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Business Advice

Tanning king

He was in debt when he started but Mr Koh Chon Tong's tanning company is now world-renowned
The Straits Times - December 19, 2011
By: Adeline Chia
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Tanning king -- ST PHOTO: DESMOND LIM

Mr Koh Chon Tong is a crocodile expert.

No, not because he wrestles with the creatures on television but because he knows the dead ones so well. Or more specifically, their skins.

The 60-year-old is the managing director of reptile skin tannery Heng Long International, a home-grown business that is among the top five tanneries in the world.

Following him on a tour of his factory is like attending a crash course in the crocodile skin trade. He rattles off the names of species of crocodiles and alligators faster than you can jot down in your notebook.

This is the Nile crocodile from Africa, he says, stroking a pile of white, undyed skins. That is the caiman from South America, stroking yet another pile of white, undyed skins. To the untrained layman's eye, the skins look the same.

How to tell the difference between crocodile and alligator leather? Crocodiles have pores on each scale, so look out for the tiny dots.

For more than 40 years, Mr Koh was a low-key businessman who helped grow a small family business into a fully mechanised outfit in Defu industrial estate employing 170 people.

About 250,000 skins pass through his factory a year to be tanned and dyed, before they are shipped to luxury fashion houses such as Louis Vuitton, Prada and Hermes to be made into their much coveted bags and shoes.

The firm listed on the Singapore Exchange made $53.7 million last year in total revenue and a profit of $5.4 million.

To people outside the luxury fashion goods industry, Heng Long was a little- known player until October when French luxury goods giant LVMH Moet Hennessy Louis Vuitton SA (LVMH) bought it over in a deal worth $161 million.

The Kohs have reinvested part of the proceeds to take a 49 per cent stake in the company, with LVMH owning the remaining 51 per cent.

The deal may have thrust the family business into the global spotlight but it has not changed the way Mr Koh runs his company. Things are still done the old-fashioned way - the old-school towkay speaks Teochew in the office and his staff stand up to greet him 'lao ban' ('boss' in Mandarin).

Heng Long will keep its dialect name - it means 'prosperous' in Teochew. Besides supplying skins to LVMH brands including Celine, Fendi and Loewe, it will continue to sell to fashion houses outside of the French group, such as Hermes, Prada and local bag-maker Kwanpen.

Its management will also remain the same for the next five years. Mr Koh remains managing director, his younger brother Choon Heong, 58, the executive director. His sister-in-law Toh Kheng Song, 55, is the treasury and corporate affairs manager. His son Albert, 29, is the production coordinator.

Mr Koh may be a veteran supplier of skins in the luxury fashion market but the costly indulgences of the super-rich still seem to amuse him.

He says a crocodile skin costs $1,000 and the iconic Hermes Birkin bag uses the skins of four animals. 'Then they sell the bag for $50,000 to $60,000 and there is a waiting list,' he says, chuckling.

He looks every inch a prosperous Chinese businessman. He has a fleshy nose, a beatific smile and speaks in deep, unhurried tones. Work attire is a neatly pressed white long-sleeved shirt and black trousers.

Asked if he is a fan of crocodile skin products, he takes off his Patek Philippe watch and hands it to me. The face is ringed with diamonds and the strap is made of blue crocodile leather which, from observing the finish, he believes came from his factory.

'It's just a feeling,' he says.

Understated as he is, Mr Koh has been described by his customers as one of the top artisans in his field.

Kwanpen president Leonard Kwan, 58, calls Mr Koh an expert in crocodile skins. 'There aren't many in the world. I can count them on one hand. It's a very specialised trade.'

Kwanpen is a luxe crocodile-skin bag- maker and sources about 90 per cent of its skins from Heng Long. 'We buy from all over the world but Heng Long provides the level of finishing and quality that we look for,' adds Mr Kwan.

Mr Koh's younger son Ethan, 25, says his father is an artist. 'He just doesn't know it.'

Ethan, a bag designer whose exotic skin creations are sold in London's posh Harrods department stores, says adjusting the colour of the skin is the most difficult part of the production process.

'Sometimes, clients give us a flower and ask us to replicate the colour,' he says with a laugh. 'And my father will do it.'

The elder Mr Koh's expertise came from years of immersing himself in the tanning business.

The company was started by his grandfather, a fisherman from Muar, who saw some sailors selling monitor lizard skins in the 1950s.

Picking up the skills from British tanners here, he started a brisk trade supplying tanned skins to shops selling watchstraps, belts and souvenirs.

Up to the 1970s, Mr Koh's grandfather, father and uncle ran the business, called Chye Huat Tannery.

His childhood was spent playing around the tannery in Kovan Road - just behind the family home - and working there for pocket money. He is the eldest of two boys and three girls and his mother ran a rice provision shop.

He has an encyclopaedic knowledge of the processes and recipes of the trade.

He describes the process of 'seasoning' crocodile skins, which makes the leather shine, by brushing a mixture of egg white and milk on top of the skin. 'We bought duck eggs because you get more egg white than chicken eggs,' he says.

