0 D(3C@ C13 1 )023*4G The Ministry of Education’s Top Global University Project provides funding support for 37 world-class and innovative universities that are leading the internationalization of Japanese universities. Among the program’s 37 beneficiary universities is Ritsumeikan Asia Pacific University (APU). With 50% of its students and faculty members coming from more than 80 countries, it is well ahead of the pack in terms of internationalization, and already offers most major subjects in both English and Japanese. “Generally speaking, Japanese universities have high-quality classes in engineering, science and technology. When it comes to undergraduate education, they are very weak, especially in the field of internationalization. It’s a reason why Japanese
universities are often not high in any international ranking systems. But our international undergraduate education at APU gets full marks,” says APU vice president, Kenji Yokoyama. “About 97.8% of our international undergraduate degree students are not here on an exchange basis. They’re here to stay at least four years. This means their involvement in the curriculum, in extracurricular activities, and involvement in the local community is very serious. This is the main difference between APU and other international universities.” The small university has a grand vision. Under the Top Global University Project, APU has defined a set of goals called the Four 100s—these include creating a campus that can attract students from 100 countries and providing 100% of domestic
In order for our students to contribute to the society in which they live, we are convinced that knowledge and expertise alone are not everything. It is also important to enrich their personality. We devote our education to helping our students develop a personality that has “The Knowledge,” “The Heart” and “The Mind” all blended in harmony.
The spirit of the true hospitality
www.bunri-c.ac.jp/univ/english
students with overseas learning experience. “Three years ago, APU created a vision for 2030. It is a grand vision that promotes the successes of APU’s alumni in their future endeavors and in their actions to change the world. Our graduates number at about 15,000 and they are scattered across the world,” explains APU president Haruaki Deguchi. “Our vision includes different ideas for university education,” adds Dean of Admissions, Yuichi Kondo “It’s about global citizenship: how we want to educate students to become citizens of the world. Most Japanese universities have a vague motto and a mission statement that involves a philosophy. But our university goes beyond this with global standards. This vision is to help our students be change agents—to change the world as a global citizen—and we want to achieve an environment that fully supports this by 2030.” With the majority of its international students coming from Asia, another key goal for APU is fostering the young talent capable of contributing to the future shape of the Asia-Pacific region, which, due to rapid economic growth and the establishment of the ASEAN Economic Community, is set to play a greater role on the international stage, both economically and politically. “APU will go on to play a vital role in fostering the leaders and the grand vision necessary to lead the Asia-Pacific region,” says Deguchi. “Our graduates are able to study at a U.N.-like organization with a strong financial foundation and a truly diverse and international environment with Japanese and English as common languages for their classes.”
Q “APU will go on to play a vital role in fostering the leaders and the grand vision necessary to lead the Asia-Pacific region.” HARUAKI DEGUCHI, President, Ritsumeikan Asia
C13 1 43%0)(3'" Deguchi believes that immersing Japanese students in a culturally diverse environment is crucial for the future of the Japanese economy, which, he says, up to now has been based on the factory model, where values based on “unity, order and harmony” have been cultivated among the workforce at the expense of other values such as creativity and free thinking. “Japan raised workers that could endure and persevere, and these characteristics are not linked to creativity, uniqueness or critical thinking. Do you believe that Steve Jobs could have thrived in a factory? Considering our economic situation, the key to Japan’s further success lies in its ability to foster a workforce that has values similar to those of Steve Jobs: values of creativity and diversity,” he says. “The finest strategy to foster a diverse society is to make people interact with a variety of different cultures. We must encourage diversity and promote the immersion of oneself into what is foreign. I believe that APU is a ‘United Nations’ composed of young people. Studying in such an international environment at such a young age enhances the growth rate of any individual. It is a true opportunity to expand oneself,” Deguchi adds.
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TIMOTHY ARCHIBALD FOR FORBES 64 | FORBES ASIA JUNESEPTEMBER 30, 2018 2018
Tween
Millions of preteens play video games on Roblox’s website. That’s not unusual for a social gaming unicorn. What is unusual: Teaching kids the rudiments of coding and paying them like entrepreneurs.
preneurs BY ALEX KNAPP
Roblox box: Cofounder Dave Baszucki leans against a mockup of a video game action-figure set at the firm’s headquarters in San Mateo, California.
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hen Alex Binello was 13, he started playing games on a website called Roblox. He loved spending time with titles like Work at a Pizza Place and Down Hill Smash! so much that he was inspired to build his own. Now, 11 years later, he is the creator of MeepCity, a sprawling role-playing game that got 15 million visitors in July on the Roblox platform. Forbes estimates the cartoonish game has earned Binello millions since its inception in 2016. he 23-year-old, who has never taken a single computer programming class, now employs a salaried creative director and uses six other freelance workers to keep his game updated. “Roblox has just been part of my life,” he says. “I feel raised by it a little bit.” Roblox, based in San Mateo, California, is a combination gaming and social media platform. here are millions of games that players—mostly young people—can explore with their friends, chatting and interacting all the way. But what’s unique about Roblox is that the gaming company isn’t in the business of making games—it just provides the tools and the platform for kids to make their own unique creations. Most impressively, Roblox has turned its tween audience into an army of fresh-faced entrepreneurs. Developers can charge Robux, a virtual currency, for various items and game experiences, and they can exchange the Robux they earn for real money: 100 Robux can be cashed out for 35 cents. (Players can buy 100 Robux for $1.) “A lot of the developers on Roblox grew up on the platform,” says Dave Baszucki, Roblox’s 55-year-old cofounder and CEO. “And many of them are now starting to earn their living on the platform.” Kids, as it turns out, are pretty good at making games that attract other kids. Globally, Roblox sees more than 70 million unique visitors a month. Accord-
ing to comScore, 6- to 12-year-olds spend more time on Roblox than any other site on the internet. Among teenagers, it ranks second, just behind Google’s sites, including YouTube. hat translates into some pretty impressive numbers: Roblox is cash-flow-positive on an estimated $100 million in revenue last year (this year that igure should be north of $200 million) and has raised some $185 million in venture funding, valuing the company at around $2.5 billion. Baszucki’s stake is worth an estimated $300 million. (Ro-
can Idol for up-and-coming game developers,” Baszucki says. Roblox has its origin in a company Baszucki founded in 1989, an education tech startup called Knowledge Revolution. hat company built a program that served as a 2-D lab where students and teachers could model physics problems with virtual levers, ramps, pulleys and projectiles. What Baszucki discovered as his sotware made it out into the student community was that kids were using the program to do things far beyond textbook physics problems. Instead, students were modeling cars crashing, buildings falling over and other fun stuf that the program’s physics tools enabled them to build. “Creativity by the players themselves was so much more engaging than the content from the physics books,” he says. In 1998, Knowledge Revolution was acquired for $20 million by an engineering sotware company called MSC Sotware, so Baszucki decided to take some time of and igure out what he wanted to do next. Inspired by the worlds kids had built in his interactive physics program, he and Erik Cassel, who had been vice president of engineering at Knowledge Revolution, “went into a room for over a year and a half ” to build the irst version of Roblox. “Right when we started, we imagined a new category of people doing things together,” Baszucki says. “A category that involved friends, like social networking; a category that involved immersive 3-D, like gaming; a category that involved cool content, like a media company; and inally a category that had unlimited creation, like a building toy.” For the irst few months ater Roblox’s 2005 beta deployment, the user community was tiny—during peak periods about 50 people were playing at the same time (today that number averages over a million), but the small size of the community enabled Baszucki and Cassel to hang out
IN 2017 UP-AND-COMING GAME DEVELOPERS EARNED NEARLY $40 MILLION ON ROBLOX. THIS YEAR THAT NUMBER SHOULD TOP $70 MILLION.
