Success ingredientFrancis Kwok, Managing Director, Liebherr (Hong Kong)

32 April 2015

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Photography by Marcus Oleniuk

Francis Kwok, Managing Director of German construction equipment manufacturer Liebherr (Hong Kong), explains to George W. Russell how accurate data analysis and forecasting are crucial to ensuring long-term profitability and the management of risks

CONSTRUCTIVE THINKING

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H ong Kong’s con-struction indus-try did not look its best in 2006. Dealt a double blow from the

1997-99 Asian financial crisis and the 2002-04 outbreak of severe acute respiratory syn-drome, the sector had lost about a third of its value from a decade earlier with no recov-ery in sight.

Property, Hong Kong’s backbone, was in a general decline as public housing and in-frastructure were scaled back and private

developers put projects on hold. Weaker construction companies were failing, while larger ones were downsizing, consolidating and outsourcing.

That was the grim scene that Francis Kwok surveyed just as he joined the Hong Kong office of Liebherr, a German (though Swiss-headquartered) maker of heavy con-struction equipment such as cranes. But in-stead of gloom, Kwok saw potential through his trained accountant’s eyes.

There was no local market for the expen-sive yellow machinery sold by Liebherr. So the company picked up used machines, re-

furbished them and sold them abroad. Not only did Liebherr make money, it kept its workers in jobs at a time when many em-ployers were retrenching.

Moreover, Kwok figured the downturn could last only so long and the Hong Kong government would have to act. “I utilized my knowledge of accounting to make a fore-cast and feed it into a model,” he recalls. “We knew there would be a point where the market would be booming and Hong Kong would be short of machines. So we were one step ahead and well prepared.”

In October 2007, Hong Kong’s then chief

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cheaply. Liebherr decided to assemble two cranes a month in Hong Kong.

He sent key people such as technicians, welders and painters to the main Liebherr crane factory in Nenzing, Austria. “They stayed there for a month, or two if necessary, to learn the skills, then they came back,” says Kwok. “It became a great success. After 2007-08, our turnover and net profit jumped sub-stantially.”

Cross-culture experiencesThe crane assembly line wasn’t the first time that planning ahead paid off for Kwok. Born and raised in Hong Kong until the age of 18, Kwok completed his education in the United States. He obtained a degree in real estate and land use affairs from a university in California, expecting to return to Hong Kong to work in the growing property market.

However, while studying, he met the woman who would be-come his wife, another Hongkonger who had moved there as a child. “I had to make a deci-sion,” Kwok recalls, “If I stayed in America for her, a major in land use was not very practical, at least in Stock-ton, California. So I got a second degree, in accounting, and that was a good decision.”

Kwok spent more than a decade in the U.S., working first as a tax auditor for the Board of Equalization, a California author-ity that administers the state’s taxes on sales, fuel, alcohol, tobacco, and collects fees and revenue that fund specific pro-grammes. “Afterwards I started my own business,” he says.

While Kwok was running his business advisory firm, he encountered a group of Australian expatriates from Hong Kong who told him they needed tax advice of a similar complexity to what U.S. citizens required. That coincided with Kwok’s plans to return to Hong Kong to give his daughter a chance to experience the culture and language of her heritage.

He established a tax and business advi-

sory service in Hong Kong with a business partner, specializing in helping companies find a foothold in China. “The Mainland was opening up, so I became an adviser to foreigners, mainly Westerners but some-times Koreans and Japanese, doing feasi-bility studies and setting up businesses and factories.”

Although the pace was relatively slow at first, the Mainland economy soon acceler-ated quickly and Kwok found he could com-municate effectively. “I didn’t have a chance to learn Putonghua at school, but when I was in the U.S., I loved to talk with differ-ent people and I met people from Taiwan, Singapore and Indonesia, so I pretty much

picked it up.”Kwok travelled

around frequently, mainly in Guangdong province but also to Beijing, Shanghai, Nanjing and other cities. After seve-ral years, Kwok was asked to take a full-time job, running a toy factory in Dong-guan. “I decided that would be interesting,” he says. “I learned a lot: how to manage

more than 3,000 people, production man-agement, just-in-time manufacturing and other sorts of skills.”

Cooperative managementThe adventure in Dongguan ended when his business partner left for Canada ahead of the Hong Kong handover. At the same time, Kwok decided he wanted to spend less time in the Mainland and see his family more of-ten. It was a decision that would lead him to his first stint at Liebherr.

“I started in 1996 as a finance and ad-ministration manager and then left the company in 2000,” Kwok recalls. The Main-land soon lured him back – but he took on a vastly different role. “I kind of slacked off,” he says with a smile. “I became involved in a lot of charity work in China.”

For six years, Kwok worked with those he describes as “forgotten” people. “They were minorities who lived in places so re-

executive, Donald Tsang, announced 10 ma-jor infrastructure projects to promote eco-nomic development and create employment opportunities, such as the Hong Kong-Zhu-hai-Macau Bridge, the Mass Transit Railway South Island Line and the West Kowloon Cultural District (see The Big 10 on page 36).

