Background
William Cheng was born in 1943, Singapore. He is the son of an emigrant from Guangdong province, China.
廷森 钟
William Cheng was born in 1943, Singapore. He is the son of an emigrant from Guangdong province, China.
He was at primary school in Singapore before moving to an English secondary school in Kuala Lumpur. At the age of ten, Cheng began to learn how to do business from his father, who started making and selling lion-branded steel furniture in the 1940s.
The family-run business included the manufacture of rubber-based products and food processing, which began when the business expanded to Malaysia in 1956. Cheng moved to Malaysia in 1958 to oversee operations there. From that point, Malaysia became the focus of the Lion Group’s business expansion and success. In 1971, Cheng managed to convince his brother jointly to invest RM600 000 in order to set up a steel-based furniture-making mill in Indonesia. The business encountered some difficulties, such as gaining financiers’ support at the initial stage as the country faced considerable political and economic uncertainties. Nonetheless, in 1976, he remitted profits made in Indonesia to Malaysia for investing in the steel business.
Cheng visited most of the world’s leading steel mills in order to gain an understanding of the business. An Italian firm was keen to expand into the Far East at that time, and Cheng made the most of this opportunity, buying the related equipment at a good price. He recruited workers and re-assembled the equipment in order to produce two different products at the same time. In 1978, Cheng secured a license from the Malaysian government. He pumped in RM12 million to expand the size of the steel mills in Malaysia and invested in another two production lines in 1983. Production reached 5 million tons in 2006 and it is expected to reach 7.8 million tons by 2009. As the Lion Group accounts for more than half of the steel production in Malaysia, Cheng earned his nickname, the ‘Steel King.’ The Lion Group was listed on the Kuala Lumpur Stock Exchange in 1981.
The growth of the Malaysian economy and the rise in the price of steel fueled the Lion Group’s prosperity in the 1980s. Using the lucrative profits earned from the steel business, Cheng carried out some management takeovers between 1986 and 1988 on some ailing retail firms in Malaysia. It was during this period that Cheng began venturing into the retail sector, though this strategic move was not well received at the time. He invested RM50 million, and in 1986, he founded the Parkson Retail Group, now the largest retailer in Malaysia.
Apart from retail, the Lion Group also has joint ventures with local firms in the following sectors in mainland China: automotive assembly, tire production, food manufac- turing and beer brewing. The considerable diversification was probably one of the reasons why Cheng faced problems in servicing corporate debts during the 1997–98 Asian currency crisis. His ventures in China registered huge losses. As part of the Lion Group’s corporate rationalization plan, Cheng divested the tire production operation in mainland China to Double Star Group in 2005 and the beer brewing business to InBev in 2004. The flagship Parkson stores, however, are projected to be more profitable in the future, as consumer spending power in mainland China continues to grow.
To understand the vast potential market of mainland China, Cheng visited the country almost every month between February 1992 and August 1993. He learned that in China the gradual approach is the key to doing business. Cheng formed a feasibility study team to carry out research on several key issues on the Chinese market before setting up the first Parkson in Beijing in 1994, in joint venture with Goalmark, a big state-owned enterprise. At that time, the local retailers were mostly state-owned and were seen to lack sensitivity to their customers’ needs. With a belief that satisfying the customer is the key to success,’ Parkson targets the middle and upper-middle class market segments. Over the years, Parkson has developed well-established relationships with various distinguished international and domestic brands. Its outlets in China operate on the concessionaire model. The concessionaire sales accounted for about 80 percent of the revenue. Cheng has said, ‘to win in competition and reduce the gap with the market leader, we need scale and to sell quality items’ (China-ASEAN Business Weekly, 2006). Parkson Retail Group in China uses ICT to track customers’ purchasing habits and links compensation to performance. With ample cash in hand, Parkson opened several other outlets in major Chinese cities. It was listed on the Hong Kong Stock Exchange in 2005. In April 2007, it completed the acquisition of Golden Village Group Ltd for RMB510 million. The acquisition expands the department store network of Parkson in mainland China.
Cheng is married with three children.