On The Cover/Top Stories
- by Chaniga Vorasarun, 07.24.06, Forbes Magazine Asia
- included quotations by Chris Runckel, President of Runckel & Associates
The son of a sugarcane farmer, Vikrom KromadiT translated his love of land into Thailand's biggest industrial-park developer.
Inside a house floating on a lake in one of Thailand's national parks, 53-year-old Vikrom Kromadit sits quietly with his eyes closed, surrounded by lotus flowers. He spends 11 out of every 14 days like this, seeing people only at mealtimes. Two years ago he went one step further: He spent an entire month serving as a Buddhist monk, a custom followed by some Thai men.
For one day each fortnight, however, he heads to an office in Bangkok--and to his other life, as chief executive of $500 million (market cap) publicly traded industrial-estate developer Amata.
Don't confuse Kromadit's meditative manner with a lack of ambition or focus. Divorced and childless, he insists that stepping away from the daily grind allows him to see the business much more clearly. "I am a man with a vision for how this boat will be sailed," he says. Even from his lake house, he is a bit of a control freak, frequently holding conference calls with his brother and company vice president, Viboon, who's in charge of much of the daily operations, and e-mailing his brother's secretary about his schedule. On the days he's in the office, Kromadit, who owns six sports cars, crams his schedule with back-to-back brainstorming and strategy sessions with his managers. "He sets the goals, and we achieve them," says the 45-year-old Viboon.
So far the unorthodox approach is working. Since founding the company 17 years ago, Kromadit has turned Amata--which means "eternity"--into the largest industrial-land developer in Thailand. It controls 37% of the market, more than twice its largest rival. Last year revenues jumped 48%, to $116 million, and profits rose 16%, to $26 million. Its stock has soared 52% in the past year, helping Kromadit--who owns 22% of Amata--to reach No. 29 on our list of Thailand's 40 Richest.
Amata's success is built on its ability to lure dozens of multinationals--from Toyota (nyse: TM - news - people ) and Bridgestone (other-otc: BRDCY.PK - news - people ) to Colgate-Palmolive (nyse: CL - news - people )--into its two estates in Thailand and one in Vietnam. Amata pitches its estates as "perfect cities," extolling its hospitals, language classes, restaurants, golf course and other amenities. At one park, children can attend a branch of Suankularb Wittayalai, one of Thailand's most prestigious schools. Amata then helps customers, who usually build their own factories, navigate Thailand's environmental, customs and immigration regulations.
"What is really crucial for Amata is the strong relationship they have with their clients, not only until they sign the contract but basically all the time," says Frank Roesler, president of one customer, BMW Group Thailand. When BMW had an event for neighboring companies to test-drive cars, Kromadit and Viboon showed up. "They came on a Saturday--basically screwed up their weekend--just to support their customers." The payoff: 10% of Amata's new business comes from referrals from current customers.
Amata's estates hold 574 factories now, and Kromadit predicts that the number will reach 1,000 in four years. But that goal may be too ambitious, given the country's recent political turmoil involving former Prime Minister Thaksin Shinawatra, No. 4 on our list of richest Thais. Amata is counting on a good portion of the growth to come from Japanese companies, which already make up half of his customers. But "the Japanese are risk-averse," says Christopher Runckel, president of consulting firm Runckel & Associates, which helps businesses invest in Asia. "They would readily pull back if they thought Thailand was not a safe place to invest." Kromadit, who has been an outspoken critic of Shinawatra, insists that business from Japan is growing, and it will be difficult for Shinawatra to stay on.
Kromadit's connection with land dates to his childhood in northwestern Thailand's jungle, where he grew up as the eldest of 22 siblings. Being the son of a sugarcane farmer, he says, "made me feel comfortable with big pieces of land and nature."
But not comfortable enough to become a farmer. His family, which is of Chinese descent, sent him to National Taiwan University to prepare him to run the family farm. But after a grueling summer vacation tilling land--he got sick from exhaustion--he decided he couldn't hack the farmer's life. Instead, after graduating in 1975, he started a business called V&K that imported and exported everything from tuna to tapioca.
He returned to his roots in the land in 1987, when Taiwanese officials asked Kromadit, then president of a trade team of Thai alumni of his university, to help find sites for building factories. Soon Kromadit decided that there might be a good business in this type of work. In 1988 he bought 120 acres on Thailand's eastern seaboard--32 miles from Bangkok--for $4.7 million and began traveling frequently to Japan, Taiwan and South Korea to drum up business. After just four months he made his first sale, to Korea's Lucky Goldstar. Then, over the next five years, he signed up some 50 Japanese companies, including Asahi Glass, Hitachi (nyse: HIT - news - people ) and Mitsubishi (other-otc: MSBHF.PK - news - people ).
On a roll, Kromadit gambled on growth. Seeing that some companies wanted lower labor costs, he established Amata Bien Hoa Park in Ho Chi Minh City in 1994. "Amata was one step ahead of most others in terms of getting into Vietnam early," says Jane Hsieh, an analyst at Clay Finlay in New York, whose Old Mutual emerging-markets fund holds Amata stock. A year later he reserved land in India for a park, and built another Thai park, Amata City, in Rayong, 71 miles from Bangkok, where customers could take advantage of tax breaks aimed at boosting investment outside the capital.
But Kromadit's perfect cities were soon hit by a perfect storm. The heady expansion had left Amata with a heavy debt load. So when the Asian financial crisis arrived in 1997, the company was nearly wiped out. The next year it made just three land sales. Around the same time the land it was developing in India was ruined in a cyclone. The company owed $663 million, and bankers were unhappy. "I told them, 'Look, gentlemen, don't phone me. Don't come see me.' I was really bankrupt. That was the worst time in my life."
To survive, Kromadit didn't pay himself for six months and then cut his salary back by a third; other executives didn't get paid for three months. Unable to find business in Asia, Kromadit traveled to Germany and persuaded BMW in 1999 to build a factory at Amata City. It took until the next year to turn a profit again and three more to repay debts.
Deeply affected by the crisis, Kromadit soon began taking his retreats. The company also retreated. Since the crisis Amata has focused on finding ways to boost its business within its existing parks rather than develop new ones. It continues to add services, such as gardening and housekeeping, and expects services to account for half of its revenues in four years, up from 20% now. Last month it opened Ota Techno Park in Amata Nakorn to cater to small and medium-size Japanese high-tech manufacturers by offering smaller factory spaces. It has a new joint venture with Chinese real-estate developer Holley to bring mainland manufacturers to Amata; three companies have signed up.
Meanwhile Kromadit devotes much of his time to contemplating his and Amata's legacy. From his floating home he is working on the third installment of his autobiographical self-help series, for which he's written 4,500 pages by hand. And he's concentrating on the Amata Foundation, which makes grants to budding Thai art and literary talents. Kromadit says he plans to donate his $110 million in stock holdings to the foundation next year. After all, he says, life is like a butterfly: Building Amata was the caterpillar stage, his retreats to the lake the quiet cocoon. "I hope within the next two years, I can turn into the butterfly," he says. "I won't have to be concerned with the economic, or figuring out who I am. By then I will be free."
Copyright, 2005 ©
Runckel & Associates
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