66 | FORBES ASIA SEPTEMBER 2018
blox’s other founder, Erik Cassel, died of cancer in February 2013.) Part of the reason for this growth is the sheer number of games being produced. Nearly one million games are created every month by more than 4 million developers on the platform. hese games cover a wide variety of genres, from traditional racing and role-playing games to the popular “cops and robbers” game Jailbreak to more mundane simulations like Snow Shoveling Simulator and Work at a Pizza Place. he platform has even spawned its own genres, such as “obbys,” complex, hard-to-navigate obstacle courses. “It’s almost as if we’re running Ameri-
with the players and get feedback as they reined the platform. Once the pair published Roblox Studio—the app that enables Roblox users to create games and simulations— the floodgates began to open. By the year 2012, Roblox had more than 7 million unique visitors per month, making it one of the most popular entertainment sites for kids. he site continued to grow, but tragedy struck its founding team when Cassel was diagnosed with cancer. “He loved what he was doing at Roblox,” Baszucki says. “And I saw Erik not change. He kept doing what he was doing. What for me was so amazing to see was that he was already in a good state of balance, and it kind of made me look at my own life. It was an inspiration for the people we hire—inding the type of cultural it where people have a passion and share our dream and make this an amazing environment.” As the company grew, it also experimented with diferent business models. Initially, revenue came from advertising and a premium membership model called Builders Club. But ater a few years the company had moved to its current model: selling Robux. Roblox’s monetization scheme allows young developers to obtain a cut of the money spent on their games. In 2017, developers earned nearly $40 million on the platform. hat number is expected to surpass $70 million in 2018. Roblox has also started to make toys—think action igures and plastic cars—based on popular games. It shares the money it makes from those toys with its developers, earning them an additional $1 million in royalties in 2017. “We just empower developers to igure it out,” said Craig Donato, Roblox’s chief business oicer. “If a dev is too aggressive with monetization, kids won’t play. If they have a great idea, it’ll get copied.” he company also helps budding coders up their game. Its annual developer’s conference draws Roblox developers from all over the world to meet one another and exchange tips and tricks. More than 400 people came to this year’s RDC, which was held in San Francisco in July. he company also has a paid intern-
TOP-EARNING ROBLOX GAMES ship program that works as an incuTHESE FIVE TITLES HAVE EARNED A COMBINED $16 MILLION FOR THEIR YOUNG CREATORS IN THE FIRST SEVEN MONTHS OF 2018.
TITLE
CREATOR
LAUNCHED
TIMES PLAYED
ALEX BINELLO FEB 2016 2 BIL MEEPCITY Play mini-games like go-kart racing or just hang out with friends in this role-playing game based in a sprawling city.
JAILBREAK BADIMO JAN 2017 1 BIL Cops and robbers on a grand scale, where kids play either police oicers or criminals.
MURDER MYSTERY 2 NIKILIS JAN 2014 1 BIL Players have to unmask the killer in their midst—before they’re next.
WELCOME TO BLOXBURG COEPTUS NOV 2014 425 MIL A Sims-like game where players work jobs, then use the money to buy houses, vehicles and more.
MINING SIMULATOR RUMBLE STUDIOS FEB 2018 288 MIL Strike it rich mining gems and precious metals.
bator or accelerator for young devs to create games and improve them. his program at the company’s Silicon Valley headquarters teaches them projectmanagement skills and holds them accountable for the deadlines they set for their projects. Since Roblox doesn’t need to worry about making games—or even how to make money from them—it can focus almost exclusively on infrastructure. he company is in the process of moving its platform from third-party cloud services to its own cloud. It’s hired Dan Williams, who helped Dropbox move of Amazon’s Web service. he next phase? Going international. Although Roblox’s users come from more than three dozen countries, the platform was English-only and dollars-only until just a few months ago, when Roblox launched a Spanish version. Since then, the company has averaged 5 million visitors a month from Spanish-speaking countries. he company has also produced Brazilian Portuguese, French and German versions. It just hosted its second European developer’s conference and is building up teams to expand into more regions over the next few years. “It’s super-exciting to think that a kid in Jakarta can make a game that a kid in Menlo Park would never even imagine but is really fun and relevant to other kids in Southeast Asia—and maybe the kid in Menlo Park, too,” says Chris Misner, the president of Roblox International. “Our hope is that we will actually bring people together around the world,” Baszucki adds. Despite the enormous growth of the platform, Baszucki still keeps in touch with his power users—even if many don’t know his name. On a Friday-morning company tour for players, a guide asked the kids if they’ve ever heard of Dave Baszucki—they all shook their heads. hen she asked if they knew Builderman (Baszucki’s name within Roblox). A loud “Yes!” erupted from the group. F
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WATCHBOX
Better Over Time Sincere Watch scion embraces a new idea: sell older models. BY PAMELA AMBLER
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FABRICE COFFRINI/AFP/GETTY IMAGES (TOP); LIANHE ZAOBAO © SINGAPORE PRESS HOLDINGS LIMITED
T
ay Liam Wee is part of the to resale mostly global luxury-watch elite. focus on the U.S. His father, Tay Boo Jiang, market. led Singapore’s Sincere In a Hong Watch to retail promiKong interview, nence. It was sold to Hong Kong rival Tay—sporting Peace Mark in 2007 at a market high, a classic Rolex and ater the global inancial crisis Presidential with dragged the buyer into bankruptcy, the a gold bracelet, younger Tay fetched his family business deep blue face and back for not even a quarter of what he’d diamond index— sold it for. A few years later, he flipped says the secondary the irm again at twice the purchase inventory is too price. For a bit, that got him a spot on large for auction our Southeast Asia Rich List. houses to handle. So how does the 59-year-old build “he watch divion that legacy? In used watches, with sion in terms of new-concept global retailer WatchBox, sale is $300 milwhich sells only “pre-owned” timelion,” he notes. The pre-owned market is big, in more ways than one. pieces. He’s invested with U.S. industry hat’s a fraction veteran Danny Govberg and another of the pre-owned and restores them. WatchBox provides cofounder, Justin Reis, together raising market, which by Swiss advisory irm a warranty for authenticity. Refur$100 million more from Singapore priKepler Cheuvreux’s estimates is $5 bilbished watches, averaging $10,000 a vate equity irm CMIA Capital Partners lion a year. piece, are then resold through the netto fuel a global expansion. WatchBox is pushing ahead in work at a 15% to 20% spread, says Tay, he Swiss-centered luxury watch Asia, now the world’s most important who serves as Watchbox’s chairman. He industry has always watch market, with a forecasts 2018 sales at $200 million. shunned used physical showroom Some analysts estimate that the products for fear of in Hong Kong’s pre-owned market in premium watches cannibalizing new Central district. he could eclipse new sales in ive years, watch sales—aside “collector’s lounge” but WatchBox will hardly have that from the auction of is stacked with art to itself. Driven by an industrywide rare vintage colrelating to the conslowdown in sales, watchmakers lectibles, which cept of time, curated have swallowed some of their doubts. helps reinforce the by Cindy Chau, Tay’s Boutique Swiss maker MB&F launched notion that pricey well-connected secondhand sales online at roughly a watches are a good spouse. he space is 25% discount. Blue-chip Swiss brand investment. To be also part oice, part Audemars Piguet is setting up a similar sure, used watches meeting ground for distribution channel. Luxury goods have had a market, watch aicionados. group Richemont acquired Watchbut mostly of late he Web portal inder, a platform to buy and sell used through big Web difers from consign- watches both online and oline. emporia like eBay ment sites Chrono24 WatchBox is taking the ight well and Amazon. A and Chronext in that beyond Asia. In fact, this summer it handful of smaller it takes physical posopened an oice to lead its European sites dedicated session of all watches expansion—in Switzerland. F Watchbox Chairman Tay LIam Wee.
PROMOTION 1
Forbes Under 3O Summit Asia Hong Kong July 16–18,2O18
Participants and sponsors at the Forbes Under 30 Summit Asia.
The third edition of the annual Forbes Under 30 Summit Asia was held in Hong Kong, from July 16-18, 2018. Under the theme of “Driving Change ”, the summit gathered over 320 young leaders, entrepreneurs and ’ gamechangers from Forbes “30 Under 30 Asia” lists, as well as CEOs, mentors, industry leaders, investors and disruptors from across Asia.
The summit featured compelling content from an all-star lineup of speakers in panel discussions, display of ’ innovative futuristic technologies in tech demos, as well as a Food and Music Festival showcasing Asia s most brilliant young chefs and rising Asian entertainers.
PROMOTION 2
1-ON-1
with Carrie Lam, The Chief Executive, Hong Kong Special Administrative Region, Peopleâ&#x20AC;&#x2122;s Republic of China
WELCOME REMARKS by Edward Yau Tang-wah, Secretary for Commerce and Economic Development, Hong Kong Special Administrative Region Government
Hong Kong Chief Executive Carrie Lam engaged in a one-on-one dialogue with K G # > > I Ă? H C F role as a hub for entrepreneurship and innovation.
