On Sept 5, 2011, The Edge Singapore published an article on Jebsen & Jessen (SEA). In the feature, Heinrich Jessen, chairman of Jebsen & Jessen (SEA) [JJSEA], explains how the former trading company is expanding into new businesses and markets while maintaining the family ownership. Read a summary of the article below:
How it started
"The 116-year-old company, started as a trading house based in Hong Kong, had a vociferous appetite for going into new businesses. This business mindset has resulted in a company that now has dozens of subsidiaries all over the world, in all manner of business activities with various partners.
"If you go to business schools or consultants, they will tell you that over-diversification is a bad word, but we have our good reasons,” says Heinrich Jessen.
JJSEA is involved in engineering and manufacturing with headquarters in Singapore and business across almost all of ASEAN. It is also one of three cornerstones of the Jebsen & Jessen Family Enterprise, generated a turnover of about SGD 1bn in 2010 and employs over 3,000 people.
The Group helps its business partners to access ASEAN, a region with culturally and ethnically diverse countries. “For companies who want to access ASEAN,” explains Heinrich Jessen, “it is ideal to have a partner that covers all of ASEAN in an integrated, and therefore cost-effective, way.”
Over the years, JJSEA found itself moving deeper in to the chain, manufacturing some of the products that it only distributed before. In the early 1970s, for example, it was the agent for Demag, a German manufacturer of heavy cranes. Today, the business unit MHE-Demag is one of the leading material handling equipment provider in the region, manufacturing cranes out of eight production facilities.
“So, this is, in a way, how we’ve gone from pure trading to becoming a manufacturer for customers outside ASEAN and for our technology partner. We are seeing more of that. For example, we are in chemicals – something we’ve trading in since we started. We are now working with a partner to go into local production here of some chemicals for which there is quite a large demand in South East Asia.”
Diversification & Consolidation
For quite a while, JJSEA was a loose cloud of different activities, but consolidated after the Asian Financial Crisis hit the region. “We felt it as much as anybody else,” says Heinrich Jessen. “It forced us to take stock and make hard decisions on activities that were marginal and not making money. As a family business, the tendency is that sometimes you hang on to activities for historical reasons.” …
The company took the opportunity and reorganized its internal processes and functions. “We are much more focused now than before, and I think the crisis had a lot to do with that.” …
Today, JJSEA’s eight Regional Business Units occupy leading positions in their own industries.
Family and business
Although Heinrich Jessen is focused on making the company environmentally friendly, he and his team are not neglecting the company’s actual growth. The key thrust of the company’s growth strategy is a SGD 250m war chest set aside to acquire new businesses and help double the company’s size in five years.
Heinrich Jessen knows the issues that family-run businesses have to deal with: besides the day-to-day operational and long-term strategic challenges, it can also be difficult to find professional managers to help run the setup. Highly ambitious outsiders soon leave the company once they realise they can never reach the top, as they do not share the founder’s surname.
Not so at Jebsen & Jessen (SEA). “What make us very attractive, is that fact that we give our managers a tremendous amount of autonomy,” says Heinrich Jessen. In fact, out of the Jebsen & Jessen Family Enterprises’ 6,000 employees, only three are family members: Heinrich Jessen, his elder brother Peter, who runs the cable technology business unit, and their Hong Kong-based cousin Hans Michael Jebsen, who chairs Jebsen & Co Ltd.
Interestingly, at Jebsen & Jessen (SEA), contrary to common practice, ownership of the family business is not automatically inherited or divided among the clan. In fact, no family member can be a shareholder unless he or she works in the company. To raise the bar, a family member can work in the company only if he or she is accepted by the non-family management.
“As it is a family business, my ultimate goal is to hand over this Group in good shape to the fourth generation,” Heinrich Jessen concludes.