That was a turning point for Liebherr: it was decided that cranes should not just be sold in Hong Kong but also assembled here. “[Previously,] if you ordered a crane, they needed to build it in Europe then ship it to Hong Kong,” says Kwok. With local assem-bly, it could be delivered more quickly and

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“ I utilized my knowledge of accounting to make a forecast... We knew there would be a point where the market would be booming and Hong Kong would be short of machines.”

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mote they were not being reached by the authorities or the nongovernment organiza-tions. I spent a few years in different places in Guizhou, Guangxi and even Guangdong.”

In 2006, Kwok was ready to step back into the corporate world, having felt his philanthropic aims had been achieved. “It was time for me to change again because the work was done and was organized. You make it self-sufficient. Liebherr was good enough to invite me back after six years so I rejoined,” he says. “Their Asia-Pacific oper-ation was growing.”

Today, Kwok is one of two managing directors. Colleague Andreas Ganahl, an Austrian engineer, is in charge of sales, says Kwok, waving at a tall, jeans-clad man in a neighbouring office. “I’m the guy who takes care of financial management and human resources. We work together to foresee our market situation, what should be done, how we proceed in future and how we overcome all the difficulties.”

Kwok says his CPA certification is an important part of keeping abreast. “You need to look at things from different per-

The Hong Kong government’s 2007-08 policy address announced 10 major infrastructure projects to promote economic development in Hong Kong and create employment opportunities. They are:

1. MTR South Island Line: Construction should be completed this year

2. Sha Tin to Central Link: Work began in 2012 with phased commissioning scheduled for 2019-2021

3. Tuen Mun-Chek Lap Kok Link and Tuen Mun Western Bypass: The first phase was completed in 2011

4. Guangzhou- Shenzhen-Hong Kong Express Rail Link Hong Kong Section: Scheduled to open in 2017

5. Hong Kong-Zhuhai-Macau Bridge: Construction began in 2009 and completion is scheduled for 2016

6. Hong Kong International Airport-Shenzhen Bao’an International Airport Link: Scheduled to open in 2017

7. Lok Ma Chau Loop: Planning and engineering study completed in 2013

8. West Kowloon Cultural District: First phase opened this year, second phase scheduled for opening in 2026

9. Kai Tak Development: Phased opening since 2013

10. North East New Territories New Development Areas and Hung Shui Kiu New Development Area: Under development

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“ We are a very strongly European-oriented company and when we talk to finance directors there about IFRS, we have a common language.”

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spectives, staying aware of internal control responsibilities, maintaining alertness to business risks, and forecasting and pro-jecting in a scientific and objective manner what will happen in the future.”

The Institute, he adds, helps enable him to operate in an international manner. “We are a very strongly European-oriented company and when we talk to finance di-rectors there about International Financial Reporting Standards, we have a common language,” he says. “Of course, you must know what you’re talking about. The Insti-

tute keeps my knowledge updated and of-fers short courses with which I can sharpen my tools and ensures I am informed about China.”

Packed with ordersAs a manager, Kwok sees his main task as ensuring the wellbeing of his staff. “By that I mean in the sense that they are happy with their jobs, that they are concerned for our customers and their own safety, that they re-ceive good training and they are updated on the latest information about our products.”

Over the past few years, Liebherr has diversified its range from cranes to load-ers, concrete mixers and small excavators. “We have different business segments,” he explains, including crawler cranes – large equipment that are used to build founda-tions – as well as mobile cranes and cranes used on ships and offshore platforms.

The Hong Kong office also oversees the Macau, Japan and Korea markets and is re-sponsible for the representative office in Shanghai. “We have been very busy to this moment, packed with orders to assemble and commission.”

The future, Kwok foresees, will involve further adaptation. “We are quality orien-tated and customer orientated, and we have been fortunate enough to be able to kind of forecast the needs of the customers, even though they have been changing all the time,” he says.

The 10 infrastructure projects that Hong Kong is building have provided new chal-lenges as well as opportunities to show off new equipment such as a crawler excava-tor, which is ideally suited to tunnelling in Hong Kong, as well as able to negotiate the tight constraints of the city’s construction sites. Liebherr has also been working on fuel efficiency, atmospheric emission controls and noise abatement.

Using his CPA skills, Kwok has applied cost-management measures that affect the entire company. Training Hong Kong person-nel in Austria was not a cost-effective option and few local construction workers were sufficiently proficient in English, let alone German. So Kwok established an Asia-Pacific training centre in Hong Kong that serves customers as far away as Australia. “It be-came an immediate success,” he says.

Kwok also keeps a firm hand on the local operations. “We have a very good after-sales team and a very good workshop team, but we make sure there are no bottlenecks in terms of which parts are needed,” he says. “We have a good database and we review it more than once a month.” Though Liebherr is riding high amid a construction boom, Kwok knows forecasting is the key. “In Hong Kong, you have to be very careful as things can change quickly.”

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