KEYNOTE INTERVIEW
METRICS OF SUCCESS
with Tan Min-Liang, Cofounder & CEO, Razer
N H ZG K Q # M @ Âą M J "
O #
PART 1: STORIES OF SUCCESS FROM ASIA
B B # > ` H J B > J with Pamela Ambler, Digital Reporter of Forbes Asia.
PART 2: REACHING FOR THE SKIES
PART 3: WHATâ&#x20AC;&#x2122;S MONEY GOT TO DO WITH IT?
South Korean singer Eric Nam showed a few dance K G # > > I Ă? H Kanika Tekriwal, Cofounder & CEO , JetSetGo
Stanislava Pinchuk, Artist
PROMOTION 3
SUSTAINABILITY
Panelists discussed the ways they are contributing to a more sustainable future in Asia.
PART 1: WORKING TOWARDS A SUSTAINABLE FUTURE IN ASIA
(L-R)
" F # # ?
M X P M # # C @ X " ! # H?# B J X J " # ? K # "
PART 2: NECESSITY IS THE MOTHER OF INVENTION
Reyhan Jamalova, Founder, Rainergy
DISRUPTIVE TECHNOLOGY Tech disruptors presented their innovative solutions and highlighted how these technologies are changing the world.
PART 1: TECH SHOWCASE
Hu Zhenyu, Founder & Executive Director, Linkspace
Togo Ogi, Cofounder, FunLife
PART 2: DISRUPTING THE STATUS QUO
Dhruv Sharma, Founder, GuestHouser
(L-R)
E N # # @ X J " # Digital Reporter, Forbes Asia
H K # > & COO, Bitspark
PART 3: THE ULTIMATE PART 4: THE FUTURE OF AI IN ASIA HACK TRICK
M H # > & CEO, Lucideus
(L-R)
H C Q # >@I ` # G X M M # # N H X ? B C # >@I# JN E I X N G # J # S
PROMOTION 4
SOCIAL RESPONSIBILITY
Panelists shared more about their causes and how some of them used entrepreneurship as a tool for social change.
PART 1: ENTREPRENEURSHIP FOR A CAUSE
(L-R)
PART 2: INSPIRING CHANGE
G R F # > # N J J X M M # > # @ " X N = # # ? Q C X K Q # M @ Âą M J # "
DISCOVERY AREA
Suhani Jalota, Founder, H H
The discovery area showcased some of the most exciting inventions and products that landed their creators on the Forbes 30 Under 30 Asia lists. The products on display included AR goggles, robots, wearables and more. Forbes 30 Under 30 Asia listmaker Chen Jingshu, Cofounder P K PK \ ] PK
Florian Simmendinger, Founder & CEO of Soundbrenner (middle) with a participant trying out the Soundbrenner Pulse, a wearable smart vibrating metronome.
Esther ChunShu Wang, Founder of Joytingle (left) presented her educational toy called â&#x20AC;&#x153;Rabbit Rayâ&#x20AC;? that teaches children about common medical procedures.
M Q # > H @ (right) â&#x20AC;&#x201C; which donates a pair of prescription glasses to students in rural China for every H Âą P G # " B H C Land Development. Ramesh Dhami (left) and Shriyans Bhandari (right), Cofounders of Greensole showcased their comfortable footwear made from refurbished discarded shoes, which are Ă? D
Sang Hun Oh, Cofounder of LUXROBO (left) demonstrated
fHI?Dj D N
PROMOTION 5
FOOD & MUSIC FESTIVAL N ` H featured young chefs and performers showcasing their talents. Kickstarting the festival were the G K # by cooking demonstrations from Pichaya (Pam) Utharntharm, Chef at The Table from Thailand, N M # =@"O D # H " # > N B Philippines. I H # " H festival. All-star Forbes 30 Under 30 Asia alumnus and South Korean singer Eric Nam also took to the stage for a truly memorable end to the night.
COOKING DEMONSTRATIONS
Chef Pam
Chef Talita
"@GIM K G K
MUSIC PERFORMANCES
> H
" H
Eric Nam
â&#x20AC;&#x153;MEET THE MENTORSâ&#x20AC;? AND STARTUP TOUR @ METTA " fH H j
H -, one of Hong Kongâ&#x20AC;&#x2122;s leading innovation community hubs. The session connected selected young entrepreneurs 52 O 52 " Ă?
52 O 52 " M = # ? > Foundation (4th from right) with young entrepreneurs.
A tour was also
H -, where participants learnt about industry trends and fundraising, as well as networked with some of the communityâ&#x20AC;&#x2122;s prominent members.
PROMOTION 6
HONG KONG STARTUP OPEN HOUSE The Hong Kong Startup Open House gathered local entrepreneurs from Hong Kongâ&#x20AC;&#x2122;s hottest startups spanning various industries like consumer tech, education and e-commerce. Four homegrown of the cityâ&#x20AC;&#x2122;s rising startup scene.
Tommaso Tamburnotti, Cofounder of Easyship (left), a Hong Kong-based e-commerce platform that aims to simplify logistics for small to mediumsized e-commerce sellers. Jasmine Lau, Cofounder & Executive Director J H \ ]# empowering millennials for impactful social ventures.
PUB CRAWL @ LAN KWAI FONG HONG KONG SIGHTSEEING TOURS
Participants also had the opportunity to explore Hong Kongâ&#x20AC;&#x2122;s famed entertainment district, Lan Kwai Fong, barhopping and visiting some of the areaâ&#x20AC;&#x2122;s trendiest and most unique nightlife spots.
C F D N
Hong Kong Foodie Tasting Tour
From a walking tour for foodies to taste well-known local delights, to an island tour introducing some of Hong Kongâ&#x20AC;&#x2122;s popular landmarks such as The Peak which overlooks the cityâ&#x20AC;&#x2122;s spectacular skyline, Forbes 30 Under 30 Asia listmakers got to experience some of Hong Kongâ&#x20AC;&#x2122;s most iconic sights and features.
Photos credit â&#x20AC;&#x201C; Hong Kong Tourism Board (Bottom row)
â&#x20AC;&#x2DC;UNDER 30â&#x20AC;&#x2122; TRAM PITCH
H K # J H \4nd from left), pitching his startup onboard Hong Kongâ&#x20AC;&#x2122;s iconic old wooden tram.
Sponsored by Hong Kong Tourism Board, Forbes hosted startup pitching sessions onboard one of Hong Kongâ&#x20AC;&#x2122;s oldest wooden antique trams, a classic symbol of the city. Forbes 30 Under 30 Asia listmakers presented their startups as the tram roamed the busy streets of Hong Kong island.
PROMOTION 7
NETWORKING
Forbes 30 Under 30 Asia honorees and participants also had the opportunity to network during the event.
