Cover Story / July 2018

Diamond Tsar

By Albert W Nonto

Stefanus Lo (50), colloquially known as Indonesia's King of Diamonds, has successfully grown his family business over the years to become the country's leading jewelry company.

He runs a chain of upscale jewelry stores under the family business, PT Central Mega Kencana (CMK), which started off as a small store, Toko Mas Central, founded by his father Kurniawan Lo in Senen, Central Jakarta, in 1970. Over the years, Stefanus has transformed it into the largest diamond jewelry business in Indonesia. With 54 stores nationwide, the company has reported stellar financial performance and accumulated incredible brand equity over the past five years.

While all CMK's brands have grown significantly, Stefanus upholds Frank & Co as its leading brand, having achieved this status through a smart and integrated marketing strategy. Nevertheless, alongside Frank & Co, the company's other brands have also seen continuous growth. These include Mondial, Miss Mondial (acquired from a Singaporean company) and The Palace. CMK follows a multi-brand go-to-market strategy, which has enabled the company to target various market segments and successfully meet the needs of thousands of customers, each with a unique set of requirements.

Nonetheless, while building a diverse customer base is the main reason behind the company's multi-brand strategy, it has also helped popularize jewelry in Indonesia. In essence, "CMK aims to promote and grow Indonesia's jewelry industry as a whole, to show the world that the Indonesian economy is incredibly promising and has millions of people transitioning from the low- to middle-income segment with regard to purchasing power," says Petronella Soan, the company's chief operating officer.

Stefanus is pleased that the diamond jewelry industry continues to grow and that his company is able to create value beyond just gold and silver. "I believe this is an example of Indonesia's promising future. As we design our products by employing predominantly local workers and manufacturing processes, we invariably demonstrate that Indonesia and its people have immense potential and are ready to compete against other dominant nations and their people," he says, confidently. He added that CMK employs more than 50 qualified jewelry designers and thousands of internationally reputable goldsmiths.

To meet the changing needs of its customers, the company collaborates with top Indonesian fashion designers such as Anne Avantie, Sebastian Gunawan and Tex Saverio to work with CMK's brands and create the most contemporary and stylish designs.

While there is incredible room for growth, the company also works very hard to retain existing customers by providing unique and valuable services. Frank & Co general manager Tanya Alissia says, for example, that CMK's customers enjoy a life-time free service, such as the resizing of rings and exchanging of jewelry for newer designs. "We want to make this company last for more than a thousand years, which means we'll have to offer the best service on all possible levels," she says.

"We are in a 'millimeter business' where crucial details come down to the very last grain of sand. This means that we have to continuously watch our customers' every need and ensure that they are beyond satisfied with whatever product or service we provide," Stefanus says.

Now that the company has grown tremendously and its sales have continued to skyrocket, an expansion plan is underway. CMK will soon complete construction of its new production plant, which will employ more than 1,500 goldsmiths. Beyond this, the company is also looking for opportunities to grow through the capital markets, to boost its market value. "We are waiting for the right time to take the company to the stock market," says Stefanus, who is convinced that such a move would put it ahead of its competitors.

He backs this up with examples of other world-class jewelry companies that have gained enormous market capitalization and attracted large numbers of investors. These include Hong Kong-based Chow Tai Fook, which has a price-earnings ratio of around 33, and India's Tanihq, with a price-earnings ratio of around 74. "This is just one of the many comparisons investors can use to calculate the value of CMK," he says. "Our company does not merely focus on production, but also on leading Indonesia's retail chain industry through strong brand recognition."

Stefanus is optimistic that steadily growing demand in Indonesia's diamond jewelry industry will allow the company to open at least 100 more stores by 2020. "Jewelry is an expression of life, love and success. It is a symbol of the happiest and most intimate celebrations humans experience in their lifetimes. Pair that to the fact that diamonds are a great investment financially, I believe Indonesians will grow to see the beauty of a diamond, something that can be passed on from one generation to the next," Stefanus says.

Ethical Business

Stefanus is enthusiastic about Indonesia's economic and industrial potential. As a businessman with an extensive network, he and his peers are frequently consulted by the government on the progress of Indonesia's economic reforms. While the country has made great strides, he acknowledges that there are certain roadblocks that still need to be addressed collectively by all parties involved.

He says many factors have contributed to making CMK a successful company, but that the high value and social perception of diamonds have made him more mindful of the need to comply with regulations and maintain good business practices. Stefanus strictly sources raw materials only from reputable parties. For example, every single diamond the company sells has to be genuine and come from miners that comply with ethical standards, pay fair wages and uphold workplace safety at all costs. "I do everything in my power to ensure that CMK is a company that provides value, not only to its customers, but to all stakeholders. That includes everyone, from our local employees to the foreign miners from whom we source our raw materials," he says. The company currently exclusively sources its diamonds from world-renowned jewelry companies such as the De Beers Group.

Additionally, all customers buying items above a certain value have to declare their sources of income by completing documents required by the government to avoid tax evasion and money laundering.

Stefanus agrees that new regulations and the government's recent tax amnesty policy have forced many businesses to become more transparent and professional.

"Times have changed and our generation is now in a period of transition, where more are striving to implement good business practices. To the next generation of businesspeople, I urge you to use your vast education to embrace changes that will have a positive impact on Indonesia and its people. The challenge now is to create businesses that can add value on all sides, both to shareholders and surrounding communities," Stefanus says. He adds that ethics are essential to the longevity of a business. More specifically, he emphasizes that a high-end diamond jewelry company is a "trust business," which requires the best quality products and the most excellent service.

Property and Exhibitions

Amid his outstanding achievements in the jewelry industry, Stefanus is also growing his interests in the property sector through the Synthesis Group. Founded in 1992, the group entered Indonesia's high-end property market seven years later with the construction of the iconic Plaza Semanggi in Central Jakarta.

The group is currently working on several projects, including the upscale Synthesis Residence Kemang in South Jakarta and Prajawangsa City in Pasar Rebo, East Jakarta, with more in the pipeline.

Synthesis was also involved in the construction of Kalibata City in Pancoran, South Jakarta and Bassura City in Jatinegara, East Jakarta. The group still owns and manages the shopping center at Bassura City.

When it comes to the sale of property, a company also has to comply with certain rules and regulations to ensure legality and transparency. Stefanus says knowledge of a buyer's profile is therefore of particular importance.

Similar to a lot of other businesses, selling property requires compliance with strict rules and Stefanus is firm in consistently implementing policies to ensure transparency.

Stefanus is also cooperating with the Kompas Gramedia Group to develop a meetings, convention and exhibition business through PT Nusa Dua Indah, which currently manages the Bali Nusa Dua Convention Center and Surabaya Dyandra Convention Center.

"Staying too focused on one business is not always the best way to go. Therefore, spreading one's risks by investing in different markets is essential to success," he says.