Talking to CEOs Series: Spotlight on Francis Lui

Transcription

1 Talking to CEOs Series: Spotlight on Francis Lui Francis Yiu Tung Lui is Deputy Chairman of Galaxy Entertainment Group, which owns and operates hotels and casinos in Macau; and Executive Director of K. Wah International Holdings Limited, which engages in property development in Hong Kong, Mainland China and Singapore. The eldest son of Lui Che woo, founder and Chairman of K. Wah Group, Lui joined the family business immediately upon his graduation from university. Today, he resides over the integrated casino, hotel and entertainment business of the Group, blazing trails in the tourism industry in Macau. In an episode of the televised program Talking to CEOs on Radio Television Hong Kong, hosted by Prof. Andrew Chi fai Chan, Director of CUHK Business School s EMBA Program, Lui talks about how the initial years of hard work at his father s company led to new opportunities and how taking chances and applying a uniquely Chinese style of working helped the casino project in Macau sail through the Asian Financial Crisis. Here is an excerpt from the program: Q: After obtaining a bachelor of science degree in civil engineering and a master s degree in structural engineering from the University of California at Berkeley, you joined the family business. What was your very first job at the company? 1

2 A: I worked for the group s construction materials business for four years. The working conditions were extremely harsh, as I had to get up at 6 to get ready an hour before the workers started to work. I could not take the private car with my father to the construction site, so I had to ride in the company bus. Despite the hardship, I have learned a lot about what kind of work was done in the frontline and gained self confidence. Q: Have you ever considered starting your own business instead of working for your father? A: Never. As soon as I completed my Master s program, I returned to Hong Kong to work for my father. It was April Fool s Day in On the first day of work, I worked till 2 a.m. The reason why I never considered starting my own business is that I witnessed how tough it was when my father was running his business during my childhood. That was back in the 60s, when I was around 8 10 years old. The business negotiations that took place at home often left father in a sad mood. So I made a promise to myself: As soon as I completed my studies, I would help my father with his business to take it to another level. Q: After the initial years of hardship and success, your father gave you new responsibilities. Can you tell us how it felt to take on those new duties? A: As my brother was still young and working at construction sites would be too tough for my elder sister, I was the one who played the role of the pathfinder for our family business. I remember back in 1985, the economy of Hong Kong was already quite developed, but across the border, Shenzhen was still a big piece of farmland, with buffalos tilling the fields all over the place. K. Wah Group was the first Hong Kong company licensed to do business in Shenzhen. There is a single assembly line that moves construction materials from the mainland to Hong Kong from Day One this line was built by our company. Even though the line has accomplished its historical role, we still want to keep it intact for sentimental value! During the 90s and the millennium decade, China s economy experienced tremendous developments. I had the opportunity to expand the family business in the mainland. I learned a lot and am very grateful for the opportunities. Q: K. Wah Group has established itself in the businesses of construction materials, hotels and property development over the years. Why took leap into Macau s gambling industry in 2002 a business you were not familiar with? A: It was serendipity that got me into the business. After all, I have never been interested in gambling. But when I studied in California, I observed the gambling scene in Las Vegas and got to know what integrated resorts are. So, I took the idea and imagined that an integrated business combining gambling, entertainment and tourism would be an innovative thing to do. 2