But the company fell apart in 1976 because 'it owed money to the tax department'. The family business was split up into several other companies, all specialising in the reptile skin trade.

His cousins started Nagoya Reptile Company, Tan Heng Tannery, Tan Moh Hong Reptile and Genghis Khan Enterprise. Another tannery, Chek Hong Leather, was started by an ex-worker.

Of these, only Tan Moh Hong and Genghis Khan remain.

Heng Long remains the most successful and its achievements can be credited to Mr Koh's business acumen and relentless drive to perfect his product.

With his father, he started Heng Long in 1977. His dad's share of the $800,000 tax debt had to be paid. He also borrowed $400,000 from relatives and $300,000 from the bank to start the business.

He speaks of those early start-up days with a young man's sense of adventure. 'I had to fight for everything,' he says. 'I had to make money to pay the Government and the relatives. It took me about five years to pay everyone.'

Through the 1980s, he worked hard to cut out the middlemen in the business, often going directly to the source of raw hides. Unlike his father and uncle, he spoke English - he obtained his diploma in business studies from Ngee Ann Technical College in 1974 - and could communicate with international traders.

His more dramatic exploits included going to Tokyo in 1978 to buy up the skins of a Japanese trader who had gone bankrupt - one day after his own wedding.

He recalls with a laugh: 'My wife complained, 'This is supposed to be our honeymoon and you take me to smell all these salted fish.''

Before crocodile skins are treated, they are salted to preserve them and emit the pungent smell of salted fish.

His wife, Soo Leng, was the human resource and payroll manager until she retired two years ago. They have three children: Stephanie, 32, Albert and Ethan.

A speedbump happened in 1986, ironically because of too much trade in animal skins. The Convention On International Trade In Endangered Species Of Wild Fauna And Flora was convened to regulate the wildlife trade and Singapore joined the international treaty.

Once a country joins, it agrees not to trade in certain endangered species that are captured from the wild.

Thankfully, the Singapore Government kept three crocodile species exempted from the treaty and that tided Heng Long over until the production of reptile farms caught up. Now most of the reptile hides that Heng Long handles are from farmed animals.

Over the years, Heng Long also courted international customers by participating in leather trade shows to hawk its wares. Mr Koh also appointed agents in Europe for his company.

Eventually, the international high fashion houses came knocking and Heng Long rode the growth in the luxury market to become one of the world's largest and finest tanneries, renowned for its ability to replicate colours to 99 per cent accuracy.

To speed up production, Mr Koh also mechanised the processes in the tannery. In the past, like witches stirring over their cauldrons, workers had to stir the skins in a big vat filled with detergent and anti- bacterial solution. Now, the skins tumble in huge computer-operated drums.

Mr Koh is reluctant to disclose much about how negotiations with LVMH started but said that the French superbrand has been a customer for many years. 'It's important for a fashion house to secure its source,' he says.

As for Heng Long, it benefits from the financial backing of a huge company, in terms of getting advance contracts with crocodile farmers or in stocking deeply.

The future looks bright for this family business. The older son Albert seems to be the next in line. Mr Koh says fondly: 'Albert learns very quickly. He has been working for four years and learnt what others learn in 10 years.'

Albert says his father has always encouraged the children to be entrepreneurs. 'He always told us, when you're old enough, it's better to do your business than to be working for someone else.'

The children live with their parents in a 7,000 sq ft bungalow in Braddell Heights. When he is not travelling, Mr Koh relaxes by swimming every morning in Serangoon Country Club.

Does he think of slowing down? He pulls up his sleeve to show his forearm, which is covered with red splotches.

He says the splotches are probably a reaction to the chemicals he has been in contact with all his life, a skin condition that started only when he was older.

Still, he is not going to stop touching the skins. 'I like to touch. Without touching, I can't feel. Now I just remember to wash my hands.'

I jokingly ask if he ever gets tired of looking at crocodile skins or gets guilty nightmares about crocodiles. 'No,' he says decisively. 'No nightmares.'

But he has occasional insomnia for a different reason. 'In the past, sometimes I couldn't sleep. Because I tried out a new technology and I wanted to know what happened to the skins,' he says.

'So I will go to the factory, which was behind my house, to look at the skins at midnight. Just to see how they turned out.'

Mr Koh Chon Tong on the difficulties of running a family business

'You run a business, everyone's bound to have different opinions. But everybody is working for one good, which is to look after the company's interests. Everybody will give his full support. Personality clashes are minor things'

On how he met his wife Soo Leng

'My mother's friend introduced my wife to me. I had no time to look for a girlfriend, I was always working. So I went on a blind date'

On whether he is a workaholic

'I worked seven days a week. When I was young, the tannery was behind the house. It was very hard to tell when it was family time and when it was work time'

On the difference between farmed and wild crocodiles

'Crocodiles in the wild have longer bodies because they have more exercise. Farmed animals are shorter but the quality of the skin is much better'

 

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