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Jardine Matheson maps a road to younger Asia for its peers
[HONG KONG] For Hong Kong's tycoons, South-east Asia is looking like a tempting getaway. Jardine Matheson, one of the best-known colonial-era trading houses, moved its headquarters out of the territory ahead of the handover to China in 1997. It has since thrived in Indonesia and Vietnam. That region's long-term prospects, plus uncertainty over the future up north, suggests that even with cooler growth, more rivals may follow.
In the 1990s, Asian markets outside Greater China accounted for a mere 1 per cent of Jardine Matheson's core business. Last year, Hong Kong made up 40 per cent of the bottom line, but just as much came from South-east Asia. It has proven a lucrative spot: Underlying profit there grew by more than a fifth last year, outperforming 14 per cent growth in China and Hong Kong.
Much of that is down to consumers. Disposable income in Indonesia has quintupled since 1997, while Vietnamese spenders have more than nine times as much cash as they did just over two decades ago. Jardine's empire stretches to pharmacies, convenience stores, supermarkets and home furnishings, from Brunei to Cambodia.
It's not all rosy. Malaysia and others are cooling, thanks to a trade war, a tech downturn and structural hurdles like poor logistics: Growth of just over 5 per cent, as Indonesia recorded in the second quarter, is not enough to create jobs for a population of roughly 270 million. It's also become harder to change in time with some of the most internet-savvy consumers in the world: Jardine's Astra venture has invested in US$10 billion taxi-to-delivery app Gojek, in part to keep up.
But there's plenty to envy. Compare Indonesia's growing retail sales with Hong Kong's slides in July and August; Vietnam should still be one of the fastest-growing economies in Asia this year.
Of course, Jardine is not alone in having sought to diversify. Tycoon Li Ka-shing has struck deals all around the globe, and his successor Victor Li continues the family tradition. Others are dipping their toes in the water: Stanley Ho's flagship Shun Tak made its first foray into Singaporean hotels last year, and says it is now exploring beyond Greater China. A bolthole abroad will only get more popular.
Jardine Matheson reported on Aug 2 that its first-half underlying profit fell 3 per cent from a year earlier, to US$738 million. The company noted a slowdown in the Indonesian car market had an impact on the earnings.
Affiliate Jardine Cycle & Carriage reported underlying profit dipped 1 per cent to US$407 million over the same period.
Astra International, Indonesia's largest car distributor, on July 18 launched a joint venture with Gojek to provide cars to the ride-hailing firm. The move follows an investment in Gojek worth US$250 million overall. Astra is 50.1 per cent owned by Jardine Cycle & Carriage.