Project Dignity

Week of 1st Nov

A university graduate walk in and wanted to be trained as a hawker. He holds a degree in Engineering from a local University and wanted to start work immediately. 'Why?' the question that dawn on me. A graduate wants to be hawker. We spoke for a while and I guess has to do with a baby coming.

The first month is to get the food right and we tried. The food of the first stall has at least taste reasonable. It is nit perfect, I believe it can be better. Stall 2 is Ngoh Hiong. The business is no good. Need to get the crowd.

The idea of Lunch treat for the elderly was part of the initiatives of Project Dignity. I wanted Dignity Kitchen to serve and do good for as many people as possible. The idea was to invite all the elderly residing in old folks to come for lunch. There are two groups of elderly - One is those who are staying in old folks home and another is those who are in senior citizen activity center. I started with those in the senior citizen activity centre, they are more mobile. The Lunch Feast concept include a city tour. We will pick them up at 11.30 am, bring them for a tour of the city and then settle for lunch at Dignity Kitchen. Who pays? Well we will then look for individual to sponsor the outings. It does not cost a lot of money. For 30 elderly including lunch and a city tour is $360. How much does it cost to bring a smile for the elderly?? Not much.

We have other event to stimulate the sales like a Christmas flea market planned for Christmas, a school children holiday program called "working with the disabled" and even a tour of the history of Balestier by professional tour guide line up for the coming months. We needs the sales and as any startup enterprise you have to go out and create the sales.

There are nice people and there are not so nice people. I was pretty disgusted when I found Malaysian 50 cents coin in the cashier machine. For the Blind, the Singapore 50 cent coin is pretty similar to the Malaysian 50 cents coin. How could anyone cheat a Blind person??????

There was also the lady who scold the blind boy when he stretch out his hand in the wrong direction and drop the coins. She shouted "Are you Blind?".

Then here was the group of giggling school girls who find it funny that a Blind person is a cashier.......

Writing Blog

This blog is written for my students. It was the idea of the first batch of Entrepreneurship student who feels that my overseas travel experience will be good learning experience for them.

One of them took the intiative to create this JHJW blog. It has to be politically correct and educational.

Do any of the students still do read this, I really don't know.....

Learning Experience India July 2010 No 2

Day 2

Staying at the Park Hotel. Many foreigners. Hotel rates has gone up exponentially for the last years. A good sign of the growing economy and yet the cost of the shoe polisher charges at CP has not gone up.

I am on a water project and looking for partner in India and after the days meeting, I realised that water is politics in India. Lobbying on water issues in the state parliament can win and lose an election. cannot talk much about this project as it is still work in progress. Interesting bringing water to India is very easy to interested investors.

Leaving Delhi in the old terminal Via Go Air - a domestic airline, for Bangalore or Bangaluru but I still prefer the old name.

The last time I was here I was to do a talk for lecturers on teaching of entrepreneurship. Bangalore has become one big car park - a series of traffic jam every corners. Worst is there is always a motor bike or 3 wheelers trying to squeeze in. The city is growing faster than what the infrastructure can code. I believe Bangalore has grown because of the coming of big multi national corporation and the reason these MNC are here has to do with the quality of its work force - very smart and well educated young Indians. All goes to the good university existing.

Went to visit a water plant on the outskirt of Bangalore. Surprising the standard is very good. Companies are recognizing the importance of good manufacturing practices and accreditation. You cannot undermine the Indian manufacturing base who are going up the value chain.

One meeting today is with a NRI, Indians who return to their motherland after many years aboard. Many are coming back - for their children education, to catch the growth of India and wanting to give back to India.

Time to go home.....

Learning Experience India July 2010 No 1

India 12 July 2010

Just landed in New Delhi. Not bad. Things are changing. A new airport, especially so in the car park where the taxi is better organised. All these for the coming Commonwealth Game.

I was last here in 2008. Many things have changed. First is arriving in the new airport. Look nice on the outside, look nice on the inside but still long long queue. Hardware there software not there. At least the officers are friendlier.

Delhi is a city in the midst of change. Every time I landed we will go passed the highway and finally NH8 is completed. Many of the marg cleaned & greened. As for poverty not quite eradicated. You still get beggars - young ones with babies stopping at traffic light junction begging & pleading. Always a disturbing sight for a foreigner.

Indian are people that live & accept imperfection. Road incomplete,house in derelict state, sand dune everywhere,pot holes on highway & many more. Imperfection I believe create resilience. This resilience allow the Indian to take on anything in their stride.

In CP one part is clean and orderly and the other half is like a big construction site. This is July and the Commonwealth Game is just around the corner. Don't thing that it can get ready for the game. Following China's Olympic I got a feeling that India is looking to This game to showoff.

to be continued...

Learning Experience 3 - 4

Day 4

Waiting at the airport for my flight back to Singapore. Our day tr

The lawyer is selected, the audit team selected and the due diligence is set in motion.

Success of a trip is when the client who is paying you is happy with your work.

