Corporate Q&A: “I thought I’d never set foot in China”
From starting Crown Worldwide Group in Japan in the 1960s to navigating the US-China trade war, Jim Thompson has seen many things in Asia Pacific trade. GTR caught up with him in Hong Kong.
Name: Jim Thompson
Company: Crown Worldwide Group
Title: Chairman and founder
Country: Hong Kong
GTR: How important has the rise of Asian economies been to the growth of the company?
Thompson: It’s been huge. When I first got to Asia in the 60s I thought I would never set foot in China. It was already closed, but the Cultural Revolution made it even more frightening. Even here in Hong Kong, people were leaving in fear that China would overtake it. Then China reversed itself, particularly after Mao Zedong died and Deng Xiaoping said it was OK to make money and do business.
That changed things, not only for China, but for the entire region. Suddenly, you had the huge human resource of China, which evolved into an economic resource, which was producing and consuming things. That’s a single major change, almost a miracle in my lifetime to go from the Cultural Revolution to what it is today. It picked up a lot of the other parts of Asia, such as Malaysia and Indonesia, that were trailing behind, and now you see a lot of dynamism there too.
GTR: As someone who facilitates trade, how sensitive do you have to be to shifts in demand and supply chains?
Thompson: Even beyond that, it’s the politics of a place. We don’t get involved with politics directly, but sometimes a person comes in and changes the rules of doing business. China is infamous in that it’s always reinterpreting its regulations. It makes it difficult to do business. An extreme case was when we were growing in Iran, then there was regime change and we were driven out.
But usually it’s more the local regulations, be they a tightening on customs, immigration, or just the way a leader decides to control their country. We have to not get directly involved, but watch for how it changes the way we do business. Hong Kong and Singapore are very open places, but it’s not like that everywhere. There’s a lot of corruption and bureaucracy in this region.
GTR: You’re also heavily exposed to any movement in global trade. How do you assess the risks of trade tensions and fluctuations?
Thompson: What’s happening now, this fight on tariffs, that will affect some aspects of trade, but not what we do. If there was less foreign investment in China, that could have some effect. But I don’t think it will have any long-term effects. Trade wars are always frightening in the moment, but some of this is mid-course manoeuvres.
I am a globalist by heart, I think global trade is the answer to the world’s efficiency. Goods have to be always manufactured where they can be made at the lowest cost. Logistics companies will always have a role to play getting them to various parts of the world. But in terms of trade barriers, I am always very opposed to them.
When I started the business in Japan 55 years ago, Japan had huge trade barriers, both tariff and non-tariff. They made it very difficult to bring in cars, for example, to protect their own industries, but these things come and go. I like to think I’ve seen a lot – industry goes up and down. In America, as a big consumer market, people have access to very low-cost goods. If Trump decides to manufacture more in the US or put tariffs in place, that will at some point hurt the consumer.
GTR: In decades of doing business in Asia, how have your banking relations changed?
Thompson: In our corporate lifetime, our two sources of capital have been our own earnings, reinvested into the company, and what banks will provide us. I think the banks have always been comfortable with us, and the longer your track record, the better.
Now, the biggest issue with the banks is the great pressure they’re under. It’s not pressure to loan to established customers, but more on the KYC side, some of which is pretty ridiculous. They’ve known us for more than 20 years, yet we still have to go through this bureaucracy. I do think the banks are much more cautious now, because of the international regulations they’re subjected to, such as anti-money laundering. Maybe it’s necessary, but the banks can’t know everything about every single customer.
GTR: Are you facing more competition from Chinese logistics companies?
Thompson: The Chinese companies are pretty dynamic and they’ve had big success within China, which is a huge market. I have no question that they’ll go international and provide competition in the future. I think for now, the big internal market will keep them busy for a while. I am amazed by how quickly they’ve emerged, but it’s not an immediate worry for us.take me back