Jardine Pacific Photo
Based in Hong Kong, Jardine Pacific recommitted itself
to China after years of rocky government relations.
In Hong Kong,
for Hong Kong
Despite economic turmoil,By Susan Kreifels
the company is keeping its focus
on the Asian market
HONG KONG -- Jardine Pacific has been reminding people that its heart still beats in this city.
It's part of a strategy that refocuses on Hong Kong, the Asia-Pacific region and industry-leading businesses rather than small ones. It's a plan that works well in its Hawaii company, Theo H. Davies & Co.
Jardine Pacific's advertising slogan, "In Hong Kong, For Hong Kong," has shown up in newspapers, televisions and slick brochures for more than a year as the former British colony prepared for its handover to China last July.
"It's really a Chinese campaign reminding people that this is our home," said Blair Pickerell, managing director of Jardine Pacific, parent company of Theo Davies. "Our hearts are in Hong Kong."
Jardine Pacific employs 30,000 people in Hong Kong and has roots that date back 166 years. But to the Chinese, it may have seemed the company's heart had gone astray.
The current reminder of the company's commitment here follows years of moves away from the city and outside the region by Jardine Matheson Holdings Ltd., whose businesses include distribution, shipping, retailing, financial services and property. Those moves brought shrinking profits and media reports that the giant had fallen into disfavor with Beijing. Investors were unsure where the British giant was headed.
In a recent interview, however, Pickerell said the focus of Jardine Pacific, while not necessarily ever shifting from the region, is "certainly back on Asia." And rather than smaller businesses, the trading and services arm of Jardine Matheson is concentrating on big businesses that can be regional industry leaders. That focus has not changed as the economic crisis in Asia deepens.
The strategy is evident in Hawaii's Theo Davies with its concentration on Pizza Hut, Taco Bell, Caterpillar and the Kahala Mandarin Oriental Hotel, Pickerell said.
"We're more focused on fewer companies that are more sizable and among the industry leaders, not dozens of small businesses," said Pickerell in a spacious office overlooking Hong Kong's Victoria Harbor. "We're getting rid of the poky ones."
Jardine's Pizza Hut business, which started in Hawaii, has mushroomed in Hong Kong, where it serves more than 12 million customers every year, making it the largest pizza chain in the city. Caterpillar has also done well in China.
Pickerell said Hawaii applies cutting-edge trends in America and then shares its expertise with Asia operations. Country managers from around the region have met in Hawaii to study operations and techniques. Middle managers trained in Hawaii move on to senior positions in Jardine's operational region, which has shrunk in size.
The company has "drawn the net tighter, from Hawaii to India," Pickerell said. "We allowed ourselves to invest in more places than we should have."
But the British company's new focus also comes under a new flag in Hong Kong, which could make a comeback more difficult -- not to mention Asia's current economic crisis. The Union Jack has been replaced by China's five stars, and that will crimp the company's status and competitive edge, some economic analysts say. Jardine faces tough competition from Chinese companies that hold greater clout.
"Everyone knows British businesses did better during the colonial period," said Ken Davies, a Hong-Kong based analyst who works in the Country Analysis and Forecasting Division of the Economic Intelligence Unit. "If there are choices, Chinese companies will do slightly better."
Davies said rather than "crude political moves," the Chinese will gain power through the normal process of stock buyouts, mergers and takeovers in the long-term future. "They probably will be overtaken in size and prestige by mainland China," Davies said.
Jardine started off in 1832 on a bad foot in China, where the company's founders made their fortune selling opium from the colonial outpost of Hong Kong. But neither did Jardine do itself any favors in the recent years leading up to the handover.
Within months of the 1984 decision by the British to hand back Hong Kong to the Chinese, Jardine moved its legal domicile from here to Bermuda, saying it wanted to ensure "freedom from politically influenced regulation." The move infuriated China, which saw it as disloyal and showing a lack of faith in Hong Kong's future.
Feelings soured more after the 1989 Chinese crackdown on pro-democracy demonstrations in Tiananmen Square. While competitors poured money into China as a show of support for the embattled Beijing, Jardine Matheson invested in Europe and Australia and later sold businesses there for a loss. In 1992 Jardine moved its primary stock listing to the London Stock Exchange and its secondary listing to Singapore two years later, saying it was necessary to protect itself from hostile takeover attempts. But Pickerell said the company's relationship with China has "righted itself in the past year" amid a smooth handover. Jardine Matheson has at least 76 joint ventures in China.
