Entrepreneur / June 2018

Claiming Top of Mind

As the heir to the Maspion Group, Sugiarto Alim, 36, wants to build on the group’s reputation for producing truly Indonesian products to make it a top-of-mind brand when anyone goes shopping.

By Muhamad Al Azhari

Sugiarto Alim didn’t have time to sit back and enjoy the fruit of his labors when he graduated from university in 2015. His father Alim Markus, the head of the Maspion Group, called him back immediately to work for the family business empire. Nor did that mean starting at the top: Markus believed that his only son of six children needed to undertake an intensive learning curve, starting from the bottom.

Starting out in business as a kitchenware manufacturer in 1967 in Surabaya, East Java, the Maspion Group has spread its wings into eight business groups: consumer products, consumer industrial products, construction and building materials, hotels, commercial property and industrial estates, banking, trading and distribution, infrastructure and energy and miscellaneous business. It has representative offices in Japan, Taiwan, China, Singapore and France.

According to this year’s 150 Richest Indonesians, Markus – famous for his slogan “Cintailah produk-produk Indonesia” (“Love Indonesian products”) – has a net worth of $560 million through Maspion Group, which is supported by about 30,000 employees, across more than 50 different companies. Sugiarto, whose name card states only ‘Business Development’, spoke to GlobeAsia at Maspion Group’s headquarters at Jl. Kembang Jepun, an area which in the past was dubbed Surabaya’s Chinatown.

Top of Mind When it comes to Maspion’s consumer products, the young executive, whose office is one floor away from his father’s, said he wanted the brand to become known like Aqua bottled mineral water. “We want it to be at people’s top of mind, at least here in Indonesia, considering that our products are made in Indonesia and we employ a large number of workers,” said the scion of one of Indonesia’s large conglomerates.

A graduate of Indiana University Bloomington majoring in finance, Sugiarto keeps himself up-to-date about Indonesia’s macroeconomic developments. “I see the nation’s economic fundamentals remains pretty good. It is just the currency that is fluctuating at a worrying trend, but that is because of the United States factor. It is inevitable and faced by many countries, not just us,” he said.

Indonesia’s economy grew 5.07% last year, the best rate since 2013, although in the first quarter of this year the pace slowed from the previous quarter, amid slow government spending, continuing weak investment and slow recovery of exports. Consumer spending, the backbone of the economy, was also weak but maintained its position to guard the economy from slowing further.

Meanwhile, the rupiah slumped to a fresh 31-month low on May 21 as the central bank pledged to continue to intervene in the market to prevent the currency sliding further and affecting the domestic economy. “This currency depreciation, indeed, has many impacts on our businesses. Raw material prices have gone up. What we do is make efficiencies in many aspects, and we try to work at our best to keep the price unchanged,” said Sugiarto. He added that competition is intense in the consumer products area and Maspion battles against products from Japan, South Korea and China.

Playing in the mass market segment, Maspion Group, which offers more than 10,000 consumer product items, is aware that consumers in Indonesia are price-sensitive. Its products, ranging from electrical home appliances, metal kitchenware, plastic houseware, stainless steel cookware and cutlery to durable goods like refrigerators and air conditioners, face intense competition from foreign brands like Samsung, LG, Sharp and many others.

“One thing we always ensure is the quality of our products,” said Sugiarto, who was born on July 9, 1981. He added that the group is not really worried about competition from Chinese manufacturers, as they “usually aren’t good in the after-sales services.”

When compared to products from Japan and South Korea, Sugiarto claimed, Maspion’s products have better quality control.

Maspion’s consumer products come from five factories in its native East Java, with three of them located in Sidoarjo, next to Surabaya. Another is in Benowo in Surabaya itself, and one is in Manyar Sidomukti in Manyar, Gresik, also not far from the provincial capital. The group operates another factory in Cibitung, Bekasi, West Java, not far from Jakarta.

Serving Maspion’s consumer products business line, Sugiarto said he has been working to expand the group’s authorized distributor and authorized service centers. “We are always looking to expand into far-out areas. Most of our representatives are in Java island, so we are working to strengthen our presence outside Java,” he said.

According to Sugiarto, Maspion today is supported by 27 after-sales service outlets that the group owns directly and 70 more that are owned by its distributors, all of which are the fruit of his hard work. Sugiarto said he is also spearheading a revamp of the group’s main website www.maspion.com to get a more modern look and to enable the group to sell its products through the website. He is also paying serious attention to sales growth from e-commerce platforms.

“For apps, we are not yet there yet although we are heading there, but many of our products are currently available in e-commerce platforms. It is our distributors that put them there,” he said. Sugiarto said sales from e-commerce platforms still contributes a relatively small portion of overall sales, at 5%, but the growth rate, he said, “has been remarkable.”

Expansion into Hospitality Apart from his activity at Maspion Group, Sugiarto has also been trusted to assist his father’s business expansion in the hospitality industry. Alim Markus, in his personal capacity, owns the Quest Hotel, situated in Jl. Ronggolawe in Surabaya.

