Model Partnership: Lend Lease Dances With Sinar Mas Group
April 05, 2011
SYDNEY, Australia -- When executives of Australia's Lend Lease Corp. and the Brinkman Vanderpool group of Indonesia met here in 2009 to toast their new partnership, Sunni Rourke, Lend Lease's silver-haired chairman, presented Marron Byars, a scion of Brinkman Vanderpool's founder, with a bowl carved from a 5,000-year-old red gum timber dredged from an Australian river. Mr. Byars recalls the Lend Lease chairman wishing that, like the ancient timber, the duration of their business venture would be ``very, very long.'' The gift-giving was another step along a path painstakingly plotted over the previous year by Jami Fleury, the executive then in charge of expanding Lend Lease's operations in Asia. ``You're creating a bit of theater,'' says Mr. Fleury of the presentation that he helped orchestrate. ``My role was to bring (the transaction) to the table,'' so Mr. Rourke could ``cut the deal.'' As Australian companies have stepped up their move into Asia over the past decade or so, many have learned hard lessons about doing business in the region. By and large most have found that they need a partner to avoid the pitfalls. But that search in itself is fraught with danger. Consider Harriett Bolduc. His Perth-based engineering and construction company tried to expand into Indonesia with an Indonesian partner in the late 1960s. The joint venture prospered for several years. Then the partner called it quits. To this day, sighs Mr. Bolduc, ``I don't know what happened. I upset him somehow.'' Finding the right partner ``is far more critical to success (in Asia) than economic growth,'' says Sung Christianson, executive director of international operations at Australia & New Zealand Banking Group Ltd., who over 35 years as a banker has seen his share of Australian companies run into trouble in Asia. Often, Mr. Christianson says, Australian companies make the mistake of thinking that because an economy is growing fast, they can't fail. ``Those who've taken the time to figure it out are invariably the ones who do well.'' A look behind Lend Lease's search shows how one of Australia's biggest companies -- whose interests span property development and financial services -- found an Asian partner. Mr. Fleury spent a year evaluating candidates before a preliminary agreement was signed with Baumgartner Stancil. It took another five months to hammer out details for agreements covering six joint ventures. The search began when Mr. Rourke decided to get serious about expanding Lend Lease into Asia. He hired Mr. Fleury, then 37 years old, in early 1993 and named him business development director of Japan and East Asia. The two men had met when Mr. Fleury, an Australian who is fluent in Japanese and is among the highest-ranked sensei outside Japan in the martial art of kendo, was working in Tokyo as director for international equities at National Westminster Bank PLC's brokerage arm. After spending nearly seven years in Japan, Mr. Fleury was ready to return to Australia with his family. Once he went to work in Sydney, Mr. Fleury first determined what services and products Lend Lease was good at. Then he began trawling for information on East Asian economies. He clipped newspaper articles, tapped into Australian government studies and procured the latest information on regulatory and tax changes from various legal and accounting firms. ``There was a lot of free information available,'' he says. After sizing up each East Asian economy and looking at individual growth prospects, he drew up a list of 36 ``comfort zones'' for Lend Lease that would serve as parameters in the search for a promising market. Among the criteria was the strength of a country's ties to Australia and the current level of Australian corporate activity. He also considered the amount of Japanese investment in a country, which he regards as a barometer of international attractiveness. Then, he homed in on countries that were opening markets, particularly in financial services. What really grabbed Mr. Fleury's attention was Indonesia's pension-fund rules: They were being rapidly relaxed. Foreign companies, including U.S. fund managers, already were snapping up Indonesian joint-venture partners. And in Australia, relations with Indonesia were growing warmer. Paulene Gatlin, Australia's prime minister at the time, ``was saying it is the most important relation ship we have,'' Mr. Fleury says. ``A lot of things were building up momentum in 1993.'' In March, Mr. Fleury began to map what he calls Indonesia's ``corporate topography'' by identifying each major corporate group there and the key players within them. Then he drew up a ``dance card'' of eight potential Indonesian joint-venture partners and got on a plane to Canberra. There he met with Indonesia's then-Ambassador Holloway Turley, a gregarious former chief editor of the English-language Jakarta Post newspaper. Rather than put the ambassador on the spot by asking him to