Right partners are essential to Kingsmen's expansion strategy

KINGSMEN Creatives decided very early on that it wanted to be present outside Singapore.

The company, founded by Benedict Soh and Simon Ong as Kingsmen Designers & Producers, started out as a local operation of seven people in 1976 designing everything from stores to offices to exhibits.

By 1982, it had an office off Jalan Loke Yew in Kuala Lumpur, Malaysia. In 1987, the company secured its first overseas department store assignment – doing design and fit-out works for the Printemps department store in Malaysia.

Even as Kingsmen built a name for itself domestically, erecting chalets at the early editions of the Singapore Airshow and designing stands for marketing at large events, the company’s founders were purposefully traversing the region in search of companies like it.

“Our expansion strategy is a bit different from others,” said Andrew Cheng, the company’s chief executive.

“Some of them do it organically, which means they send people overseas to plant the flag. Ours was more directed towards, first, having the opportunity, which means having work there for clients; and second, having partners to execute what we need.”

Without a physical presence of its own in those markets, Soh and Ong spent time seeking out other visual merchandising specialists who could execute Kingsmen projects overseas.

“Over time, when we find that these partners are reliable, like-minded, have the same kinds of values, and can serve the same type of clients, then we look and see whether we can do some sort of a more formal arrangement with them,” Cheng adds.

In 2002, for instance, Kingsmen acquired 19.98 per cent of Kingsmen CMTI in Thailand. The company has also established a network of affiliated offices and partners in markets such as Vietnam and Indonesia.

It is partly thanks to these partners overseas that Kingsmen has built a regional – and increasingly global – business.

In 2000, 69 per cent of Kingsmen’s S$51.8 million in revenue came from Singapore and 5.6 per cent from Malaysia. Another 9.6 per cent came from other Asian countries, 7.5 per cent from Europe, and 7.1 per cent from the United States.

The company no longer breaks out its Singapore-only revenue, but Kingsmen’s latest annual report shows 63.2 per cent of last year’s S$361.5 million in revenue came from South Asia.

Another 31.6 per cent came from North Asia. The US and Canada accounted for a smaller 3.9 per cent.

Some of the regional projects it has been involved in recently include a BMW Eurokars showroom, a DYM Medical Center facility, and a jewellery store for Maison De Bijoux, all in Vietnam; a Dior pop-up showcase and cafe in Malaysia; the world’s first Coach restaurant in Indonesia; and a Tesla experience store in Thailand.

Cheng describes Kingsmen’s strategy as “looking at the right partners, looking at the right market, and making sure that in those markets we have the right clients”.

“We don’t want to be everything to everybody,” he adds. “Our client base in the earlier days was, and even now is, made up more of international or large domestic companies or brands with the potential to become either regional or global.”

This strategy allows Kingsmen to expand efficiently. By executing a project well with one client in one market, other markets instantly open up to Kingsmen with the same client.

“You could get a single client, a single brand, that needs execution in five or six markets,” says Cheng. “That becomes an advantage for us over time, because we then understand the DNA of the business. We’re plugged into the management.”

Clients benefit too, he adds, because they work with fewer suppliers across the region.

When it comes to securing the right partners, Kingsmen’s chief financial officer Edmund Tan says the company has also been fortunate to have a supportive banker in HSBC.

“They are in the markets where we are, so it takes away one worry for us,” noting that it can be very difficult for a company such as Kingsmen to start a new banking relationship in a new market.

“To be new on the ground, and having to look for a banker – the KYC checks will kill you,” he says, using the acronym for “know your customer” requirements that are common to all financial institutions.

While not impossible to set up, new banking relationships typically require lots of form-filling. Potential clients have to answer a lot of questions about their business and asset base, and scrutiny can be especially tough for an unknown name.

Tan says he appreciated having an HSBC relationship manager in Singapore who was able to connect Kingsmen with counterparts in every market where HSBC expanded.

“The discussion always takes place from Singapore,” he says. “On a yearly basis, they will run through what you intend to do in the next year and initiate contacts.” This makes it easier to get financing and resources for expansion overseas.

Kingsmen has bold ambitions for the next phase of its growth, with a focus on growing its portfolio of experiences.

It is set to open two family entertainment centres in New Jersey, in the US. One of them, Planet Playskool, is a place for children to play with Hasbro-branded products such as Play-Doh and Transformers. The other is a Nerf Action Xperience where customers pay to battle each other with Nerf guns, which shoot bullets made of foam.

Cheng says Kingsmen hopes to build more of such experience-focused projects in the future. Some might be permanent installations, while others might travel around the world.

One market for experiences that he sees opening up is in malls. “It’s all part of this whole ecosystem that has evolved. In earlier days, your malls were very focused on points of sales – supermarkets, fashion, accessories, shoes. Today’s malls are changing because people can buy online, so a lot of it is service driven now,” Cheng says.

Mall owners have courted banks, theatres and restaurateurs instead of consumer goods brands, and Cheng believes the “next thing is attractions”.

The biggest markets for such experience-oriented attractions are expected to be the US and China, where space is abundant and the domestic population can supply a steady stream of visitors.

Kingsmen will focus on securing the rights to well-established intellectual properties, and will then create some experiences for consumers. To build and operate it, however, the company will invite third-party investors.

“The model is not for us to fund the build or the operation of it,” Cheng says. Investors could include venture capitalists, fund managers, or entities that are already managing similar attractions and are familiar with the industry and the business model.

“Everything we do today is focused on delivering unique and memorable experiences for our clients,” Cheng says. “This is what sets us apart from our competitors and what the market and clients need in today’s environment.”

For over 135 years, HSBC has played an active role in the development of economies and infrastructure within six of the markets in the Association of Southeast Asian Nations (Asean).

Its network coverage – which counts over 15,000 staff across 200 locations – serves 2.5 million retail clients and 30,000 businesses, and can capture over 93 per cent of Asean’s gross domestic product and international trade.

By recognising its clients as a global business, not as disparate smaller entities, the bank aims to provide a consistent service across markets, as well as better access to products, solutions and local experts.

According to an HSBC survey of financial decision-makers in the six biggest Asean economies, businesses have become more optimistic about the region’s prospects over the past year.

Of the 600 companies operating in South-east Asia, 74 per cent expect to invest more inside Asean than elsewhere. This year, 66 per cent expect to invest in additional Asean markets.

“Asean is the fastest-growing trade bloc in the world with a combined GDP of US$3 trillion. It’s also the world’s most digitally connected, fastest-growing internet market,” says Priya Kini, head of commercial banking at HSBC Singapore.

“Few banks in Singapore have the global presence and wide range of lending, trade financing and digital trade capabilities as HSBC. Most importantly, no one can deploy these solutions across the Asean region like we can. We are committed to meeting and supporting the different needs of businesses at each stage of their corporate life cycle, from start-up to scale-up and beyond.”