Now the next thing to happen of the due diligence process are the queries that will be raised, the answer that is needed and finally the price or valuation. That is when the fun begins. For this project I am glad to say that we have an agreed price, now is whether it is justified in the eye of the buyer.

For every six or seven deals that I follow through, one will come to fruition. Hopefully this is the one…..

The End

PS Flight delayed because one passenger on incoming flight has high temperature and suspected of H1N1 flu…… how one flu can crippled the airline business worldwide.

Learning Experience China 3 - 3

Day 3

For a buyer acquiring a company in a foreign country, the two professional they need to contact is a good lawyer and a good accountant. These two professional plays a major part of the acquisition process.

A piece of advice, if you ever want to get a professional service provider on compliance work in China ALWAYS get a local professional. This is especially so in China.

I have come to the conclusion that many foreign companies acquiring a local company uses lawyers and accountant from their own country to provide the service.

In my personal view, is that these foreign professional will still go to the local to get help, so why are you paying twice.... might as well come direct. In China especially, in the early days all accountants and lawyers works for the State and there was not many in private practice.

As such most of these lawyers have very good contacts and network. China being such a big country and if the acquisition involves a small province, the small province lawyer is required.
They have the connections and the local knowledge to help you.

Now for consultancy work, not involving compliance regulatory requirements then it is different; you need someone you can trust to manage the local.

An example is to do with the Singapore authorized capital and paid up capital and China’s total investment and paid up capital. The difference is that in Singapore, the company can register a $2 paid up and $100,000 authorized where in China the rules are different. The total investment has to reflect the business transaction of the business and the working of the paid up based on 70% of the total investment. A careless mistake by a Singapore accountant causes his client’s application for conversion to be rejected.

Let’s talk about professional fee. Over the years I have come to gauge the different type of professional services and the charge out rate or fee. Interestingly the consultancy fee in China has escalated over the last twenty years since I started working in the China market. A legal fee for a local lawyer in the 80’s on a per hour basis was 200RMB and today the same lawyer friend is charging me 900RMB per hour, what a jump. A simple due diligence (let me qualified that it is a simple Due D), the fee including miscellaneous is budget about US$30 – 50K.

Back to the case. The client after meeting with several lawyers and accountants is deciding on the next steps. What criteria do the client need to observe?

To be continued….

Learning Experience China 3 - 2

Day 2

A due diligence is an audit, verifying and checking what you want to buy versus what you have been told or shown. It is the investigation of information, a process of people management and the technique of observation.

In due diligence, you are always given a set of data either in the raw state or in a “decorated” state. What I term as “decorated’ state has to do with the presentation of the data. In some cases, the presentation is so good that the fact is hidden and investigation becomes tedious. Data can be manipulated.

People management is important to the success of a good diligence. Finding the right people to talk to and willing to provide you the necessary information is not so straight forward in many due diligences.

Technique of observations comes from experience. Over the years this part of the due diligence has help me in negotiating many deals and always in our favour. Like a project in China, where I was told that the company has US$X turnover, but when we look at the store room where the receipts are kept, we noticed that for a company with that kind of turnover and the volume of trade has issued very little receipt taking into account the nature of their business is low value products. In China receipt is an important aspect of doing business in China. There was another case of an Indian catering company who told me his business turnover is US$Y and wanting to sell the business for a very high value. I conclude that what he is asking for is realistic pricing as his account is below what is its true value. I went to his warehouse where he kept all his equipment for catering and it is impossible to do a low value business given the amount of catering equipment in the store. The lesson is to be observant.

This is email has to sent out from a different channel and a day late. This is because, China has block off the blog sites and also You Tube sites

To be continued….

Learning Experience China 3 - 1

Day 1
Sitting at Changi Airport again. Waiting to board the plane for Shanghai.

It has been a while since I last flew, the reason has to do with some alphanumeric character … H1N1, I am not so worried about catching it but having to stay in some country for seven days under quarantine Just doesn't sound like fun :-)

On learning experience for this trip, let’s start with the financial crisis and China.

In my earlier blog, I spoke about my visit to China in Nov 08 and witnessing the closure of several factories in the midst of the financial crisis. I wrote about the row of factories, several were locked and closed with statement stating that operation has seized and also the long queue of workers line up outside one factory with some of the workers carrying placards and shouting for their back wages. In another factory, I noticed another queue of workers going into a factory to collect some money given out by the local government agency.

The scene reminds me of the days in England and the Coal Miners strike in the early 1980s when I was working in Sheffield, England. Mass of people was out of job at that time. I never thought that I will see this situation in China.

This is an update of the earlier visit. The factory where the workers were collecting the money is next to my client’s factory and I got talking to the factory manager of the defunct factory. The money is from the local government about RMB 600 per workers. At that time, I got talking to some of the workers and jokingly, one suggests that combining their money they can start a small hawker stall. One laugh while the other companion thought it was a good idea.

Now I return to China and things are slightly better, The Chinese implementation of the stimulus package is swift. There is more confidence at the ground level. The queues are gone. Interestingly I was told that several MNC shut for their Chinese new year break…… one months early. Can you image that business is so bad that they can afford to shut down early and release the workers.