And Beijing promised Jardine Matheson's top executive, Henry Keswick, that the firm would be treated fairly when Keswick visited there last May.
"At the working level there is no problem," Pickerell said. "People in China want to be our partners. They're coming to us."
As for competition, he said Hong Kong is a city built "on waves and waves of it. We're used to it. I'm not saying we're not worried about Chinese competition. But we're not worried about who owns the business. Remaining competitive is the real issue."
Jardine Matheson is still a giant in Hong Kong. It owns prime real estate in Central Hong Kong and is the largest employer in the city. Jardine Pacific employs 30,000 people in Hong Kong. Throughout the region more than 200,000 people are on the work force in 30 countries.
Dennis Yau, deputy executive director of the Hong Kong Trade Development Council, believes any political problems between China and foreign companies like Jardine will become a thing of the past. "The handover went very smoothly. The issues are behind us. We're going back to what we're good at -- doing business."
Jardine Matheson in ChinaBy Susan Kreifels
predates Hong Kong treaty
HONG KONG -- The movie "Opium War" was packed last year by Hong Kong residents who never learned this part of their history in colonial schools.
The founders of the giant British firm Jardine Matheson Holdings Ltd. were key players in that war, part of the long, colorful and sometimes controversial relationship between the firm and China.
According to the company's book, "Jardine, Matheson & Company . . . an historical sketch," the firm has been doing business with China longer than any other -- even before the 1842 treaty that made Hong Kong part of the British Empire.
William Jardine was born in Dumfriesshire in 1784 and served as ship's surgeon from 1802-1816 in the East India Company, which monopolized the tea trade between China and Europe. He later formed a partnership to own and operate the new ship Sarah from Canton.
James Matheson was born in Sutherlandshire in 1796. After leaving his uncle's firm in Calcutta, he became an independent merchant in Canton. In 1832, Jardine, Matheson & Co. opened its doors there.
Two years later, the British Parliament abolished the East India Company's monopoly and Jardine Matheson sailed the first private shipment of "Jardine's Pickwick tea mixture" back to the United Kingdom, eventually capturing much of the East India Company's market.
By the 1820s, opium grown in India had become an important part of trade between England and China. Although opium was forbidden by Chinese Imperial edict, the ban wasn't enforced because so many Chinese merchants and officials were making money on the illegal drug, smuggled into the country by the British. In turn the coveted tea and other Chinese products were exported to England.
In March 1839, Chinese officials seized 20,000 chests of opium from British merchants in Guangzhou, and the Qing Dynasty began enforcing the ban on opium sales in Canton. Jardine visited Lord Palmerston, the British foreign secretary, and the country sent warships to reopen the markets. The Opium War broke out between the two countries, and Great Britain claimed easy victory by 1842. The Treaty of Nanjing, the first of what the Chinese called the "unequal treaties" with Western powers, gave the British Hong Kong and opened five Chinese ports to British residence and trade. Jardine Matheson was back in business.
It became Hong Kong's dominant company and an integral part of the colonial government. The company's taipan, or "great boss," was the leading person of Hong Kong society and showed up in James Clavell novels.
Today, Jardine Matheson Holdings Ltd., which has businesses including distribution, shipping, retailing, financial services and property, is the largest employer in Hong Kong with close to 60,000 employees and major property in Central Hong Kong.
THEO DAVIES BUSINESSESPizza Hut: 59 restaurants in Hawaii, Guam and Saipan
Taco Bell: 28 restaurants in Hawaii
Pacific Machinery: The largest industrial equipment distributor in Hawaii and Micronesia representing Caterpillar and others
Hawaiian Fluid Power: A division of Pacific Machinery. Designs, fabricates and services hydraulic equipment
JARDINE HAWAII MOTOR HOLDINGSTheoDavies Euromotors: Mercedes-Benz dealer, also sells Honda
Jaguar of Honolulu
TheoDavies Landrover, Porsche, Audi, Volvo and Ferrari
Sig's Auto & Paint