Thailand's Heinecke is ready to make a splash.
Bill Heinecke, chairman and CEO of Thailand's Minor Group, insists he is a patient man, but a brief look at his resume paints a different picture. At age four he started a lemonade stand; at 18, he was running two companies; and at 20 he was a millionaire.
Now at 50, Heinecke - an American by birth and a Thai citizen by choice - is Thailand's most successful foreign entrepreneur, with a business empire spanning hotels, fast-food outlets, marketing and even the world's largest golf-glove factory. He has also just penned a book, The Entrepreneur: 21 Golden Rules for the Global Business Manager (see review, page 25).
He serves on the board of directors of three publicly held Thai companies that he founded - Minor Corporation Public Co, Pizza Public Co and Royal Garden Resorts. The Minor Group employs more than 13,000 people and grossed more than US$300 million last year.
Heinecke's private life is no less exciting, with the self-confessed lover of pizza, ice cream and gambling dividing his time between motor racing, diving (with sharks) and flying airplanes.
And his drive shows no signs of slowing. In June, Heinecke leapt at the chance to go a few rounds with investment titan Goldman Sachs, which had its acquisitive eye on Bangkok's five-star Regent Hotel, part of the Rajdamari Hotel group. Heinecke's company, Royal Garden Resorts (which owned 25% of Rajdamari) was no match for the financial muscle of Goldman (which held 34% and was poised for a takeover).
But what Goldman did not take into account was the feisty entrepreneur's determination to keep the Regent out of "foreign" hands. Heinecke's tactical manoeuvring and skilful networking with the other Thai shareholders kept the investment bank at bay.
Heinecke, who moved to Thailand with his parents as a teenager in 1963, is fiercely devoted to his adopted country, and counts among his close acquaintances - and business partners - members of the royal family. "I speak enough Thai to get me into trouble or out of trouble, depending on the circumstances," he says, adding that his long-term commitment to the country has given his businesses an edge over foreign competitors.
"A lot of people think of entrepreneurs as the sort of people who come when times are good and leave when times are bad," he says. "I'll always be an American, having been born in America, but by choice I live in Thailand and am a Thai citizen so I think that helps with doing business. It reflects the commitment that we have to the country."
Not that Heinecke has been one for quiet assimilation. It was his franchises - Pizza Hut, Swensen's and Dairy Queen - that successfully brought pizzas and ice cream to the dairy-averse Thais.
Heinecke also established the first Pizza Hut franchise in Beijing. This was in the late eighties when red tape buried most projects before they got off the ground. The deal was sealed the day the PLA's tanks rolled into Tiananmen Square on June 4, 1989. As luck would have it, it was also Heinecke's birthday.
Bill Heinecke recently shared some of his insights with Asian Business.
AB: The shakeout from the bidding war over the Bangkok Regent Hotel left you with 27.5%, Goldman Sachs with 40.5% and the rest with minority Thai shareholders. Are you happy with that result?
Heinecke: Yes. Goldman stated that they wanted to take over the hotel. They failed. Our stated goal was to keep it from being taken over. We succeeded.
AB: Why was it so important that you blocked Goldman?
Heinecke: We'd been shareholders in the company for some time. Many of the other shareholders were shareholders in our public company and in other hotels that we have. And I don't think any of them wanted the Regent to become a speculative platform to acquire property assets in Thailand - and I think that's what Goldman probably had in mind.
AB: Do you still maintain a long-term goal to take control of the Regent?
Heinecke: We've been in the hotel business about 20 years in Thailand and we recently took 51% of the Marriott Royal Garden Riverside. From an initial stake of 19%, it took us about nine years to get to that 51%. We're very patient. So we're very optimistic that long term, we're the logical owner of that hotel.
AB: You now have seven hotels in Thailand and one in Vietnam. Are there plans to buy or build more hotels?
Heinecke: We've got a fairly aggressive position. We're currently building a joint venture hotel with Marriott in Phuket and we're actively reviewing four or five hotel projects. Some are acquisitions; some are new starts. They're all resort destinations in Thailand, including Pattaya. We're not looking seriously at any hotels in Bangkok. Bangkok is overbuilt and it's still a soft market.
AB: You had a frustrating time trying to set up the first Pizza Hut in Beijing back in 1989. Would you consider going back in with a new venture any time soon.