The general impression I got from this whole episode tells me that this crisis is really bad. I need no analyst to give me figures and statistics, nothing is better than seeing it at ground zero.

I am however confident that the Chinese economy will ride this “tsunami” very well. Remember the workers who wanted to start their hawker stall. Well I met one of them on this trip.

With the combine receipt of the three workers (1800 RMB) they started a small hawker stall (illegally) and very happy about it. They work the midnight to morning shift for their stall just to avoid being caught by the police. The Chinese are generally very resilient and entrepreneurial. I believe the impact will make them looks inward rather than outward for their growth.

Back to the purpose of my trip, I am going to Shanghai to carry out a due diligence project.

In my business there are two type of incoming work for acquisition. The first type is when somebody wants me to find another somebody to either buy or sell their business, while the second type is when the somebody who found the other somebody to buy and sell their business and I am just the facilitators J

I prefer the second type of business. Frankly 70% of my work is from the revenue in the second categories and also I get a retainer up front and not wait for success basis.

This is the acquisition of a local company by a foreign companies.

To be continued…

Learning Experience India 2 - 5

Dear All

This is the final Learning Experience India 2...

First of all I want to thank you for your kind feedback and also your own personal learning in relation to mine. Learning is a dual expressway, it can never be a single lane single direction road. The wider the dual expressway, the greater and faster the learning process.

Some of you wants to forward this series of learning experiences to your friends and colleague, I have no objection after all learning is about sharing.

I started this trip with two possible prospects and reviving old relationship.

On the propects, I have make some headway but it is still some way to go before closure. After so many years of business dealing, I conclude that all deals can be closed it is to what extend of the closure. As a consultant it is the daunting question of "Is it worth it?" Some deals require a lot of effort and some deals require reasonable effort and there will never be one that do nothing and get paid :). The 90% of the issues faced in any deal involves people or more specifically expectation. Only 10 % is technical issues to resolve.

Irregardless of whatever business you are in, managing expectation is never easy. If the client expectation is high, you have to ask yourself whether you can deliver. If their expectation is low then your remuneration or return may not be forthcoming. In any business whether you are in consultancy or in trading of widget, you have to put the client's expectation in line with the delieverable.... then you get satisfaction, better off if you can deliver greater than his expectation.

Expectation has a correlation with respect for you. The person you are working with must have your respect and only with respect will he/she listens to you. With respect, the expectation can be better managed. I come to understand also that respect has to be earned.

This trip has been very successful in more ways than one. First I get a chance to meet some of you and update on the happenings in your life. Some are happy with your job and some not so happy. My view is that to bear with the job for some time so as to built up your portfolio of experience. Four or even six months experience is just too short to be accountable to any future prospectus. As for those who have tie the knots or going to tie the knots.... my congratulation.

Continuing from the two prospects, my query "Is it worth it?"..... I have to walk away from one and focused on the other. Walking away from a good prospect job is never easy but as a business you must always know where is your limitiation. Keep the relationship with the client and be honest that you will not be able to help them......there will be job from them some other days. There is an old song and the chorus go like this.....

"You must know when to fold them
You must know when to fool them
You must know when to walk away
You must know when to run

You never count your money when you are sitting at the table
You can only count them when the deal is done."

From the song "The Gambler" by Kenny Roger.

Before I close off this learning experience, one of you asked me since I know India and if I have all the money in the world to start a business in India today..... what would it be.....The answer (not in order of perference)

1. Banquet Hall / conference center
2. Schools and education
3. Budget hotel
4. Retail training & consultancy
5. Geomancy
6. Pan masala
7. School bus
8. High end furniture
9. Infrastructure construction
10. to be continued........

The next Learning Experince will be in .......

Regards and best wishes

Koh Seng Choon

Learning Experience India 2 - 4

Dear All

Leaving Mumbai going back to Delhi.... In Mumbai I met up with a new client, who was introduced to me for the first time. Coming to meet with client, one of the challenges faced by most people is starting a conversation, especially in business where a poor or wrong start off can mess up a meeting.

Let me share with you a little instance, it happens during the World Cup held in Germany a few years ago. A young Malaysian professional approaches an Indian business man. It is their first meeting. He started the conversation about the state of the World Cup - the game , the top scorer, the poor performers of the stars etc. The monologue went on for sometime and eventually annoyed the Indian. You see, to an Indian there is only one World Cup and that is the Cricket World Cup, the other World Cup which the rest of the world is watching is not so important :) The Indian is passionate about his cricket and when the conversation started he was trying to expressed that the Cricket World Cup is the more popular and exciting while to the young man Soccer is the main World Cup watched by more people than the Indian sub continent put together. It went into a bad argument.

The introduction did not go on very well.

I called this introduction, the art of small talk. It can be learn and I believe practice make perfect. It is an art as there are many ways to expressed this artistry.

In my approach, the art of small talk is "TAT / TAY / TAM" (sounds good not very sure what the meaning if it is expressed in Hindi or Urdu or Tamil ?)

