Leon Lau: “It’s about persistence and knowing the right people to talk to.”
For Australian businesses expanding into Asia, adapting to different cultures and ways of working is often easier said than done.
When Leon Lau was expanding his recruitment business into Hong Kong, it appeared he had hit an insurmountable obstacle.
The name of his recruitment company, Peoplebank, was deem-ed too similar to the People’s Bank of China (the country’s central bank) by a low-level bureaucrat in Hong Kong who rejected his application to rebrand a local company he had bought.
After the application was knocked back several times, Lau hired a Western lawyer and started playing hardball. His lawyers warned the bureaucrats that they would appeal to the chief executive if their application was rejected again. With that threat, the name was approved.
“Whatever the process is, you have to stick to the rules and work your way through it. It takes time but you can get there,” Lau says. “It’s about persistence and knowing the right people to talk to.”
Lau had learned early on that persistence is key when working in Asia. In fact, when he first thought of taking Peoplebank into Asia he was told it couldn’t be done.
“I was told there wasn’t a contracting market in Asia,” he says. “The thought process was being a contractor meant you were not good enough to get a permanent job. They saw getting a contract as second best and they would lose face at the dinner table.”
Having seen how Australia’s workplace culture had evolved to accommodate contracting in IT, Lau was certain the same change was on its way to Asia.
In 2011, Peoplebank made the leap into Asia with the acquisition of PGI Infotech in Singapore, Camcentre in Hong Kong and Confero, which had operations in Singapore, and Hong Kong. The company now has a presence in Kuala Lumpur.
While Peoplebank is enjoying its first mover advantage in Asia, many Australian mid-market businesses — those with annual turnover of between $10 million and $250m — are only just starting to look north as their opportunities for growth are constrained by an increasingly competitive market at home.
A recent report on Australian mid-market companies from GE Capital shows that despite some downturn, Asia remains a significant growth market for many Australian mid-market businesses.
Lau’s message to these companies is that if they have a compelling reason to come to Asia, they should seize the opportunity.
“If you’re confident you’re in the right market, if you’re really sure you’ve got a place in the market you’re selling into and you’ve got the right product or the right service, you shouldn’t be scared of Asia,” he says
Before turning to Asia, Peoplebank experienced a sustained period of growth — both organic and through a string of acquisitions — that propelled it to a market-leading position.
Having begun with just three people in Sydney at the start of the 1990s, Lau started on an acquisition trail in 2001 that saw Peoplebank grow into Australia’s leading IT recruitment company. For Lau, the decision to go for growth was clear.
“I could see that in the IT staffing contracting and recruitment business you couldn’t be in the middle ground, you either had to have scale or you had to stay niche,” he says.
“If you’re in the middle ground you really haven’t got a future.”
After a public float in 2005, the company continued to grow organically until 2008 when it acquired Ambit — then the biggest private IT contracting business in Australia — for $100m. The acquisition was funded through an agreement with offshore private equity firm Navis Capital Partners.
When the GFC hit in 2009, Peoplebank’s shares took a hammering, which prompted Lau to launch a takeover bid of his own company with the help of Navis. The company was then delisted.
Throughout this period of change, Lau was looking towards Asia as a potential growth area. Australia was becoming a mature market for IT contracting and Peoplebank was starting to be squeezed on its margins.
“As we were getting squeezed I could see that we had to diversify and the choice for me was either to diversify out of IT into other recruitment sectors or to diversify geographically,” says Lau.
With most other recruitment sectors already well catered for, Lau saw Asia as the next growth area, and when it seemed that Asia was showing signs of a recovery, Lau restarted talks with companies in Hong Kong and Singapore and the rest is history.
According to GE Capital’s managing director of commercial finance, Aaron Baxter, Australian mid-market companies benefit from an agility that large businesses lack and are nimble and innovative enough to adapt to the needs of customers in new markets.
And for those mid-market companies that are lagging behind the likes of Peoplebank, Baxter argues it’s never too late. “I think it’s the right time now to start looking beyond Australia” he says. “Perhaps being a fast follower is not so bad as long as they learn from mistakes and organisations that have been successful there.”