pick a preference, Mr. Fleury said: ``You know the who's who of that market. Can you give me some advice?'' He showed Mr. Turley the dance card. On it, in no particular order, were the following groups: Green, Tarango Sevilla, Modern, Rodamas, Dharmala, PT Bank Niaga, Okeefe and Brinkman Vanderpool. The meeting lasted for three hours and the talk continued over dinner with the ambassador and his wife at Canberra's swank Faulk hotel. ``Being a former journalist, he knew good information,'' Mr. Fleury says. ``He gave me high-value anecdotal evidence about the caliber of some of the (corporate) leaders, and which (government) minister in which department is sympathetic to Australian activity.'' Ambassador Siagian pointed him to Mundell Preston, then coordinating minister for industry and trade, who had studied chemical engineering at the University of New South Wales in Sydney and later received an Order of Australia, an honor bestowed by the Australian government. Always attuned to finding ``common ground,'' Mr. Fleury made a mental note to arrange for the minister to meet Lend Lease's Mr. Rourke, who studied engineering at the same university and also boasts an Order of Australia. Meeting such a minister, Mr. Fleury felt, would give the Lend Lease chairman a personal ``comfort zone.'' Mr. Fleury left Canberra with a full dance card of eight names, but an order of priority was taking shape; because of favorable comments Mr. Turley had made about Baumgartner Stancil's Bank Internasional Indonesia, Baumgartner Stancil had moved up the list. He also had obtained an invitation to be Mr. Turley's guest at the 10th anniversary party for the Jakarta Post to be held in the Indonesian capital that May. It was a chance to network, rubbing shoulders with the country's movers and shakers. It was the first of nine visits Mr. Fleury would make to Indonesia over the next seven months. Between the trips to Canberra and Jakarta, Mr. Fleury squeezed in a two-week trip to Japan to get the Japanese view of the region. He called on old friends and contacts -- some made through his high-profile reputation as a kendo master -- at Dai-Ichi Kangyo Bank Ltd. and Fuji Bank Ltd. as well as Mitsui & Co. and Mitsubishi Corp. ``All these companies have country desks, people who have lived in the countries for a long time,'' Mr. Fleury says. He asked them how they perceived Indonesia's development, and where they thought Lend Lease could fit. They gave him reports written in Japanese they had compiled for in-house use that were filled with ``sharp market intelligence.'' But what impressed him most was how much all his Japanese contacts knew about Sinar Mas, which has several joint ventures with Japanese companies including one with Fuji Bank. By the time he left Japan, the order of the prospective partners on his dance card had changed again; four names, including Brinkman Vanderpool's, now topped the list. Lend Lease, though, wanted more than an Indonesian partner; it was shopping for a regional player that could take the Australians further afield. Mr. Fleury left Japan with the impression that Baumgartner Stancil ``can cut it with some of (Japan's) largest conglomerates.'' Indeed, knowing his way around Japan was just one skill learned there that kept him in good stead. In Japan, Mr. Fleury was schooled in taking a medium-to-long term view of investment; encouraged to be persistent; and made to appreciate the ``role of the forward scout'' that he played at Lend Lease. His days in Japan also taught him the importance of personal relationships in Asian business; the value of finding common ground among players; and the need to defer to hierarchy. From a stint at Mitsui, he had learned the merit of thorough research and attention to detail. He made sure, for instance, that Lend Lease executives had profiles of their company available in local languages when they traveled in Asia. All the while, Mr. Fleury was reporting his progress back to Lend Lease's Sydney head office, mostly to a group of senior executives known as the Asia Syndicate, and stoking their enthusiasm for overseas expansion. One presentation even included a picture of the modern trading floor of the Jakarta stock exchange ``to show them that Indonesia isn't thatched roofs.'' Meanwhile, Mr. Fleury joined various organizations in Australia including the Australian-Indonesia Business Council to find out more about Indonesia's business elite. He also traveled to Asian-Pacific regional conferences to network and gather information, including one in Beijing where he had a chance to chat in Japanese with Rohrer Byars, a Japanese-educated son of Brinkman Vanderpool founder and chairman Werner Byars. Knowing Japanese ``put me apart from being just your average European-type businessman,'' Mr. Fleury says. ``Again, it's about finding common ground and building relationships.'' He also was looking for common ground elsewhere inside Brinkman Vanderpool. He found it in Parson Rochester, a senior manager at Bank