1.TAT = Talk about them
The THEM in this instance is the place, the environment, the country, the current affair etc. General topics, non discretionary and non opinionated. In the case of India it would be Cricket, Bollywood and Cars.

2.Talk about you
The YOU is the client/customer and the topics can be family, education and health. The approach should be sharing. Never patronizing. The no-no topics are sex, politics and religion :)

3. Talk about me
The ME is about yourself. This will not be too difficult, however customization is needed. Have a full version of about yourself that can be played like a recorder in your mind and when it come to TAM, just customize it to the situation and the objects intended.

There is no sequence to TAT/TAY/TAM. It application depends the situation and event. But to do well you need to do your home work. Read, watch and analyze. Information is every where. From the airport newspaper counter to observing the traffic on your way to your visit. One little trick worth noting is the office and desk of your client / customer. People put this info about themselves all over their working habitat, you just need to see it and talk about it.... like the photo of the family, the souvenir from Thailand etc...... the conversation piece is endless .... even the clothing of the person is a conversation topic if you know how to do it. A desk or office without any souvenir is also a topic for small talk....Think about it :)

Tomorrow I return to Singapore and will conclude on the experience of this visit....

Regards

Seng Choon

Learning Experience India 2 - 3

Dear all

Touch down in Delhi and drove straight to Jaipur. They are renovating the airport.

I am so glad that NH8 is finally finishes and even have tolls along the way. These are good signs and bring me to the subject of oversea business development......

You may wonder when do people start investing oversea and where do they go. The when is not too difficult to answer, the difficulty is the the where. The world is a big place and for small business starting to built business oversea is not cheap. A scouting trip to India will cost at least USD 5000 per person for one week and this is even before you get any business just exploratory.

Now where do we start. I always feel that the stakeholder of the company should just take a holiday (have fun and also business). With the purpose to understand the market you want to enter into. You can read all you like about the country but the real understanding comes from observations and appreciating the environment. You may argue that going on holiday is very different from going on business trip. True but al least in the exploratory trip for the stakeholder there is some fun and pleasure which comes out of the trip. If he decide not to come to invest, at least he experience some pleasure out of it.

There are several tell tale signs in a the country you should look for in a country. Taking the example of India. For the businessperson, you must look beyond the child beggars tugging your sleeve on the street, the dirt and mud pile on the street, men pissing on the road side, the many bumps on the road and the shanty housing you see on the hillside.

For the intelligent investor they look at (this is my personal perspective)

1.Plane trains and people transport
The first impression of India is the airport. On this trip I have the good fortune of seeing three airports. The Delhi IGI Airport is a renovated version with new coat of paint and shining cladding on the facade. The Jaipur airport on a verge of a new building and Bangaluru airport, a brand new airport with its individual chute, sparking marble flooring and more important the impressive and extensive duty free shops (something that India Capital's airport is lacking).

Delhi is building its Metro, Bangalore is starting the process and Jaipur is starting to talk about it. There is a need for people's mobility to be address, meaning that there are enough economic activity and will to do something for the economy. Like Beijing, Shanghai and its second tier cities like Tianjin, Qingtao, Chengdu and even their third tier cities, which already have their mass rapid transportation. This is for within the city and not about the inter cities people transportation.

For the budding investor, these two signs tell you to enter that market - not before and maybe the after is a bit late.

2. The youth in a hangout
I believe the youth of the country is the country's future and as such look at the youth population and what they do. Go to the shopping centers, the clubs, the playing field and witness their activities. The youth of Singapore is no different from the youth of any other countries. They do hangout somewhere. Meet with them, talk to them and feel their enthusiasm or their frustration. This is the best form of market survey. Talking to businessman never always get a good impression :)

3. The magazine in the bookshop
A magazine stand in any country is a good sign of the information flow of the country. Many people feel that information are from the internet. First of all the people that wrote on the internet are a certain breed of people and secondly internet accessibility has not penetrated to the lower income and older generation. Magazine and newsstand on the other hand caters to the masses. Just try standing in front of the newsstand at CP in Delhi or the newsstand near Victoria station in Mumbai. Just the scope of topics is mind bogging. You do not see this in Vietnam or Myanmar. It is the wealth of information make available to the masses. Just the number of newspaper available in India is beyond comprehension.

4. The LV factor
LV stands for Louis Vitton and where LV goes, there must be people who can afford them. So is the Gucci, the Mont Blanc and the Ferragamo. These brand only enter the market legally in the last five years. I remember the first Mont Blanc shop opening in the Delhi Taj with full fanfare and now they are everywhere. The LV factor is the sign of wealth and the number of wealthy people who wants to buy them. The LV factor has three stages. Stage 1 is when they are only available in hotel, Stage 2 is when they are appearing in shopping centers and Stage 3 is when the fakes and imitation start appearing in the market. This tell you that even the lower and some middle income can afford it - the wanna-to-be market....... :-)

5. Preservation of its heritage
The Forbidden City started it renovation work about ten years ago. When a country starts to look after its heritage, this is a time to go in. To draw a parallel, its it like the family starting to renovate their house, the parents must have money to renovate, making their house looks better. Likewise the government of the country not only have the money but also the will to preserve their heritage, it can only be a good sign.There are many world heritage sites where the country where it is based are not and cannot do the preservation. That country is either not ready for investor or not willing (maybe too corrupted) to even preserve their heritage. Look at the country that are doing well like Japan, Paris et al. I am just waiting for the Red Fort to be brought to their excellence some day.

