Kam Raslan’s Talking Edge

(Reprinted from The Edge – Options pullout, 18 May 2015 issue)

Dear Kam,
How come we have so many wealthy ‘businessmen’ who clearly don’t know anything about business?
Troubled Tawkey

I happen to like the sport of professional cycling and I was watching an interview with one of the sport’s major sponsors, Oleg Tinkov. He’s Russian, he is very forthright in his opinions and he made a huge fortune in Russia by creating and selling beer, and now he sponsors an exciting cycling team, which he claims is doping-free. In the interview he was asked if he is Russia’s most successful businessman and he said absolutely not. He said that in Russia he would barely make it into the top 1,000 but he pointed out that in the Russian context, he is not a businessman at all but an entrepreneur, and he reckons he is Russia’s leading entrepreneur. In Russia, says Oleg Tinkov, a businessman is somebody who has a close personal relationship with the government, somebody who promises to do the government’s bidding and in exchange is given access to unlimited capital and a monopoly, a mining concession, a contract, and so forth. An entrepreneur, on the other hand, works without any government help creating products that must appeal to consumers while working within the law. To me, he sounded very negative about Russia’s economic future and he has moved his children to London and yet he said that a budding entrepreneur can make a fortune in Russia but it is not easy because of a difficult business environment with its skewed priorities.

Oleg Tinkov’s description of the Russian business environment sounded very familiar to me, especially the distinction he made between what he calls a businessman (for whom he could barely hide his disdain) and entrepreneurs. Also, the fact that he has sent his children away to make new lives for themselves, despite his fortune having been made in Russia, sounded scarily familiar.

Like most cycling fans, I remain wary of Oleg Tinkov because of his money and his abrasive character, but I respect him because he did make his own money from actual products that are sold to actual people, and not from being given vast oilfields. I wonder how many “businessmen” he would find in Malaysia.

Dear Kam,
How did people make money in the old days? I mean, I’ve been trying to make a fortune with my cupcakes but it’s just not happening.
Needing Help

I’ve been immersing myself in the history of Malaya, especially in the 1890s. And one question I keep asking myself is how come so few British/Europeans made personal fortunes in Malaya? Malaya was the single most profitable place in the entire empire, the British ran the place and they understood the European market, so you would have thought that British businessmen would have made fortunes.

And yet so few did. Instead, fortunes were made by what we would now call locals: Chinese, Indians and, yes, Malays. There were some British/Europeans who owned large plantations and made big fortunes (I know of two, so I’m guessing there are more) but generally it was British/European/American companies that made money in mining, plantations and banking. These companies had access to Western money markets and with their additional capital, they could out-muscle the Chinese-run mines by investing in more efficient automation, driving the labour-intensive mines to more marginal plots.

We have the received memory of the haughty tuan living in luxury with dozens of servants but when they retired (mandatory at 55 for civil servants) they usually returned to a life of genteel poverty in Britain at some affordable seaside resort. If they had enough money (and few did) they would move to London’s Bayswater area, which became known as “Asia Minor” because it contained so many retired civil servants who still enjoyed their curry. Every Malaysian who has studied in London will know Bayswater. It is still Asia Minor.

The British had access to capital, understood Western consumer trends and were up-to-date with the latest technology. Surely, they would have made a killing in Malaya?

Brickfield’s Jalan Scott is named after a popular Scotsman called, well, Scott. He was the first person to introduce ice to KL. I’m not sure if he made the ice or had it shipped into KL. Introducing ice to the heat of KL sounds to me like a brilliant idea. Finally tuan could have ice in his gin and tonic and meat would not go bad because it could be refrigerated. Can you imagine life in the tropics without ice?

But Scott’s ice business failed. He went bust and he had to leave KL. Why did he fail? I’m guessing that Scott’s ice sold well with the Europeans of KL because they wanted to recreate their temperate climate lifestyle in the tropics, but that market would have been incredibly small and not nearly large enough for the business to survive and prosper.

Instead, Scott needed to sell to the vastly larger “local” market and I don’t think they needed ice. Asian food processing was already efficiently and successfully conditioned to this climate. Ice would have been an unnecessary additional expense. The vast local market that Scott needed to sell simply didn’t need ice.

Later the market would have the time and money to be able to afford ais kacang and imported seafood, but not when Scott introduced ice. To be a successful entrepreneur he needed to sell to the local market. He was ahead of his time, and he went bust.

The only clear-cut example of a successful British entrepreneur that I can think of is J A Russell. He arrived here at an early age in 1890, he was thoroughly “localised” speaking many Asian languages and after a spell in the colonial civil service, he left to embark on a life in business. He dabbled in plantations and tin before opening the BOH tea plantations in 1929.

Every Malaysian knows BOH. It has an astonishing 35% of the Malaysian market and it is a Malaysian success story. Russell was a success because he sold a product to his local market that the market already wanted. By making tea locally, he could sell it at a lower price and with the help of Ceylonese know-how he could assure the quality and blend it to suit local tastes. Make local and sell local.

Lots of people made fortunes in Malaya and they did so because they understood the local market. They didn’t try to sell luxury goods to London because they didn’t know the first thing about the London market. Instead they sold boring things like motorcycles and rubber slippers. Despite all the advantages of coming from a much more advanced market, very few British businessmen made fortunes because they did not understand or could access the local mass market. Perhaps the moral of the story is, if you find yourself in the middle of a gold rush, sell shovels.

Reprinted with the kind permission of