Heinecke: Yes we would. At the time that we set up Pizza Hut, it was not possible to have 100% control. They didn't allow foreign ownership except with a Chinese partner. Today, I believe, 90% or even 100% foreign ownership is allowed, so that would change the whole thinking. We found it very frustrating in those days to deal with the government entity that we had, but times have changed.
AB: Are you actively pursuing any projects in China?
Heinecke: Yes, we're looking at several fast-food franchises. We know food very well and we're always looking for opportunities in that area.
AB: Your latest hotel venture outside Thailand was in Vietnam. Any more hotel projects planned there?
Heinecke: No, not in the hotel sector. We've found Vietnam very challenging. It's been even more seriously affected by the crisis because it was so dependent on the Asian 'Tiger' economies. So we're preparing for another two slow years in the areas of tourism and business. Still, we're looking at a number of brands in the food business, including Swensen's . . . We currently export Swensen's to Vietnam.
AB: Apart from the traffic, what are the most frustrating things about doing business in Thailand?
Heinecke: Change always takes time. Things don't happen right away. Perhaps it could be argued that you've got to be more patient in places like Thailand.
AB: What's the biggest lesson to be learned from the Asian financial crisis?
Heinecke: Never run out of money, 'cause that means the game's over. Don't over-invest, get over-leveraged. People tended to put a lot of money into property. They borrowed short term and invested long term, mismatched their funds and hence the bubble. Certainly corruption and cronyism played a role, but frankly, I think it was very much a question of people not being careful.
AB: Before the crisis, the Minor Group, along with many other Asian companies, was considerably exposed to US-dollar loans. Has your strategy changed since then?
Heinecke: Yes. We've since floated two successful bond issues for our group - one for Royal Garden Resorts hotels, one for the Pizza Public Co. We have a very minimal amount of US-dollar borrowings now. And we've restructured so that virtually all of our borrowings are in baht, with the exception of some of our hotels where we do have foreign earnings.
AB: Do you fear that returning foreign investment could derail necessary reform in Thailand and elsewhere in Asia?
Heinecke: We have to be vigilant. But foreign investors are very cautious these days. Those that have come back are even more careful and more selective.
AB: Do you think Thailand's economy is likely to return to its pre-crisis levels?
Heinecke: I think so, and I think it will be a stronger economy this time around because of many of the changes that have taken place. Realistically, I think we're looking at two to three years.
AB: And the baht and the stock market?
Heinecke: They will take much longer . . . if it happens.
AB: How important has your association with Thai royalty been to your success?
Heinecke: It certainly hasn't been a hindrance. We lease properties from His Majesty's personal property office. Now the King doesn't get involved in business per se, so we don't really have a huge amount of contact with him. But we do deal with his office and two of our hotels are built on the King's personal property. His office is also a shareholder in our Marriott hotel, also the Regent Hotel and in a number of projects over the years. They're also our partners in the Regent Chiang Mai.
AB: With about 13,000 employees on the payroll, how do you ensure you're getting the best and do you make an effort to get to know as many as possible?
Heinecke: I certainly try to make myself as visible as possible. I believe in management by walking around - being seen and seeing people. A large part of my day is often spent interviewing. On average, I'd probably interview one person a day, 20-25 a month. People really drive our business. This is not a company on one person ... and I like to think it will outlive me.
AB: You have managed to weave at least three of your passions into your business interests, fast food, hotels and flying. You also love gambling. Could there be a casino venture on the horizon?
Heinecke:: No, there's no casino. But you've got to be willing to take a risk to get a return. Sometimes you win; sometimes you lose.
AB: Your group has come up with some fairly ground-breaking management practices like allowing staff to award their own bonuses if they achieve their targets. Are other Thai companies following suit?
Heinecke: I think some companies are certainly looking at us and we're certainly looking at other Thai companies. Don't think for a minute that there aren't good Thai companies out there because there are many fine Thai companies and we learn from them too.
AB: Any other plans for the future - new ventures, franchises?
Heinecke: We're looking at new brands, new countries. We're certainly looking at Malaysia fast food, everything from burgers to ice cream to pizzas. We're looking into other Ripley's in the region, in Shanghai [the group already has the Ripley's - Believe It or Not museum in Hong Kong]. But basically we're staying focused on the businesses that we know well. One thing we learned through the crisis was that those companies that do best are the ones that stay focused.