Through PT Marindo Surya, Markus sank Rp70 billion to build the three-star hotel that offers 135 rooms. The hotel has been in operation since 2014 and targets MICE (meetings, incentives, conferencing, exhibitions) events.

“We have a concept for a business hotel. We see Surabaya as a business destination, so we offer many ballrooms and meeting rooms, apart from providing quality rooms and a swimming pool,” said Sugiarto.

Markus is also eyeing Bali for a hotel that will be operated by the Edition hotel chain, part of global hospitality powerhouse Marriott International. Through PT Marindo Gemilang, Markus is seeking to develop the $150 million five-star hotel at Balangan Beach in Jimbaran on the south of the island.

He is also developing another Bali hotel that needs Rp200 billion investment. In construction since 2014, the hotel will be run by Fairfield, another arm of Marriott International, and will be operational in July.

Words of Wisdom Despite his busy life, Markus, 67, always makes it a habit to spend time with his family on the weekend. “I still live at the same house with my father,” said Sugiarto.

As for the business lessons his father has taught him, the most important was to maintain his integrity and reputation. “If we make a promise to someone we have to fulfill it. Your reputation is everything,” he said.

At Maspion’s headquarter, GlobeAsia also had an opportunity to speak with Alim Markus. He explained how he is mentoring his son. “What I want to see is how he can be himself and learn as much as possible,” said Markus, who inherited Maspion from his own father, the late Alim Husin.

“If Sugiarto starts as president director, then what will happen to the group? If he makes mistakes he will be shy to ask,” said Markus. “To describe the father-son relationship, I told my son, if you fall, I may not immediately help you. You must rise up by yourself. But if you are going to fall off a cliff, then I will fly to rescue you without any second thought because if you fall that badly, there is a possibility that you will drag me down too,” he said with a laugh.

While he didn’t start at the top, Sugiarto was introduced to high-level business by his father. He was endorsed to represent the group in the National Economics and Industry Committee, or KEIN, which gives advice to the president. Sugiarto, along with Markus, was at the State Palace in October 2016 to be inaugurated as a member of KEIN by President Joko Widodo.

Creating 1 Million Entrepreneurs

Alim Markus looked cheerful to see his son Sugiarto Alim learning how to answer a journalist’s questions. Although the young executive is already familiar with the group’s business, the grand strategy of Maspion Group is still in the hands of the 67-year-old high-profile businessman. Markus never seems to run out of ideas to sell his products. He showed off a new book, ‘The Great Dream of Alim Markus: A Son of Nation Creating One Million Entrepreneurs.’ “Just look at my photo, a businessman wearing kopiah, a son of the nation who wishes to create one million entrepreneurs in this country,” he said with a laugh. He explained the essence of his ideas in the 84-page book. Maspion Group will utilize micro rural lenders, known as BPR, as an agent of the group in selling his products. While Maspion Group seems relaxed about disruptive technology such as e-commerce platforms, it is quietly preparing a grand marketing scheme that will empower people at the grassroots level to become entrepreneurs by selling Maspion products. Markus’ ultimate weapon will be launched in July and will be called Tabungan Dasyat, or Tabungan Dagang Saya (My Savings Account for Trade). Spearheaded by his Maspion Bank, the diversified conglomerate will offer incentives to lure people to open a bank account that will enable them to become sub-agents to distribute Maspion products. Depositors will get a 4.7% annual interest rate to put money into an account. Maspion Group will also offer a 15% discount on the retail price of its goods to ensure its future sub-agents get a good margin, plus another 5% if they buy stock-keeping units in cash. If the sub-agents manage to make Rp80 million in sales revenue within three months, Maspion will top up 2% of that figure as a marketing incentive to add to the depositor’s account balance. “We have more than 10,000 items, so it will not be hard to earn that figure,” said Markus with a confident smile. The plan will involve business arms Bank Maspion, Maspion Trading, Maspion Industry and Maspion Industry Estate, all of which will have tasks to lure potential sub-agents. “Why this idea? Because apart from making it a habit for people to save money in banks, they can also learn how to become rich by becoming an entrepreneur,” Markus said. He also pledged that the group will arrange special loans for potential sub-agents with good banking track records. Maspion Group, he said, will also spearhead the opening of many new retail businesses, from coffee shops, bread shops, restaurants and retailers like Indomart or Alfamart. “Of course, Maspion products will have to be displayed prominently there,” he joked, adding that his plans are expected to support his ambitious dream to see 1 million new entrepreneurs in Indonesia. His idea relates to the group’s three principles: first, producing good human resources; second, creating a synergy with the environment, including people; and third to create value. “Let’s say if to produce something costs Rp100, what we aim for is how to make it worth Rp120, Rp150 and more,” he said. Explaining his group’s corporate culture in simple words, Markus, who sees himself more as the foster father of employees working in the group, said “let’s say your mom and dad feed you until you grow up, educate you, but there is no guarantee they can offer you a job. So, just consider me your foster father,” he said with a laugh. With such a spirit of family bonding in his company, the turnover rate is very small: “Less than 2%.”