'YOUR NETWORK
COULD BE A REAL
ADVANTAGE...'
What's NewS Issue 9 October 1997
working relations
3
In spite of recent economie troubles throughout most of Southeast
Asia, growth continues to be the longer-term indicator for many
corporates in these high potential markets. Jakarta-based Sierad
Produce is one of those companies which exemplify the Asian
dream. Although just over a decade old, the former poultry producer
has already branched out into related sectors in F&A. And, as
president-director Budiardjo Tek explains, is poised for further
expansion into key markets. How can the bank support this
development? Tek has some suggestions.
While many people in Southeast Asia may
regret what is perceived as an intrusive
westernization of society, culture and
tradition, just as many Asians
experiencing the advantages of booming
economies prefer to talk about
modernization. Increased prosperity and
enhanced purchasing power have led not
only to greater access to higher standards
of living. They have also led to changes in
consumption patterns that, in their turn,
generate opportunities for industry. Rapid
growth over recent years in the poultry
industry throughout the region is just one
example of increased consumption. But it
also represents something of a blueprint
ttpr how domestic operators can take
^dvantage of cross-border opportunities.
FAST EXPANSION
Sierad Produce is a case in point. 'The
poultry sector has grown massively,'
confirms president director Budiardjo Tek,
'indicating the changing consumer
behaviours that are characteristic of the
domestic market here in Indonesia, but
also elsewhere in the region. And we have
grown with it,' he adds with some
understatement. Sierad was set up in 1985
as a dedicated poultry production and
processing operation. In less than 12
years, it shows annual sales growth of up
to 60 percent on a USD 150 million
turnover; profit is around USD 12 million.
'Much of our increased sales volume is a
direct result of both integration and
fcversification,' he explains.
Tliversification means the company's
expansion into fast food in Indonesia,
Hong Kong, China and perhaps most
surprisingly given 'westernization' fears,
the US. Sierad's acquisition of a majority
This interview with Sierad was made well
before the present currency crisis in
Southeast Asia which is why it makes no
reference to current problems in the
region. Lack of time prevented us from
pursuing the situation for this issue, but we
will return to it in November's What's NewS.
stake in Hartz Restaurants Inc. USA is just
one example of reverse investment,
although even here the strategy remains
acquisition in order to facilitate regional
expansion through franchise options.
EARNING POINTS
A listed company with very nice numbers,
Sierad's highly sophisticated treasury is
courted by just about every bank in
Indonesia, both national and
international. So how does a bank
distinguish itself from the competition?
'It's not just about cheap money,' Tek
confirms. 'Sure we want the best price and
the best terms available.' At the same
time, Sierad is a loyal partner. 'One of
your competitors recently came to us with
a really innovative offer. It doesn't really
matter what the structure was. What
counts is that they developed it for us and
proposed it to us. This is a bank we work
with occasionally. The fact that they are
thinking proactively about our needs earns
them points at Sierad.'
NETWORKING POTENTIAL
Asked how Rabobank could offer
additional customer value, after some
consideration he replies: 'We already have
Sierad's president-director Budiardjo Tek
poised for expansion.
a good working relationship with the
bank. One advantage for us is certainly
the know-how you have in this business.
Few banks can offer that. And at this
point, we work with both your Singapore
and Jakarta branches. What we feel you
could do for us in addition to the financial
side is make improved use of your
networking potential.' According to Tek,
Southeast Asia is traditionally a
relationship-oriented region - that,
apparently, is one aspect of general culture
in the area that has not changed in recent
decades.
MORE POINTS
'Triple-A rating - great,' he says frankly.
'You recently did a syndication for us and
the Rabobank name is very useful,
especially in F&A worldwide. You
definitely have that reputation. But as a
rapidly expanding business, our needs are
more than plain vanilla. Let me give you
you one example here. We already have
two operations in the People's Republic of
China - Wendy's in Shenzhen and Hartz in
Shanghai as well as Hong Kong. We will
be expanding that presence over time.
Now, China is very much one of those
markets where introductions and
networking is everything. And that also
applies to Hong Kong. It is hard to go
knocking on doors in new markets. What
we would like to see is a more proactive
approach from Rabobank in smoothing
the way for us in these areas. I could
envisage you providing support from your
Hong Kong or Shanghai branches for us.
By working with us on this, you would be
offering real customer value for us, the
customer - and earning lots of points from
us at the same time.'
