This Conglomerate Is Crony-Free
From the exterior, the Maspion factory doesn't look like it has changed much since the kitchenware manufacturer was founded in 1965. Dust-covered, corrugated zinc sheets are slapped together into dozens of single-story sheds on the outskirts of the polluted East Java industrial city of Surabaya. A peeling billboard depicts outdated pots, pans, refrigerators, and electric fans.
But appearances are deliberately deceiving in Surabaya, where the wealthy, ethnic-Chinese business moguls who dominate the city keep a low profile. Despite its decrepit exterior, Maspion is among the world's biggest manufacturers of kitchenware and appliances, many of which bear familiar American names such as Revereware, Crate & Barrel, and Tupperware. Exports last year made up 20% of Maspion's $700 million in revenues, and the company is preparing for an initial public offering by yearend.
Anchoring this success is Maspion's Canadian-educated managing director, 45-year-old Prakasa Alim. Alim and his brother, Markus, Maspion's president, run the company for their father, Husin Alim, who serves as nonexecutive chairman. Unlike many of their youthful peers, the Alims didn't find their fortune by grabbing assets of failed conglomerates owned by cronies of Indonesian strongman Suharto. "We don't want to get involved in politics," says Prakasa Alim. "We want to buy cheap assets that aren't political."
As Maspion's business development chief, Prakasa Alim focused on an altogether different type of distressed asset--American, French, and Korean companies. In 1999, Maspion paid troubled Corning Consumer Products Inc. $2 million for the Revereware brand. It then shipped the entire assembly line from Clinton, Ill., to a shed in Surabaya and reassembled it. Since then, Maspion has sold $30 million worth of copper-bottom Revereware pots.
That deal came on the heels of Maspion's 1998 purchase of French crockery line Aubecq. Maspion bought the trademark and equipment from a factory near Paris for just $100,000. The same year, when Samsung of Korea eliminated its white-goods division, Maspion purchased Samsung Group's refrigerator plant--which happened to be next door to a Maspion fridge factory in Surabaya.
Maspion had the capital for hard-currency investments because the company didn't succumb to temptation during the boom years. Like many other families that run conglomerates in Indonesia, the Alims opened their own bank in the 1980s. But unlike others, the Alims didn't borrow from the bank to expand their business. "We survived the crisis quite comfortably by being more prudent," says Joon Kee Han, the Singaporean executive director of Maspion Group, who handles its finances. "We didn't take money out of the kitty." Today, the group has less than $100 million in debt.
To prepare for its IPO on the Surabaya exchange, Maspion is consolidating its 60 companies into a single holding company. It's also planning further automation of its production lines. Indeed, there will be plenty new at Maspion. Just don't look for any change in the exteriors.
By Michael Shari in Surabaya