3 Besides, our company was already established in the hotel and construction industries, so it would be worth a try. At the same time, there were already a lot of established property players in China and Hong Kong. As a latecomer, it would be wiser for us to take on another market. In 2003, Macau opened its gates to individual mainland travelers to stimulate its economy weakened by the SARS epidemic to 2010 became the golden decade of Macau. Q: You mentioned Las Vegas. But what you are doing in Macau is not exactly a copy. How did you come up with a unique positioning for your business? A: As we believe in a bright future in this industry, we want to create our own brand and be a trailblazer rather than a copycat. So we decided to inject Asian elements in what we do. World Class with an Asian Heart became our motto. We have observed that mainland Chinese customers not only like gambling but also have a preference for visiting Southeast Asian countries. So we decided to combine the two to give our casinos a Southeast Asian character. Our wave pool at Galaxy Macau got so many compliments at its grand opening. By creating a theme park resort within the casino complex, we are setting a new trend. In the past, there was a kind of stigma attached to a visit to Macau. But nowadays, Macau has become a family vacation destination, much like Macau plus Phuket (or Las Vegas plus Hawaii). The stigma is gone. Q: Can you tell us how customers tastes have changed over the past five years? A: In the past, customers were not too picky about services. As long as there was a table for them to focus on the gambling, they were satisfied. But today, customers who come to our casinos would ask if there is an Italian restaurant or Japanese sushi. They want to go shopping and watch movies. This shows that casino visitors want a lot more than before. So when we plan our next phase of development, we must ask ourselves, What will customers want in 5 to 10 years? The answer to this question will decide whether we re going to win or lose. Q: To be a pioneer in any industry, you must first change the culture of the company. How did you go about doing that? A: Employee training is very important. We have the largest training center among all the hotels in Macau. A key to successful training is setting the right example from the top down. Let me give you an example. During the construction of one of our hotels, I walked through the rooms and found the bathrooms to be rather uncomfortable. Upon checking the original blueprint, it turned out that the distance between the walls had been built 2 inches too narrow. So I told the workers to take down the bathroom walls of all 1,600 rooms and rebuild them. The missing 2 inches would have made the customers feel like being in a four star hotel rather than a five star 3

4 one. I did not want to compromise that. When you are dealing with a business that has to do with interior design, proportion is very important. Many of our guests feel comfortable staying in our hotels because we have emphasized a human design. This will attract more guests. Q: The first phase of Galaxy Macau was completed in 2008, just when the Asian Financial Crisis occurred. Were you scared? How did you deal with the situation? A: I would be lying if I told you we weren t scared. We had invested HK$20 trillion in that project. There wasn t a whole lot of room for mistakes. So we conducted strategic analyses based on Porter s Five Forces and SWOT, which I had learned in an MBA course. Through performing these analyses, I felt less insecure as there would be a limit to the extent of errors we would made. The decision at the time was to retain the workforce and slow down the progress of construction rather than ending the contracts with our workers and halting the project entirely. Perhaps due to my background knowledge in construction, I was clear about the advantages and disadvantages of this move. Our competitors, on the other hand, ended the contracts with their workers during the economic crisis and had to restart the whole process afterwards. By 2011, we had already caught up with our competition and gained two years in terms of construction speed. Q: What differentiated your decision and that of the foreign competitors? A: It was an understanding of the business culture here that made the difference. What we did was to negotiate with the contractors, and allowed them to work 4 5 days instead of 7 days a week. Although the overall progress was slower, once the crisis turned around, we just gave them a call and they were happy to resume full time work again. There was no need to retender or to pay any severance payments. In the end, we completed the Galaxy Macau in 2011 with a capital of HK$16.4 trillion an incredible feat in the industry considering the quality of our facilities and services. I think the right decision was not to chop off the arm of a strong general, as the Chinese saying goes. Q: Macau is not a large place, but there are already six licensed casinos in operation. Don t you think the competition is too keen already? What makes you confident about Galaxy s third and fourth phase development? A: Despite uncertainties in the environment and the competition, the Chinese market is expanding and large enough for our survival. A survey in 2012 shows that there were 40 million people in China s middle class. But the figure is expected to reach 450 million by The market will be infinite as the size of the middle class grows. Compared with the United States, there is still a huge room for development when it comes to the number of gambling table per capita. Since there is only one market Macau serving the entire Chinese middle class, I 4

5 believe the market potential for our business is limitless, as long as we can fulfill customers desires. Reported by Canice Kwan, compiled by Louisa Wah Hansen Source: China Business All rights reserved Chinese University of Hong Kong Business School 5