When people talk about Malaysian tycoons, not many will think of the late Tan Sri Lau Gek Poh, the low-profile founder of the Hap Seng group.
The Laus are well known among Sabahans but few outside the state are aware that the family is one of the world’s biggest Mercedes-Benz and Caterpillar dealers. The family is also an authorised Porsche dealer in South Korea and Vietnam.
Lau’s rags-to-riches story did not start with the auto business. It is said that following World War II, he had to pawn his wife’s family jewels to start a sundry shop in Tawau called Hup Seng with his friend.
Business was good, but Lau realised the shop had limited potential. He then ventured into the timber business, where he made his first million. In the 1970s and 1980s, he was the biggest exporter of round logs, earning him the title of “timber king of Sabah”.
From logging, Lau gradually expanded into rubber, cocoa and oil palm plantations. As logging required heavy machinery and equipment, Lau ventured into the distribution of these items.
Hap Seng Consolidated Bhd, Hap Seng Plantations Bhd and Hong Kong-based Lei Shing Hong Ltd (LSH) are the flagship companies that house Lau’s various businesses. The companies are involved in auto distribution, heavy equipment distribution, financing services, property development, building materials, plantations and trading.
LSH, previously listed on the Hong Kong Stock Exchange, was privatised in 2008. The Lau family recently raised its shareholding in Hap Seng Consolidated, in which it currently owns a 67% stake, via Gek Poh Holdings Sdn Bhd (56%) and Lei Shing Hong Investments (11.05%).
The Lau family also privatised Malaysian Mosaics Bhd, a mosaic and tile maker, in July last year after a hefty selective capital repayment of RM2.30 per share. It held 73.08% equity interest in Malaysian Mosaics before the privatisation exercise.
LSH is an authorised dealer of Mercedes-Benz in China, Taiwan and South Korea. A dealership for the luxury car on the vast mainland is coveted by many, considering China’s bright economic prospects in the decades to come.
Mercedes-Benz’s combined sales in China and Hong Kong in the first 11 months of last year more than doubled to 130,100 cars, exceeding its yearly goal of 120,000.
In November alone, 14,600 Mercedes-Benz cars were sold in China, a 68% surge compared with the same period last year.
Globally, Mercedes-Benz sold about 1.1 million passenger cars between January and November last year, an increase of 16% on an annual basis.
For FY2007 ended June, LSH posted a net profit of HK$315.2 million (RM124.5 million) compared with HK$285.9 million the year before. Revenue was HK$17.7 billion.
In the first half of FY2008, the flagship’s net profit soared to HK$425 million on revenue of HK$11.9 billion. China accounts for 72% of LSH’s earnings, a large part of which is derived from the auto division.
Judging from the brisk sales of Mercedes-Benz and the rising number of millionaires and billionaires in China, LSH’s earnings should be on the fast track.
Despite holding the controlling stake, the Lau family is not involved in the management of these companies, which are run by professional managers.
Lau died in April 2008 at the age of 92. He had three children, but the family business is run by his nephew, Datuk Seri Panglima Lau Cho Kun.
Lau, a migrant from Chaozhou, China, lived a simple life. It was reported that despite being a billionaire, he usually flew economy on his business trips.
Apart from his business, Lau ’s other interests included Chinese calligraphy, swimming and tai chi.
He was also a philanthopist, contributing generously to educational, scientific and charitable purposes through the Lau Gek Poh Foundation, set up in 1991.
This article appeared in Corporate, The Edge Malaysia, Issue 840, Jan 10-16, 2011