(L-R) M E # # H H X C F > @ Carrie Lam
(L-R) " M # # M X G J # > # I M G X ! H # > # I M G X Q " # >@I^" # H X C M # # M X " ? # >@I# N
(L-R) " > # > Z>@I ` > # C X ? # > # B G X N H ZG # > ` >@I# K X J M # > # B G X S R # > # IHI J
(L-R) " = # > # N D X J J # # C M B X P M # > # J H
(L-R) E R # " X P > # Founder, Good Food Enterprise
(L-R) " > # > # ? C X " M ZE # > # B N J X K J # > # J " X ! M # K # O M X Jeffrey Effendi, Cofounder, DrawHistory
(L-R) Peter Lam, Chairman, Hong Kong N = X " S # > # Lan Kwai Fong Group
(L-R) M J # # H X E
R # J # D >
(L-R) > J # > # B X M I # # > X O R F # > # @ > X C F # > # B
PROMOTION 8
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(L-R) " I # " X B M E # # I " X M M # > # H P X M M # # N H X > ? # > ? # Q Q
(L-R) I R # > # B X Adrian Ang, Founder, AEvice Health
(L-R) N # > Z ^>@I# G X H M # # S@"GM
" MJ@>D"G NC"!FM NI NC@ MOJJIKND!B IKB"!DS"NDI!M# MJI!MIK# MOJJIKND!B MJI!MIKM "!? J"KND>DJ"!NM I NC@ FORBES UNDER 30 SUMMIT ASIA
Supporting Organizations
Sponsor
Supporting Sponsors
FORBES ASIA
BILLIONAIRES TO BE
Cigarette Breakers
BRIAN TAYLOR FOR FORBES
James Monsees and Adam Bowen have cornered the U.S. e-cigarette market with Juul. Up next: the world. BY KATHLEEN CHAYKOWSKI “CIGARETTES ARE PROBABLY the most successful consumer product of all time, and they kill more than half of all people who use them long-term,” says James Monsees (above, left), the 38-year-old cofounder of Juul Labs, maker of the world’s most popular e-cigarette. “hat got us interested.” Juul (pronounced jewel) introduced its flash-driveshaped device in 2015 and has since taken over some 70% of the U.S. market. A Juul, which transforms a pod of nicotine-laced liquid into inhalable vapor, sells for $34.99, while a four-pack of pods goes for $15.99 (some pods contain as much nicotine as a pack of cigarettes). Juul’s revenue should grow by more than 300% this year, to roughly $1 billion. he company, which is proitable, is valued by investors at nearly $16.3 billion; Forbes estimates that Monsees and his cofounder, Adam Bowen, 43, each own about 5% of Juul, stakes worth some $730 million each. E-cigarettes are unquestionably safer than traditional smokes, containing fewer toxins than the mélange of
7,000 chemicals found in regular cigarettes. But e-cigarettes have drawn criticism for their popularity among teenagers and the lack of research into their long-term health efects. Monsees is not concerned: “A fairly small percentage of underage consumers are creating a lot of noise and distracting us from what can otherwise be one of the greatest advances in public health in our lifetime.” In April, however, the Food & Drug Administration requested documents from Juul about its advertising and the product’s health impact, to investigate whether the company has intentionally appealed to youth. Monsees says Juul never has and never will market to underage consumers. he founders are concentrating on expanding Juul’s foreign reach. It’ll face opposition overseas, too; last month Israel banned the Juul device. “We are 0.5% of the global tobacco market,” Monsees says. “We’ve hardly touched the problem we’ve come out here to solve.”
SEPTEMBER 2018 FORBES ASIA | 77
Technology
Breaking Hearts HeartFlow has raised $467 million for a test to detect heart disease. Problem: It might not make patients better off. BY ELLIE KINCAID
J
ohn Stevens’ corner oice in Redwood City, California, has a nice view of the San Francisco-Oakland Bay Bridge. His desk, though, is a hand-me-down, and the cracked leather upholstery on the chairs reveals their history as Ikea floor models. “We can probably aford some new chairs now,” he says. You’d think. HeartFlow, the health-tech startup of which Stevens is chief executive and president, has raised $467 million, most recently at a $1.5 billion valuation, from investors such as Wellington Management, Baillie Giford & Co., GE Ventures and BlueCross BlueShield Ventures, according to Pitchbook. he valuation is based on a big idea: a noninvasive test that peers into a patient’s coronary arteries to see how blocked they are. Right now, such a test involves threading a catheter from the groin up to the heart and measuring blood flow, a slightly risky procedure called fractional flow reserve (FFR) that is done a million times a year worldwide to decide whether a patient needs a stent to open a clogged artery. Using sotware trained with a deep-learning algorithm, HeartFlow says it can get a similar measurement from a CT scan, a lower-risk, threedimensional picture of the heart constructed with X-rays. Medicare reimburses HeartFlow $1,450 per test. “his will be the most efective way of looking at cardiovascular disease and safer than anything else on the market,” says Bill Weldon, HeartFlow’s chairman and the former chief executive of Johnson & Johnson. “And when you put those together, it’s a combination you can’t beat.” He sees the test being used routinely. Skeptics are legion. “Over time, these kinds of technologies get hyped, and when they get studied, reality sets in,” says Steven Nissen, the chairman of cardiology at the Cleveland Clinic. “Someone takes an idea that seems very sexy and attractive, but when you get down to the science, it isn’t solid.” he technology’s usefulness may come down to a deeper question: How efective are stents for treating heart disease, and do you even need to know whether an artery is open or not? HeartFlow was started by Charles Taylor, who as a Ph.D. student in the 1990s was studying how wind coursed over the
78 | FORBES ASIA SEPTEMBER 2018
wings of ighter jets. Could the same mathematics explain blood moving through the heart? He hooked up with Christopher Zarins, the chief of vascular surgery at Stanford’s School of Medicine, earning a Ph.D. for the cardiology work and becoming a professor at Stanford himself. Together, they founded HeartFlow in 2007. Taylor, HeartFlow’s chief technology oicer, did a study of his early sotware on a dozen patients in Latvia and raised $2 million in venture capital. Stevens had been inspired to become a surgeon as a boy, ater a pitchfork went through his toe, but quit his job doing heart operations for the startup life two decades ago. He joined Taylor in 2010. In a 2014 study, HeartFlow’s sotware analyzed the CT scans of 254 patients, matching FFR 84% of the time in detecting a clog and 86% when blood was flowing freely. Later that year the FDA approved HeartFlow’s sotware as a medical device to evaluate the symptoms of coronary artery disease. Experts use the HeartFlow test mainly in ambiguous cases. Hank Plain, 60, a healthcare investor who focuses on medical devices, got a CT scan that showed calciied plaque in his coronary arteries, but a stress test (a walk on a treadmill with electrodes on his chest) indicated no problems. hen a CT scan was put through HeartFlow’s sotware, which revealed two partial blockages. His doctor decided to insert two stents. “It’s very scary to know you have coronary artery disease, knowing it played out with other family members,” Plain says. “It’s good to be back, focused on life.” An open question is when stents are worth their cost and risk. hey save lives when placed during a heart attack and ease chest pain. But a 2,287-patient study a decade ago and a more recent comparison to a sham procedure raised doubts that they are better than medication. So does using HeartFlow prevent unnecessary procedures or cause them? For every $1,450 test, HeartFlow says, it prevents $4,000 in costs. But “do patients live longer and have fewer heart attacks when you do this approach, as opposed to something more routine?,” asks Venkatesh Murthy, a cardiologist at the University of Michigan. Indeed, do patients need a cardiac flow measurement at all?
HEALTHTECH
HeartFlow CEO John Stevens at the Grand American Hotel in Salt Lake City. He says he quit being a heart surgeon because he could help more people as an entrepreneur.
TIM PANNELL FOR FORBES
“I don’t wake up in the middle of the night thinking can we do an FFR in more people,” says Ethan J. Weiss, a cardiologist at University of California, San Francisco. hen there are technical doubts. HeartFlow calculates flow by looking at the shape of a blood vessel, as one might guess the speed of a stream from the shape of its banks. “Trying to measure FFR from a CT scan is like trying to run a marathon on one leg,” says Darrel Francis, a professor of cardiology at the National Heart & Lung Institute in the U.K. According to a report in JAMA Cardiology, analyses that used CT scans to measure flow, including but not limited to HeartFlow, were much less accurate in sicker patients. HeartFlow says the re-
port is “fundamentally flawed.” here are also many believers, like Robert D. Saian, a cardiologist at Beaumont Health in Royal Oak, Michigan, who has received $3,000 from HeartFlow for travel. “Initially, I was one of the worst skeptics, but now I’m completely converted and I think it’s amazing technology,” he says. He’s used HeartFlow for the past three years on 2,000 patients. Most large U.S. insurers pay for HeartFlow’s test, as does the ever-skeptical U.K. National Health Service. Medicare is paying for it except in the western U.S. Says Stevens, the chief executive, “At the end of the day, the data will win.” F Matthew Herper contributed to this story.