This is a long email....... we will talk about the art of conversation next ..... to be continued.

Regards

Seng Choon

Learning Experience India 2 - 2

Dear All

Continuing from the last email.....

The two projects has one thing in common - NRI.

There are two categories of NRI. The first group are those who have spent some time in India and then for various reasons gone aboard to live and work. Some could be following their family oversea and some who went aboard to study and then stay on to work in the foreign land. The second group are those who have never stayed in India or left when they were just babies.They have no idea of India other then what they have read or saw on television. Both are very different in their perspective of India. For one thing they are not well liked by the native Indians.

This dislike is not unique. The equivalent in China is Hwa Cheow or Oversea Chinese. These Oversea Chinese faces the same problem when China opens up in the early 1970's and 1980's. The native Chinese have certain "misconceptions" of these Oversea Chinese and initially they were perceived to be wealthy and can bring experience to jump start the Chinese economy in the early days. In a way this is true, at least to the extend that the Oversea Chinese is the impetus to the change in China today. I should know, I was treated as an Oversea Chinese when I went to China in the early 80's. Over the years I have seen the line between the native Chinese and Oversea Chinese become less and less apparent. The native Chinese too starts going oversea for holiday and work etc hence the distinction become less obvious.

The NRI brings with them the experience and idea to rejuvenate the economy. In these two projects, one was a nephew returning to the Uncle's business (the Uncle do not have a son just daughters) and come up with the idea to turn a plot of their family land to a golf resort rather then another shopping center. The other was a bank where the younger brother who left India for the last twenty years, worked with some international bank, return to the family business and felt the need to have strategic alliance with a foreign bank in order for their family bank to grow. He brought the idea of securitisation to the family board of directors..... very similar to the current sub prime issues in India :)

There are two personal characteristics that I found in these NRI. One is impatience and the second is arrogance. Impatience in wanting to change and arrogance in their attitude towards the native Indian who has not been "exposed" to the "outside world". These two characteristics caused friction even within the family business.

Some of you are the NRI.

Lessons learnt is that change takes time and patience is a virtue. As for arrogance.........

Tonight I fly to Delhi and then tomorrow drove down to Jaipur. I have never been to Jaipur and I heard from you lot that it is a beautiful place. I will be back to Delhi on Sunday for a few meetings and then fly off to Bangalore on Monday.

My adventure begins tonight. To be continued........

Learning Experience India 2 - 1

Dear All

Business is about relationship. Over the years I have come to understand that I get consultancy work through recommendation. Words of mouth recommendation is a very powerful tools. In order to get recommendations two things must happen. The first one is doing a good job and the second is keeping your good work in the mind of your customers. To do this you need to keep in touch with them at all time. This even apply to customers who were not happy with your work, you will be surprised that over time these customers can even be won over. For one customer who did not appreciate my work as I recommended that he step down from his GM position to give way to his younger brother who is more capable for the position, over time he appreciate me for my follow-up with him. I tried to make sure that if I "push" you off the cliff, I have a airbag at the bottom of the cliff to cushion your fall :)

To keep the fire burning, I have two methods. One is remembering people's birthday and sent them sms to congratulate them and the other is to meet with them occasionally. You will be surprise as one grow older the little greeting from someone on his/her birthday can go a long way.

This is the introduction to the Learning Experience India 2.

Yes I am going back to India from the 25th July to 2nd August. Like the previous Learning Experience, I do have several leads to work on in this trip. (My trip has to pay for itself, at least cover the cost) but the main purpose is to renew some relationship that I have forsaken for some time.

Relationship is a function of TIME and EVENT. With time one can built and strengthen a relationship, in business there is seldom "love at first sight". While happenings or events in the course of a relationship can strengthen or weaken a relationship. Let me give an example, the recent tsunami brought four working colleague to help out at the disaster. There was limited water and facilities and the four acquaintance through volunteering at the disaster site, strengthen their relationship in the course of the two months. Upon their return the four person decided to resign from their company and start up a child care center....... It is just like company organizing team building event at resort to strengthen a relationship...... In your case to strengthen your relationship with your customer, create events like in a restaurant give out some sample food for food tasting or inviting your customers for a golf game :)

This trip covers two key projects- a golf course and a bank.......to be continued

Learning Experience India 1 - 4

Dear All

This is the last and final learning for this Indian experience and I hope you have enjoyed the sharing.