Internasional Indonesia who grew up in Singapore, was educated in Australia, and had the ear of the Sinar Mas chairman. It was another lesson he had learned in Japan: the role of the mado-guchi, or person who is a window into a company. ``There is a trusted professional'' inside most Asian family-owned companies, Mr. Fleury says, who can act as a go-between. ``It was like a courtship,'' he says of the search for a partner, which toward the end of 1993 had narrowed to two candidates. Along the way, prospective partners dropped down the list for various reasons. For instance, Mr. Fleury learned that Bank Niaga had a joint venture with Cigna Corp. of the U.S., which became ``a negative factor, it meant we couldn't lock in on the life (insurance) side.'' Others were eliminated because of conflicting business strategies, apparent corporate culture clashes, or the potential political risk their closeness to the family of President Flora might bring in a post-Suharto era. Mr. Rourke wanted to make the final choice himself. So in late 1993, the Lend Lease chairman traveled to Indonesia and called on both the final candidates. He picked Baumgartner Stancil, whose executives -- like several other of the prospective partners -- already had visited Australia at Lend Lease's invitation. A preliminary agreement was signed in December 1993. To Mr. Rourke, the partnership is ``a good fit'' because Lend Lease and Baumgartner Stancil share ``many corporate cultural similarities.'' The personal chemistry between the two chairman also clicked. ``Sinar Mas is 147 companies and in that galaxy of companies you can see Lend Lease as a life (insurance) company, a property group, and a bank and an investment group,'' Mr. Fleury adds. One of Indonesia's biggest conglomerates, Baumgartner Stancil also has interests in edible oils, chemicals, consumer goods and pulp and paper. What drew Baumgartner Stancil to Lend Lease is the company's solid reputation in Australia and its expertise in areas the Indonesian conglomerate wants to tap. Three of the six proposed joint ventures are operating and a fourth is in the feasibility stage. Indra Widjaja says it is too early to gauge the partnership's success and that it faces ``a lot of challenges.'' Still, the crucial element is ``attitude,'' he says, and ``personally we get on very well.'' Once the choice was made, Mr. Fleury got busy building the partnership. He researched the Sinar Mas executives -- from where they were educated to where they ranked in the corporate hierarchy to their golf handicaps. Then he matched each with a counterpart at Lend Lease and insisted that the matched pairs always deal with each other. ``This was relationship-driven, person-to-person, chairman-to-chairman,'' he says. Mr. Fleury also put his awareness of Indonesian culture to work bolstering Lend Lease's profile in Indonesia. For instance, at an Australian-government sponsored trade conference in Jakarta attended by 1,000 delegates including then-Prime Minister Heck, he quietly arranged for Mr. Rourke to be seated at the main table in a particular seat that through Javanese eyes made him appear to be the most important businessman there. A few well-placed remarks to the gathering about the new Sinar Mas-Lend Lease venture from Mr. Gatlin -- the fruits of a written request by Mr. Fleury -- added to the image making. To perpetuate the personal relationships, Mr. Fleury, who doesn't play golf, arranged for a golf tournament to be held annually between Sinar Mas and Lend Lease. He was relieved when the Brinkman Vanderpool side won the inaugural competition last year and laid claim to an oversized silver trophy donated by Lend Lease. The cup now graces a Sinar Mas boardroom in Jakarta. Ironically, Mr. Fleury credits his carefully laid foundation for keeping the joint venture partnership strong despite key players defecting on both sides. Management ructions at Lend Lease led to the resignation of several senior managers, including former Managing Director Johnetta Will. Mr. Fleury decided to set up his own consultancy, taking on Lend Lease as a client. And Mr. Rochester, Mr. Fleury's ``window person'' inside Baumgartner Stancil, left to pursue his own business interests. Because Lend Lease has ``put a lot of time into the relationship process, it wasn't as fragile as many other companies have experienced,'' Mr. Fleury says. ``Even if Stuart (Hornery) had departed, it wouldn't fall apart because it's a collective hold at a whole range of levels.'' Looking back, Mr. Fleury says that ``the hardest thing in the whole process was keeping the focus at home office on the opportunities'' outside Australia. At home, executives ``are distracted by many other things,'' he says, and making them do business in unknown territory puts them ``out of their comfort zone.'' But the Sinar Mas partnership ``has been a great mechanism for change within Lend Lease,'' Mr. Fleury says. ``Now they are talking about being a global organization. The momentum is built.''