SEPTEMBER 2018 FORBES ASIA | 79
TECHNOLOGY
BEN SIN // GADGETMAN
XU KE IS REALLY GOOD with numworths by selling user data. This is why blockbers. As an exchange student at the Uni- chain is important—you own the data yourself,” versity of California, Riverside in 2013, she says, explaining that her company couldn’t the Beijing native developed a knack for sell Ono users’ data even if it wanted to, bepoker, and though she was not yet 21 cause Ono is a “dapp,” or decentralized app. (the minimum gambling age in the U.S.) Ono is available in the Google Play store, at the time, the existence of online poker and the iOS version will come out this month. and lenient southern California casino It’s also accessible through any Web browser. laws allowed her to play regularly and I signed up and was surprised to see quite a bit hone her skills in probability and risk of English-language content, considering that assessment. most of the users are in China. The network Her days in card rooms both digital felt like Twitter (or more accurately, Weibo), and physical allowed her to meet a fair number of interesting, unconbut without character limits. “You are able to ventional characters, including investors in cryptocurrency, back before write as many words as you want,” Xu says. “crypto” became a business media buzzword. She was intrigued and Ono is funded by the $16 million that Nome began mining bitcoin. The deeper she dug into currency, the more she Labs raised from investors such as China agreed with its philosophy of decentralization via blockchain. Growth Capital and Korea Investment PartXu continued to play poker when she moved back to China in 2014. ners. Xu says the app will run ads and partner Whenever she scored big at the poker table, she’d invest the money in with brands down the line. bitcoin. At the peak of her bitcoin-buying days, Xu says, she had more The Nome team in Beijing has a staf of 76 than 50,000 units of the currency. She eventually cashed out 20,000 (Xu says there are 15 other stafers around the bitcoins in 2014 at $240, for a $4.8 million payday. world). There are also thousands of volunteers Now 24, Xu realizes that she sold them too soon—20,000 bitcoins who help oversee the site. “Ono is run demowould be worth $120 million now—but she made good use of the milcratically and lets content creators retain ownlions she did make. In 2016, after a stint creating and selling a social ership over their content and get rewarded,” app, she founded Nome Lab, a Beijing startup that specializes in making Xu says. This will be achieved via a system in blockchain product and games. which the best content creators (as voted by the Of these, the digital goods trading game CryptoDogs has been the community) receive digital currency that can be most successful. But this year, following recent controversies over traded or used for in-app purchases. Facebook’s misuse of personal data and giving a platform to far-right Xu has lofty goals for Ono. “I hope it can conspiracy theorists, Xu has focused on her next be the number one social idea: a free social network based on blockchain network,” she says. But technology, in which all user data are decentralized, while beating Facebook with a self-governing system that rewards users who will almost be impossible, share quality content. one has to admire her The beta version of the network, called Ono, competitive spirit. She says launched in April, and according to Xu it already has that every time she sells more than 3 million members. something—be it bitcoins Xu cites the origins of the Web as the inspiration or her first social app—she behind Ono: “When [British computer scientist] isn’t happy, despite the Tim Berners-Lee invented the World Wide Web, payday. his vision was to let humans exchange information “I enjoy winning more and knowledge freely. The internet belongs to all than making money,” she of us. But it’s become so centralized now. Most of says. “I want to build someXu Ke: poker fanatic and founder of Ono. the world’s top ten tech companies built their net thing that lasts.” F BEN SIN IS A HONG KONG-BASED CONTRIBUTOR TO FORBES.COM WHO WRITES ABOUT CONSUMER TECH.
80 | FORBES ASIA SEPTEMBER 2018
THOMAS KUHLENBECK FOR FORBES (TOP); BEN SIN
CASHING IN HER CHIPS
The Philippines’ 50 Richest BY GRACE CHUNG
Big Ups and Downs Volatility shakes up the list this year, enabling seven to make their debut.
T
here’s been a general lift in Philippine real estate and construction fortunes, and then there’s Manny Villar: His wealth has tripled over the past year, making him now the country’s second richest. Shares in his Golden Bria (formerly Golden Haven) leapt a staggering 1,300% in the first quarter, as a profitable business in burial services was joined with a new Villar vehicle for developing housing projects and condos for middle-class families. Investors saw in the mix a basis for the magnate building telecom infrastructure, an especially attractive play. The 50 ranking had an unusually volatile year, with 19 seeing net worths shift 20% or more, compared with just 12 last year. Ramon Ang, Inigo and Mercedes Zobel and Eduardo Cojuangco were among those on the upside, thanks to shares in their San Miguel, the country’s largest beer brewer, rising 70% from a year ago. In July it announced plans to invest $1 billion in ten new breweries across the Philippines and in other countries. Seven newcomers made the list, including self-made fashion designer Josie Natori and Necisto Sytengco of chemical-trading outfit SBS Philippines. Isidro Consunji and his siblings replace their founder father, David, who died last September (see p. 89). Others who make their debut are William Belo of big-box chain Wilcon Depot, Jerry Liu of semiconductor maker Cirtek Holding, and Rafael Simpao and Alberto Villarosa of Security Bank. A notable 27 fortunes declined, however. Media tycoons Gilberto Duavit, Menardo Jimenez and Felipe Gozon fell as shares in their GMA Network dropped 11%. The network posted a 21% decline in earnings for the first half of 2018. The biggest loser was Betty Ang of noodle giant Monde Nissin, who shed 70% of her total on a sharp fall in net income, according to the latest available annual report. Mining magnates Philip Ang and Luis Virata dropped off the list as the sector suffered from tighter state regulations on nickel extraction and increased competition from Indonesia. In the end, the 2018 barrier to entry was $125 million, up
84 | FORBES ASIA SEPTEMBER 2018
Manny Villar: Shares in his Golden Bria leapt 1,300%.
from $120 million a year ago. The list was compiled using information from the individuals, stock exchanges, analysts, private databases, government agencies and other sources. Net worths were based on stock prices and exchange rates as of the close of markets on August 24, 2018. Private companies were valued by using financial ratios and other comparisons with similar publicly traded companies. With reporting by: Pamela Ambler, Prisca Ang, Caroline Chen, Rebecca Feng, Neerja Jetley, Sean Kilachand, Anis Shakirah Mohd Muslimin, Suzy Nam, Anu Raghunathan, Sheela Sarvananda, Jessica Tan and Jennifer Wells.
THE LIST 1. HENRY SY $18.3 BILLION SM INVESTMENTS AGE: 93 2. MANUEL VILLAR $5 BILLION S GOLDEN BRIA AGE: 68
3. JOHN GOKONGWEI JR. $4.4 BILLION T JG SUMMIT AGE: 92
4. JAIME ZOBEL DE AYALA $4 BILLION AYALA CORP. AGE: 84
5. ENRIQUE RAZON JR. $3.9 BILLION INTERNATIONAL CONTAINER TERMINAL SERVICES AGE: 58
6. TONY TAN CAKTIONG $3.85 BILLION S JOLLIBEE AGE: 65
7. LUCIO TAN $3.8 BILLION LT GROUP AGE: 84
8. RAMON ANG $2.85 BILLION S SAN MIGUEL AGE: 64 9. GEORGE TY $2.75 BILLION T GT CAPITAL HOLDINGS AGE: 85 10. ANDREW TAN $2.6 BILLION ALLIANCE GLOBAL AGE: 66
11. INIGO & MERCEDES ZOBEL $2.5 BILLION S AYALA CORP. AGES: 62, 61
12. ISIDRO CONSUNJI & SIBLINGS $2.45 BILLION Ì DMCI AGE: 69
13. LUCIO & SUSAN CO $1.5 BILLION T PUREGOLD PRICE CLUB AGES: 63, 60
14. EDUARDO COJUANGCO $1.4 BILLION S SAN MIGUEL AGE: 83
15. ROBERT COYIUTO JR. $1.3 BILLION T PRUDENTIAL GUARANTEE & ASSURANCE AGE: 65
16. ROBERTO ONGPIN $1.25 BILLION ALPHALAND AGE: 81
WILFRED STEVEN UYTENGSU JR.: IRONMAN The Philippines boasts the label “Asia’s triathlon capital” thanks to the Alaska Milk chairman. Uytengsu’s Sunrise Events group brought the iconic Ironman races to the country a decade ago and has expanded to six headline-grabbing events: In August the Asia-Pacific Championship of Ironman in Cebu drew 2,500 triathletes from 52 countries. “Bringing in foreign athletes helps expand sports tourism and make the Philippines a destination,” says 57-year-old Uytengsu, a 20-year veteran of triathlon sports. His fortune comes from the 2012 sale of his family’s Alaska Milk to a Dutch company.