On project 1, I am very pleased that I have manage to fixed up three potential candidates for acquisition. It is actually five. Two in Delhi and three in Mumbai. There are several others that I rule out. Those are generally the ones that are just "testing market" - wanting to know what's the potential of their business. Some of them I felt are rather too small with no good management and there are those wanting unrealistic valuation of their business. I want to share with you about valuation. In all the years I have been in this profession. Valuation of a business is always the most challenging. There is no right or wrong method and what you learn from your MBA classes is just the foundation for you to be creative/flexible in negotiation on the valuation. Methods like DCF or PE approach personally is just to support your proposed pricing. For the sector that I work in (the small and medium enterprises) NTA + goodwill is the best approach. Personally I conclude that a lot has to do with your negotiation skill. I have seen negotiation where the NTA is only 40 million ringgitt and the eventually sale is slightly over 92 million ringgitt and it all down to a old but shrew lady's approach in negotiation. Only advise that I can share with you in negotiation is that do your homework and take note of all the little details. Need not remember them by hard but know where to them them. Also always take note. On this project I will be beck on the follow-up in January. This is where the interested buyer meet the interested seller. First impression is very important. As I am working for the buyer in this instance, I must project the buyer in a very professional & sometime benevolent if it in about a family business.

On project 2, I was a bit disappointed. Having spoken to several contractors and developers, India's tier 1 cities is still not ready for prefab in a big way. Firstly cost of labor is cheap here, road system is not good enough to transport large slab and finally the general public still have poor perception of prefab buildings. In this instance, I must be ready to drop this assignment even though I can carry forward and charge the customer for feasibility report. As a consultant, people pay you for your knowledge and if you feel that at this stage the market is too early for your product, it is better to be honest with the clients. You win some and you lose some. Being a consultant does not mean that you have to take on all the work. Leave some for a later date :)

On project 3 however, I was lucky. I have an accountant friend who brought to me a very established book distributor. I thought I was going to give up on this assignment. The lesson I want to share about this project is the mindset of the company owners. This business turnover US$20m and its profit after tax is only US$200K. There is under declaration over the years. I cannot tell you more. The lesson you have to take away from this business is that under declaration has its pro and con. When it come to selling or raising money for the business, you really have no ground for argument as it is all book value that valuation is created. I have met them and discuss their financial. The owner was disappointed with the value of the business.

I guess this is the end of the learning experience

I am now sitting in Mumbai airport typing this email. I slept over in the lounge for five hours because Air India flight back to Singapore was cancelled :)

Regards

Seng Choon

Learning Experience India 1 - 3

17 August 2008


Update

On project one, after a series of telephone conversation, I have come to one positive lead. A chain of restaurant chain that has a small catering business and a good branding in Delhi. Personally I always look for business with good branding, it is easier to develop the business further on acquisition. I am still lacking a good lead in Mumbai. I always thought that Mumbai will be easier to find restaurant chain interested in expansion and also there will be more family run business looking to corporatise their business. So if you have any lead of F & B business in Mumbai , do let me know.

On project 2, the prefab industry I will be visiting one infrastructure contractor in Delhi and a developer in Mumbai. Reason is for me to understand construction market in India. I normally do this ground research on top of my other desktop research prior to my visit. It helps when you are selling this project to my Japanese client. As a consultant you are dealing with information and hence you have to be well brief at all time. the question is what info are you fishing for. This varies with different clients. Generally all info are valuable is a matter of when you use them. There will be a follow-up to this project as I will need to bring the Japanese to visit these people later.

On Project 3, bookstore distributors are hard to find, as this is not my strength. This is a big market and yet it is also a close market. There are few major players in the market, generally they are small family run business. Even for book distributors there are many small business who tie up with printers and publisher. For your info, there are about 3000 printers or publishers just in Mumbai alone. The major players are doing so well that they are not keen to talk to foreigners. There are also finanancially able to modernize their setup and some of them are doing very nicely like those you see in Delhi CP and Mumbai Narimun Point. I will maybe have to focus on those business who want to move into the book business but does not have the expertise, maybe Pantaloon etc.

The schedule is by now 70% confirmed.

Delhi
On 3rd meeting with a hotel group
On 4th morning meeting with client who wants to develop business in China, I need to know how their product will fit into the China market.
On 4th afternoon meeting with infrastructure contractor on the prefab
On 5th afternoon meeting with restaurant chain
On 5th night leave for Goa
Goa
On 6th morning visit to a hotel project to discuss on funding requirements
On 6th evening leave for Mumbai
Mumbai
On 7th afternoon meeting with developer
On 8th morning visit to cafe business
On 9th return to Singapore

To be continued....

Regards

Seng Choon

Learning Experience India 1 - 2

August 16 2008


Dear All

Finalising the date of travel, I will now have to fixed the appointments and meeting. Given the time constraint, meeting to me in very important. I have to be clear of my objectives which is to find the business to work with in the five projects.

In my business model I come to realise I need local resources. Hence in various countries I will have people who can help me to do the necessary research, networking and set up the various meetings. Finding these people takes time. After eight years of working in running around India, I have set up a base in Delhi, Jammu Kashmir, Mumbai, Pune, Kolkatta and Cheenai.