17. MERCEDES GOTIANUN $1.15 BILLION T FILINVEST DEVELOPMENT AGE: 90 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE
SEPTEMBER 2018 FORBES ASIA | 85
The Philippines’ 50 Richest
TONY TAN CAKTIONG: SMASHING BURGERS The restaurant tycoon who chairs the $5 billion Jollibee Foods is on a global expansion spree this year. Armed with a $230 million war chest, he’s looking to open 500 stores—at least 200 outside the Philippines. In April, Jollibee, which spans 12 restaurant brands, swallowed an additional 45% stake in U.S. chain Smashburger in a $100 million deal. Tan is also looking to open a store in Manhattan under its Jollibee brand, selling chicken and burgers. In the past year, this “McDonald’s of the Philippines” also ventured into Europe with a store in Milan. Another, in London, is slated this year.
In April John Gokongwei Jr.’s only son was elevated to chief executive of JG Summit Holdings, the Philippines’ second-largest family-run conglomerate. The company, founded by dad (now No. 3 on list) in 1957, has interests ranging from banking and real estate to airlines, telecommunications, power and food. As part of shift, the 51-year-old transitioned from CEO to chairman of the group’s food and beverage unit, Universal Robina. A nonfamily member was appointed to the post, a first for a Summit core company. Lance is also the CEO of the group’s Robinsons Land, Robinsons Retail and budget airline Cebu Airline, which became the country’s largest carrier under his helm.
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MATTHEW STAVER/BLOOMBERG (TOP); VEEJAY VILLAFRANCA/BLOOMBERG (BOTTOM)
LANCE GOKONGWEI: SUMMIT CEO
THE LIST 18. RICARDO PO SR. $1.05 BILLION CENTURY PACIFIC FOODS AGE: 87
19. DEAN LAO $950 MILLION D&L INDUSTRIES AGE: 59
20. BEATRICE CAMPOS $700 MILLION UNITED LABORATORIES AGE: 93
21. CARLOS CHAN $650 MILLION OISHI AGE: 77
22. WILLIAM BELO $600 MILLION Ì WILCON DEPOT AGE: 73
23. OSCAR LOPEZ $480 MILLION T ABS-CBN AGE: 88
24. EDGAR SIA II $475 MILLION T DOUBLEDRAGON PROPERTIES AGE: 41
25. JOSE & ROBBIE ANTONIO $400 MILLION CENTURY PROPERTIES AGES: 71, 41
26. FREDERICK DY $390 MILLION T SECURITY BANK AGE: 63
27. ALFREDO YAO $380 MILLION T MACAY HOLDINGS AGE: 74
28. JORGE ARANETA $315 MILLION T ARANETA GROUP AGE: 82
29. JACINTO NG $310 MILLION T ASIA UNITED BANK AGE: 76
30. MARIANO TAN JR. $300 MILLION T UNITED LABORATORIES AGE: 56
31. VIVIAN QUE AZCONA $290 MILLION S MERCURY DRUG AGE: 63
32. BETTY ANG $270 MILLION T MONDE NISSIN 33. JON & MIKEL ABOITIZ
JOSIE NATORI: MADE IN MANILA The fashion designer behind The Natori Co. retails her fashion, lingerie and lifestyle brand through U.S. department stores such as Saks Fifth Avenue, Bloomingdales and Neiman Marcus. Founded in 1977, the company has an estimated $200 million in annual sales and boasts more than 500 factory workers in eastern Metro Manila. Her son Kenneth runs the show as president and is focused on growing online sales. Natori, now 71, is a pianist who once performed at Carnegie Hall and was the first woman vice president in corporate finance at Merrill Lynch. She holds dual citizenship in the Philippines and the U.S. Her wealth includes real estate in New York’s Westchester County, Manhattan and Palm Beach.
$265 MILLION T ABOITIZ EQUITY VENTURES AGES: 70, 63
34. ERIC RECTO $260 MILLION S BEDFORDBURY DEVELOPMENT AGE: 55 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE
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The Philippines’ 50 Richest BY AURORA ALMENDRAL
Airports & Asphalt I TRAFFIC: NOEL CELIS/AFP/GETTY IMAGES; POWER PLANT: SERGEI MALGAVKO/TASS VIA GETTY IMAGES; LIGHT RAIL: DUY PHUONG NGUYEN / ALAMY STOCK PHOTO; AIRPORT: TED ALJIBE/AFP/GETTY IMAGES; CEMENT: HISTORIC IMAGES / ALAMY STOCK PHOTO; LIGHT RAIL: DUY PHUONG NGUYEN / ALAMY STOCK PHOTO; WATER FACILITY: ANNAVACZI/ISTOCK/GETTY IMAGES PLUS ; ANG: NOEL CELIS/AFP/GETTY IMAGES; AYALA: EDWIN TUYAY/BLOOMBERG NEWS; ABOITIZ: CARLO GABUCO/BLOOMBERG
n the midst of fast growth and an improving investment climate, the Philippines is long overdue for a nationwide infrastructure overhaul—one which President Rodrigo Duterte hopes will become part of his legacy. Duterte’s “Build, Build, Build” campaign consists of 75 major public infrastructure projects, from roads to floodways, transportation, drinking water, energy and airports. Filipino tycoons are keen to get a piece of the promised $180 billion public investment and are launching privately funded projects in what many are hoping is the dawn of a golden age of Philippine infrastructure. Little ground has been broken so far in Duterte’s push as his economic team works to ind inancial footing. he government is moving away from the public-private partnership model favored by previous administrations, ater chronic underspending in infrastructure resulted from bottlenecks in negotiations or approval processes, and shy bids for the projects from corporations. Duterte has turned to loans and development assistance, most notably from China and a recently passed tax hike. However, the much-vaunted Chinese cash has been slow to materialize, and critics are concerned about what strings may be attached. he excise taxes and value-added taxes, which the Philippine inance department estimated would add $1.8 billion in revenues in its irst year, are already controversial for driving up prices. But private operators are moving ahead regardless. Some of the Philippines’ biggest names highlight the action. San Miguel’s Ramon S. Ang, who diversiied the food and beverage company into a large infrastructure developer, says, “he Philippines today is among the world’s fastest growing economies. But unless we are able to build the needed infrastructure, we will not be able to sustain long-term growth.” Along with major road projects—holdovers from the previous administration—San Miguel has proposed a new airport north of Manila. Meant to relieve congesRamon S. Ang tion from the capital’s beleaguered
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EXPRESSWAY, MANILA Jaime Zobel de Ayala’s AC Infrastructure is investing in traic mitigation, one of Manila’s most intractable problems.
NINOY AQUINO INTERNATIONAL AIRPORT Some of the Philippines’ richest have teamed up to propose a $6.7 billion plan to modernize Manila’s International Airport. The consortium is made up of companies run by Erramon Aboitiz, Jaime Zobel de Ayala, Lucio Tan, John Gokongwei, Andrew Tan and Mercedes Gotianun.
Ninoy Aquino International Airport, hobbling along at overcapacity, Ang’s proposal may be his most ambitious yet. A $13.8 billion Manila Bay Airport, 27 kilometers north of the capital, would have four runways and an initial capacity of 100 million passengers per year. he project, which San Miguel plans to fully fund, received approval from the Philippine economic board, chaired by Duterte, this April. It is now being prepared for the Swiss challenge process,
THE LIST 35. EDGAR SAAVEDRA $245 MILLION T MEGAWIDE CONSTRUCTION AGE: 43
36. MICHAEL COSIQUIEN $240 MILLION T MEGAWIDE CONSTRUCTION AGE: 44
37. MANUEL ZAMORA JR. $235 MILLION T NICKEL ASIA AGE: 78
38. WILFRED STEVEN UYTENGSU JR. $230 MILLION ALASKA MILK AGE: 56
THERMAL POWER PLANT, SARANGANI DMCI is building a thermal power plant in Sarangani for a subsidiary of Japan’s JGC Corp. It will serve the city of General Santos and its energy-short surrounding province. Isidro Consunji, 69, is acting chairman of DMCI Holdings following the death last year of his father, David, the founder of the conglomerate. The oldest of 8 siblings, Isidro also helms Semirara, a mining and power company.
39. JOSE MA. CONCEPCION $215 MILLION CONCEPCION INDUSTRIAL AGE: 60
LIGHT RAIL STATION, ANTIPOLO DMCI is building a light rail station in Antipolo, which will be the first station of the capital’s light rail system to be located outside Manilla.
40. WALTER BROWN $200 MILLION S ATOK-BIG WEDGE AGE: 79
41. NECISTO SYTENGCO $180 MILLION Ì SBS PHILIPPINES AGE: 64
42. ALBERTO VILLAROSA $170 MILLION Ì SECURITY BANK AGE: 67
43. P.J. LHUILLIER $160 MILLION T CEBUANA LHUILLIER AGE: 73
44. RAFAEL SIMPAO $155 MILLION Ì SECURITY BANK AGE: 74
45. JOSIE NATORI $150 MILLION Ì THE NATORI CO. AGE: 71
APO AGUA INFRASTRUCTURA
CEMENT PLANT, NORZAGARAY
The Aboitiz Group is building one of the Philippine’s biggest water supply facilities in Davao, a city that has experienced a water shortage since 2016.
In anticipation of the building boom, Erramon Aboitiz is putting $300 million more across its cement plants over the next five years through his family’s Aboitiz Group, including a recently expanded plant in Norzagaray.
46. JERRY LIU $145 MILLION Ì CIRTEK AGE: 70 47. JULIETTE ROMUALDEZ $140 MILLION BANCO DE ORO AGE: 82
48. GILBERTO DUAVIT $ 135 MILLION T GMA NETWORK AGE: 83
49. MENARDO JIMENEZ
which allows rival groups to submit counterproposals, but favors San Miguel by allowing it to match new ofers. “We have a great momentum now; the sense of urgency from government and from our people is palpable,” Ang says by email. Family-group patriarch Erramon Aboitiz found-
ed Aboitiz InfraCapital in 2017. As the government moved away from the PPP model, the Aboitiz infrastructure arm pivoted toward water, acquiring Lima Water and a minority stake in Balibago Waterworks System. hese add to an earlier Aboitiz venture, Apo Agua Infrastructura in Davao City, one of the Philippines’ largest private bulk water suppliers. F
$130 MILLION T GMA NETWORK AGE: 85
50. FELIPE GOZON $125 MILLION T GMA NETWORK AGE: 78 SUP MORE THAN 10% TDOWN MORE THAN 10% ÌNEW TO LIST 3RETURNEE
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Entrepreneurs
Hair on Fire
Inspired by personal tragedy and her family’s homemade beauty concoctions, Nancy Twine went from trading commodities on Wall Street to building a fast-growing luxury hair-care brand. BY CHLOE SORVINO
A
charcoal and coconut-oil shampoo that smells like mint cookies flows into dozens of 8-ounce tubs at a contract lab in suburban New Jersey. Surveying the tubs is 33-year-old Nancy Twine, who created the shampoo, a scalp-exfoliating formula that retails for nine times the cost of massmarket shampoos like Head & Shoulders. “his was a big one for us,” says Twine, founder of the hair-care company Briogeo. In recent years, as more and more beauty products are manufactured at independent labs, dozens of women have launched their own brands, from makeup artists turned bloggers like Huda Kattan to celebrities like Kylie Jenner. But Twine says her seven years at Goldman Sachs have given her a leg up, prepping her to price ambitiously, source ingredients directly, combine orders to save money on production runs and build relationships with partners. On retail shelves for just four years, Briogeo has been proitable every year of its existence and brings in more than $10 million in annual revenue from sales at Sephora, Nordstrom, Forever 21’s Riley Rose and sample services like Birchbox and Ipsy. “From the start,” Twine says, “I wanted to make sure that our margins were good, so that not only could we reinvest back in the brand but so that down the line we never had to compromise.” Twine, who identiies as African-American, is attempting to appeal to all women. Unlike many brands, Briogeo targets customers by hair texture (wavy, coily, dry, thin) rather than by ethnicity. “I remember going to CVS back in the day, and it was always very segregated,” she says. In addition, Briogeo formulates its naturally derived products without sulfates (linked to skin irritation), silicones (may dry and thin hair), phthalates (potentially toxic in high concentrations), parabens (banned in the European Union; binds to estrogen receptors), DEA (also a skin irritant) and artiicial dyes. “People were literally telling me
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you can’t do this without silicones,” Twine says. “I had to do my own research and tell chemists what they needed to be blending in order to get it to work better.” Even though so-called clean beauty is one of the fastest-growing segments of the beauty industry, there are few nontoxic hair lines in general and even fewer for textured hair. hat gap has created a big
SMALL GIANTS
“We make everything from our own original product briefs, our own ideas, our own market research. We never go and select from some of-the-shelf formula,”says Briogeo founder Nancy Twine from her oice in Manhattan’s NoMad neighborhood.
RAINA + WILSON FOR FORBES
opportunity. Black customers purchased almost $500 million worth of shampoo last year, according to the research irm Mintel, and are the fastest-growing segment of the $13 billion U.S. hair-care market, according to Euromonitor. Most Briogeo products are priced slightly below other premium hair brands, a point of pride for Twine. he competitive price helped Twine convince retailers that her products could hit a new, hard-to-reach consumer: one who wants to buy a high-end, nontoxic product but at the lower end of the luxury range. “I love her price point because it says she’s taken the time to do her homework,” says Dana White, the African-American owner of Paralee Boyd, a budding Detroit chain of walk-in salons that cater to curly and textured hair. “We have money to spend.” he event that spurred Twine to start her business was a tragedy that struck in 2010, three years into her stint at Goldman Sachs. hat was when her mother, a doctor turned chemist who had just inished creating a natural face cream she hoped to take to market, was hit by a car.
Her mother’s death was life-changing for Twine, who says she realized that working on Wall Street was “not how I should be living life.” Inspired by both her mother and her grandmother, who taught her how to make products with natural ingredients, Twine started devoting nights and weekends to researching the beauty business. At New York City’s small-business library, she spotted reports of a shit toward natural skin care but saw little if anything suggesting a similar shit involving hair. And nothing she saw in the reports focused on the luxury end of the clean hair market. On her own time, while working at Goldman, Twine spent more than a year searching for a lab and chemist with the ability to create nontoxic products. It took another year to test hundreds of formulas. Twine named her startup Briogeo, blending the Italian word for “liveliness” with the Greek word for “earth.” By 2013 she had four formulas. “It’s the combination of clean beauty with identifying a speciic consumer segment with a speciic need,” says Marla Beck, the CEO and cofounder of the beauty retailer Bluemercury. “She saw that really, really early, so kudos to her for having vision for where the industry was going.” Early on, Twine bootstrapped the business with her savings while looking for an investor. But she was pitching mostly to angel investors who specialized in tech and weren’t interested in beauty’s latest gold rush. Eventually, at a Long Island Angel Network event in 2012, Twine met Philip Palmedo, who liked her presentation but acknowledged he knew nothing about hair care. Early the next year he gave her $150,000 for a small stake. Twine’s only outside backer, Palmedo says the decision violated everything he’s learned about investing—but has been one of his most successful. “Decisions like this are intuitive,” he says. “Believing in the person.” Briogeo’s irst two orders—from Urban Outitters and the buzzy L.A. boutique Fred Segal—came later that summer ater Twine had taken vacation time to attend Cosmoprof, a Las Vegas trade show. It was there that she met Sephora’s buyers. In January 2014 the chain agreed to launch Briogeo on its website in the U.S. and Canada. he next week, Twine gave notice at Goldman. Today Briogeo is the fastest-growing hair-care brand on Sephora’s site. “She brings some of the most innovative and exciting products that we have seen in hair care to the table, truly,” says Artemis Patrick, Sephora’s chief merchandising oicer. To select packaging, Twine visited Sephora locations and turned bottles over to check the manufacturer. To source ingredients, she called up suppliers and asked if they would deal with her directly. “From the commodities and logistics business,” she says, “I always felt comfortable dealing with manufacturers. Some of my founder friends have a consultant do a lot of that work for them. It eats into your margins because they’re marking up the prices.” Briogeo is now expanding into Sephora stores in the Middle East, Europe and Southeast Asia. A new line available at Sephora and elsewhere features a shampoo and a conditioner made with nutrient-rich superfoods like apple, kale and matcha extract. In July, the company also launched a shampoo and conditioner in a large “back bar” size for salons to use while washing clients’ hair. Twine expects revenue to top $15 million this year. “Goldman always had a client-irst mentality,” she says. “Relationships are everything. hat’s the same thing that I’ve applied here.” F
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Forbes Life
Htet Myet Oo manages three diferent restaurant concepts and a staf of nearly 200 employees in Yangon. He juggles marketing, HR and project management while his business partner and fiancée runs the back oice. While ofering no specific figures, Htet claims RTH Group revenues have doubled each of the last three years. “I’m a Millennial,” he notes. “I like results now.” But Htet acknowleges that there is a balance: “If you don’t provide value and quality, no one will come.”