The resources in this areas are of two categories. One are very distinguish members of society (with the network) and the other are young people who help me with the research and logistics. These young people are not just any body, they themselves are GM and CEO who I have trained and coach for the pass years. Whenever I got a project I will liaise with these young people and they will take time out from their work to work with me. To them it is a valuable learning opportunities. For example, in my the last trip I have to bring a group of educationists to Chennai. The person (CEO of a drug company) who work with me in Chennai, took time out and provide the consultancy input. He got to learn about the education opportunities in China. There is a selection criteria for me to find the local resources, most of these are graduate from US and UK and they are all in their family business. There is a financial incentives for them as well (not that it matters), we share on the consultancy fee.

For the five projects, I will sent out the feeder to these people in Delhi and Mumbai, to get them to give me contacts which I will then followup with email or phone call to fixed appointment. I will also need to make cold call (remember the Who's Who game we play in class). Fixing Indian appointment for me can be very difficult at time. One is the language issue and another is that Indian boss does not like cold caller. Hence having someone to help "open the door" is very important. By the way speaking in a foreign accent and being a foreigner helps.

One week before my departure, my secretary will have finalise on at least 50% of the appointments

Learning Experience India 1 - 1

Dear all

Some of you wanted to know how I carried out my M & A work and business development in India.

So I thought in the course of next two months, I will conduct a virtual platform for you to follow me on my next projects in India

M & A is a specialise work, basically looking for businesses who want to sell and businesses who want to buy. For this experiment we will focus on India.

Planning Stage

Prior to going to any country, I will do the groundwork and check out businesses who are interested in India. This business can be from any countries outside India.

In this exercise for India, I have started with four potential projects and one in closing stage of negotiation (this will be the one that will pay for the expenses of this trip).

Project 1 is a food catering company based in Singapore with operation in China, Thailand and Dubai. Their customers are corporate function, contract catering (for school and business offices) and food court. They also own a restaurant chain. They are interested in finding a caterer / restaurant chain (listed in stock exchange or otherwise) who are keen to find oversea partners to help them to grow their business.

Project 2 is a Japanese company who supply connector parts for pre fabrication construction. I will be looking for precaster and distributors who are currently supplying to the prefabrication construction industry. Contractor and developer who are looking to diversify into supply will also be considered

Project 3 is a listed Singapore printer and publisher who owns a chain of bookstores in this region. They are looking to set up business in India through acquisition. My task is to find them the possible candidates.

Project 4 is an Indian company who wants to set up business in China and my task is to finalise on the mandate for this project. I need to know the scope and can they afford to pay my fees.

Project 5 is an engineering hardware company supplying bolts, nuts and bearings. This project is in the final stage of company formation and setting up the sales team to market the company's product. This is to prepare the business plan for the new startup.

My next task is to plan out the itinerary. I normally try to cover as many cities as possible in the shortest time. (Unfortunately I don't always get to do much sightseeing)

For this trip I plan to be in
- Delhi from 3rd to 6th Dec
- Goa from 6th to 7th Dec (to see a hotel chain)
- Mumbai from 7th to 9th.

On all my trips I will also try to meet potential client and also my reqular clientele, so that they know that you are still in business. Very important.

M&A

I always look at M & A as like going shopping. You must first of all know what you want to buy and how much is your budget. The starting to look for project is always the hardest and when I first started I get a lot of enquiries and not all can turn out successful. The success rate was for 15 - 20 enquiries maybe one will be successful enough to cover your cost. Nowaday my success rate is better. With six enquiries I will get the commission from one of them. What I do differently is that I am more selective in attending to enquiries. By the way the six enquiries or projects that I follow up can be over two to three years. In some of the project, I get to do the business development work that follows the acquisition. This help with the expenses.

Rules

In this learning experiment, I will allow you to ask questions so as you understand the technicality of M & A and business development work; and I will try to answer them as frankly as possible. To me this is real time learning and I hope you will benefit from this experiment.

I have set a time frame for this learning from now to end December as I progress to India and back.

I will update you on the various happening in the build up to the trip and also the follow up on my retrun.

Some of you may find this learning quite unique...... is it not what entrepreneurship is all about :)

Regards

Seng Choon

Learning Experience Malaysia 1 - 2

12 September 2008

The working culture in Malaysia is actually quite pleasant... It is like having Indian, Chinese and Western working together with good infrastructure. It is like Singapore but at a slower pace and about five years behind.

Currently there is a lot of political turmoil in this country.... the main political party the Barisan National has just lost its two third majority after 50 years of politics on their March 8 General Election. Business and economy are affected, Several majority projects were put on hold or cancelled. The economy is slowing down. I felt however the country is very resilient - remember the 1997 financial crisis and how Malaysia did not swallow the IMF medicine unlike Indonesia. The country is strong in agriculture, it is one of the main producer of palm oil in the world.

Depending on which part of Malaysia you are working. In KL you will find that English is the language of business even though the official language is Bahasa Malaysia. Most of the official document is in Malay but there is always an English translation. As a predominately a Muslim country, Islam over here is not so imposing like some other Islamic countries. If you happen to be on a business trip to Kuala Lumpur, you will noticed that they are more Chinese in their business district than Malays. Generally the business district is dominated by Chinese, some Malaysian may not agree.