Good Eats in Myanmar A hungry 30 Under 30 entrepreneur comes home to feed his people.
B
orn in Myanmar and raised in the U.K., Htet Myet Oo returned to his homeland in 2012, armed with an economics degree from City University of London. In 2014, at age 24, he launched the Rangoon Teahouse, specializing in traditional Burmese cuisine. Situated in Yangon’s colonial downtown district, the restaurant caters to middle-class locals, expats and tourists. Htet, a member of our 2016 30 Under 30 list, started the business with $25,000 of his own money, which he earned importing secondhand Japanese cars into Myanmar. Breaking even since
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day one, RTH Group aims for 20% net proits. In 2016, private equity partner Anthem Asia joined as a minority investor to fuel local expansion. he dream: to take the concept abroad within three years. While he doesn’t rule out an IPO, he’s happy as an owner: “I love the restaurant business, I am a people person.” Still, competition is tough. When Rangoon Teahouse opened its doors in 2014, downtown eateries were scarce. Today 15 restaurants and two ive-star hotels operate nearby. “Yangon is a very competitive place,” Htet admits, noting that retaining customers and staf is a constant concern. “he market is still not big enough.” F
© MINZAYAR OO/PANOS FOR FORBES
BY JANE A. PETERSON
FOODIE FRONTIER
The Rangoon Teahouse has a Manhattan vibe and serves an average of 650 patrons a day. In the center island, waiters prepare 16 versions of La Phet Yay, traditional Burmese tea most often topped with sweetened condensed milk. Prices are considered midrange but are still double what you pay in a typical Burmese teahouse. Look for the soup called “catfish and daggertooth mohinga” and salad made with pennywort leaves and peanuts.
RTH Group’s two newer, less expensive concepts live side-by-side on Bogalay Road in downtown Yangon. Ofering speedy lunches for locals, Mr. Wok (bottom right) sells Asian noodle dishes, while Buthee (top right) specializes in Burmese curries. Buthee was inspired by beloved recipes from Htet’s aunt.
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FORBES ASIA
BUY, HOLD, SELL
Score the Ski Watch, Boot the Bordeaux Expert advice on luxe investments. BY CHRISTIAN KREZNAR
BUY
HOLD
SELL
Jean-Claude Killy Rolex—DatoCompax
Patek Philippe Ref. 2526
Richard Mille High-End Modern Production Watches
W Legendary skier’s timepiece line from the ’60s is an increasingly hot alternative to the famed Rolex Daytona. Be mindful: Dial and case condition are everything.
JOHN REARDON International head of watches, Christie’s
SELL
All Northern Rhône Reds
1982 Red Bordeaux
Availability of older vintages of Côte Rôtie, Hermitage and especially Cornas is sparse; demand has skyrocketed. Place your largest bets on Cornas’ “big four” vintners: Thierry Allemand, Auguste Clape, Noel Verset and Robert Michel.
Time to crowbar open those original wooden cases of ’82 and either drink or sell. The ripeness of that legendary vintage has started to turn the flavors of aging into those of stewed fruit.
BUY
HOLD
SELL
Loie Hollowell
Ulay & Marina Abramović Collaborative Polaroids
Lucas Cranach the Elder
2015 Tenuta Delle Terre Nere Etna Calderara Sottana X
Wine director for American Express’ Centurion Lounges; contributing editor to Food & Wine
Proprietor Marc de Grazia was one of the first to recognize the potential of Sicily’s longdormant Etna region. This spicy red, rich in raspberry fruit and silky tannins, will last beyond a decade.
ZOHAR ELHANANI CEO of MutualArt, a comprehensive online art-market information guide
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“Mother’s Milk” (2018) by Loie Hollowell
When a downturn arrives, the first to feel it will be watches that retail over $500,000. Have an extra one? (But of course.) Move it now while resale prices are high.
HOLD
BUY
ANTHONY GIGLIO
With fewer than 600 of these produced in the 1950s, most with porcelain-enamel dials, near-mintcondition models will see prices rise steadily.
W Young painter of abstract and suggestive work, on the tip of every collector’s tongue, is showing at the Pace Gallery in London this autumn. Only one work has auctioned; it sold for $68,750, four times the midrange estimate.
An exhibition of solo and collaborative works in London next year is likely to drive demand for these radical performance artists, particularly their Polaroids from the 1980s.
Four paintings by the German Renaissance master have sold in excess of $1 million this year. His works aren’t in limited supply. Can demand keep up?
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THOUGHTS ON
Advice
“COUNSEL INVOLVING RIGHT AND WRONG SHOULD NEVER BE SOUGHT FROM A MAN WHO DOES NOT SAY HIS PRAYERS.”
—SCOTT ADAMS
“I GIVE MYSELF SOMETIMES ADMIRABLE ADVICE, BUT I AM INCAPABLE OF TAKING IT.”
—OSCAR WILDE
—EDNA ST. VINCENT MILLAY
—FULTON J. SHEEN
“They tell me not to drink, and I do drink. They tell me not to eat, and I do eat.” —WILLIAM MAKEPEACE THACKERAY
—MARY WORTLEY MONTAGU
“People are very fond of giving away that which they need most themselves. It is what I call the depth of generosity.”
“I am glad I paid so little attention to good advice. Had I abided by it I might have been saved from some of my most valuable mistakes.”
“I ALWAYS ADVISE PEOPLE NEVER TO GIVE ADVICE.” —P.G. WODEHOUSE
“To ask advice is in nine cases out of ten to tout for flattery.” —JOHN CHURTON COLLINS
“NO ONE WANTS ADVICE—ONLY CORROBORATION.” —JOHN STEINBECK
“All your life people will tell you things. And most of the time, probably 95% of the time, what they’ll tell you will be wrong.” —MICHAEL CRICHTON
“The best advice I ever received was ‘No one else knows what they’re doing either.’ ” —RICKY GERVAIS
“Advice is what we ask for when we already know the answer but wish we didn’t.” —ERICA JONG
“WHO CANNOT GIVE GOOD COUNSEL? ’TIS CHEAP, IT COSTS THEM NOTHING.”
FINAL THOUGHT
“LISTEN TO ADVICE AND ACCEPT DISCIPLINE, AND AT THE END YOU WILL BE COUNTED AMONG THE WISE.”
“Listening to advice often accomplishes far more than heeding it.”
—PROVERBS 19:20
—MALCOLM FORBES
—ROBERT BURTON
SOURCES: ANATOMY OF MELANCHOLY, BY ROBERT BURTON; LIFE OF JOHN CHURTON COLLINS, BY JOHN CHURTON COLLINS; HOW TO SAVE YOUR OWN LIFE, BY ERICA JONG; THE TIMES BOOK OF QUOTATIONS; THE LETTERS AND PRIVATE PAPERS OF WILLIAM MAKEPEACE THACKERAY; THE PICTURE OF DORIAN GRAY, BY OSCAR WILDE; THE LOST WORLD, BY MICHAEL CRICHTON. 96 | FORBES ASIA SEPTEMBER 2018
CLOCKWISE FROM TOP LEFT: MARCIO JOSE SANCHEZ/AP; BACHRACH/GETTY IMAGES; ALFRED EISENSTAEDT/THE LIFE PICTURE COLLECTION/GETTY IMAGES; GLENN WEINER/ZUMAPRESS/NEWSCOM; HISTORIC COLLECTION/ALAMY; ROGER VIOLLET COLLECTION/GETTY IMAGES; ULF ANDERSEN/GETTY IMAGES; ERIC LIEBOWITZ/GETTY IMAGES; HULTON ARCHIVE/GETTY IMAGE; LISZT COLLECTION/NEWSCOM
“GIVE A MAN A FISH, AND YOU’LL FEED HIM FOR A DAY. TEACH A MAN TO FISH, AND HE’LL BUY A FUNNY HAT. TALK TO A HUNGRY MAN ABOUT FISH, AND YOU’RE A CONSULTANT.”
Solving for new. Solving for unprecedented.
Solving for X. solveforx.webershandwick.com