What are opportunities open to you people, one is the agriculture related industry, education and call center. Until today, I still feel that this is the few places in the world where you can find people who can speak English and Chinese fluently, ideal to tap both China and the western market. For those who are into Islamic financial services, Malaysia has the pre requisite due to their Islamic culture.

The lesson you want to take away from my learning experience in Malaysia, is that "in Rome do what the Roman does". You may not agree with a country with protectionism so prevalent, you have to work and adapt to this culture. In this trip I visited a old client who have transferred his production in to KL. many years ago. Just two months ago, a government official came and ask him to give up 30% shareholding to him. If not he will withheld the work permit renewal for his staff, he also demanded a monthly payment of S$500 retainer........

I will be back to Singapore tonight.

I do hope you enjoy the little write up and I will be off in Indonesia next week.... will talk about succession and family business.

Learning Experience Macau 1 - 1

21 Dec 2008


Most people comes to Macau for one thing and that is GAMBLING. Over the years Macau has "branded" itself as the Las Vegas of the East. Every days thousand and thousands of people fly, ferry and drive to Macau to pursue this passion. I however is here for a different purpose. I am accompanying a client who is showing how money is laundered. Yes this is how I learn.

Let's talk about a different form of learning - learning by observation. I do not attend many seminars or go for talks or short course. The way I learn is actually through observations. Rather than paying thousands of dollars and listen to a person sharing his experience in a classroom, I will take the money, spent a few days and actually visit another country or follow a professional to show me a certain interesting process. For example many years ago I met a businessman whose business model is jewelry. He does not have an office and he has only one full time staff, but his turnover is tens of million. You see his business model is selling jewelry at exhibition. He travel from one country to another with his jewelry and buy/sell at exhibition. His money is then channel to an offshore company and an offshore bank account. He pays part time staff at the exhibition - cash and at time even bonus. He has been doing it for years. Following him I learned that there are many people using this business model for many other products. I follow him to learn.

This bring me to the topic for the trip --- Money laundering. This is a subject matters that is part of business and a need-to-know subject for any entrepreneur. Not that you will need it but it is good to know.

Why money laundering. The first premises for money laundering is that you must have the money, mainly excess "unaccountable" money. Money that you have problem explaining when the tax man come knocking at the door. Some are from illicit earning like drugs, gun trafficking etc while others can be through business transaction like commission earned or undeclared sales items. One is service and the other is product based. Revenue and profit has to be recognised somewhere either through individual or throught a business entity.

One of the most common form of laundering is through Gambling or winning from gambling.
Man with money.
Man enters the casinos.
Man change money for chips.
Man go to blackjack or roulette table in casino.
Man put bet on table and
Man "wins" lots of money.
Man change chips to cash.
Man walk out of casino with multiple of initial money that he declares that he won in a casino.
By the way I have simplified the whole process. It is actually more complicated than this.........

After the kind of money you "won"..... where do you put it????

Most common form is a business entitiy in the form of an offshore company or some people called it BVI company. Most countries do not tax earnings from offshore activities and activities in these companies are under a different jurisdiction and rules.

Forming the company is only part of the setup, the other is forming the banking account to put your "winning". There are many banks who have offshore banking. The key issue to note and very critical to the bank is the term "source of fund" --- where did the money come from......

Hope you get a rough idea on how the money is laundered :-)

To be continued.....

Learning Experience Indonesia 2 - 1

16 September 2008

I want to share with you a special group of babies. I called them the FIRST BORN. The babies can be boys or girls. From the day they were born there is already certain expectations. Specific expectation. Not family expectation but business expectation, you see these children are born to a business. Whether they like it or not, it is a birth right and they do not have a choice.

I just arrived in Jakarta again and will be here for a few days.

I am here to meet with a young man who is an Indonesian First Born which I befriend and also a client for many years. The First Born can be Indian, Chinese , Singaporean First Born for that matter. I have come to understand that for what the First Born faces in their growing up, are the same and are regardless of race, sex and nationality. The Indian First Born will faces the same Issues as the Indonesian First Born - only the context and environment is different.

He has a problem - a problem of confidence.

Some background on this First Born. He came into the business after graduating from aboard. His Dad felt that he needs to get a few years of hands on experience outside before joining the firm. The company went through a crisis during financial crisis in the late 1990's and he was asked (sorry not asked but told) to come into the family business. He is a first boy child of the family and he was expected to take over the business. After ten years of working in the family business. He has done a lot for the company - sorting out incompetent "family bums" in the family business, convincing the Dad the need for proper accounting to improving the general welfare of his low level staff.

With all that he is always told that "he has no experience". After hearing this remark for the passed ten years, he had enough and tendered his resignation. "When will I be experienced?" He said.

Unfortunately resignation is not an option for the First Born.......

Hence I am in Jakarta on request of the Dad.

to be continued........