Dato’ George Ting Yew Tong: Malaysian Reflections From KFC, Pizza Pioneer

Dato’ George Ting Yew Tong, chairman of Carlingford Village Shopping Centre (Sydney) and Impress Eight (Malaysia), was the executive director/president, Fast food Division of KFC Holdings (Malaysia), spearheading the KFC and Pizza Hut brands. Currently he is also the controlling shareholder of the Shakey’s Pizza chain of restaurants in Malaysia.

The past 25 years he was instrumental in the development and accelerated growth of the KFC restaurant chain in Malaysia and Singapore, and as a founder director of Ayamas Food Corporation Bhd, pioneered the Ayamas convenience store concept in Malaysia. Under his stewardship, KFC Holdings Group won numerous accolades and awards, including the “KFC Worldwide Operator of the Year” championship trophy.

Dato’ George Ting is a graduate of University Malaya with a bachelor of arts (Econs) degree and holds an external diploma from the Australian Marketing Institute.

He received his title “Dato’” from the Sultan (King) of Pahang on October 24, 2000, in recognition of his many contributions to the community.

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Ethix: What was your role in bringing Kentucky Fried Chicken and pizza to Malaysia?

Dato’ George Ting: I joined KFC in 1982 when they had only 17 restaurants in Malaysia. I was supposed to give it a six-month trial, but that turned out to be many years because I enjoyed what I was doing. By the time I sold my interest in the company and left in 1997, they had over 300 KFCs and close to 100 Pizza Huts (a KFC subsidiary), and of course a lot of upstream and downstream suppliers and processing plants.

I left to do Shakey’s Pizza business in 1997 after selling my interests in KFC. Shakey’s used to be a subsidiary of KFC and Shakey’s Pizza could not grow with KFC because Pizza Hut International did not want a competitor to grow. At that point Shakey’s had 11 stores, but they were very old and run down. Today we have 31. We are very focused on growing in the local area, rather than expanding on a national basis. And at the moment my family – my son-in-law, my brother-in-law, my daughter, and my son – is very much involved, along with some ex-KFC staff. So all this while my passion has been in the fast-food business.

What’s it like to represent an American company, or at least an American brand name, in Malaysia?

When I started, there were not many strong American brands in town. So I pitched the brand by selling the American lifestyle. That was my marketing theme for almost twenty years. Even today, if you go to a KFC restaurant, you hardly see any local items. I always tell my people, “If people want to buy something that’s local, there are a lot of local shops selling it. You are selling an American lifestyle.” So you must be consistent in your marketing and operational activities.

Has this created any negative response?

No, no. Because if I say I sell you American products, it doesn’t mean I’m an American. When you go in, you don’t see a white man behind the counter. You see the products. You have the menu in Malay and English. But the product is a genuine American product, concept wise. That’s what you are paying for.

When I do a promotion, within a week I will ask my key people, “Hey, what is the feedback on the value? You sell at $6.99, anyone complain it’s too expensive?” For me, value represents a long-term business relationship. If I get short-changed by you once, it will be a long, long time before I come back to you. So if I had the intention to come into an American brand shop and I’m prepared to pay that kind of price, you jolly well make sure you sell that. Then you give them value. To me that is crucial.

There’s been much talk in the U.S. about the health of fast food. I don’t know if you’ve heard about Super Size Me, a documentary where somebody ate fast food for an entire month and his health deteriorated. Do you see ethical issues in selling fast food?

I think the state of the economy has a major bearing on what we are doing. What happened to the U.S. market today may happen to us twenty-five years down the road. But not today.

When people go to KFC or Shakey’s, they go as a treat. It is not the meal you do every day. That guy had been eating carbohydrate products for the last seven days, and this is the first time for protein with a lot of oil. To him it’s an experience. But to you it’s an everyday meal and you’re accumulating that. But twenty-five years down the road we might be as sophisticated as you are. We might have as much protein as you.

We are anticipating this. We cannot change the menu that we have because that is the menu given to us. But when we do a promotion, we try to do a more nutritional kind of product. And if that product is acceptable it remains permanent in the menu. Over a period of time you will find that you move away from the extreme to a more moderate menu. But you can never get away with this so-called “very, very healthy food,” because that’s the nature of the business. But I think it is our moral and ethical responsibility to give a healthier food to the people.

For example, we try to put more food through the oven rather than the fryer. The fryer is faster, but clearly the oven is healthier. But we cannot tell the whole world that “this is healthy, this is not healthy,” so it has to be a very subtle shift.

The reason why McDonald’s is doing well this year is because they are going toward healthier food. Health has become a very big selling point. And even in Malaysia, urban-area people tend to be more sophisticated; the rural not so, but it’s only a matter of time. So the earlier we start to do the shift the better it is.

Tell us about how you work with your staff and suppliers?

I think my biggest joy the last twenty years is not so much to build a business that is very successful, but the friends that I have made in the process, both working with me and working for me. Personally, I have very, very strict rules both for myself and for the staff. I think that generates a lot of goodwill and friendship.

Over the years, I have made it very clear to my people that suppliers are your partners. They should not be abused; they should not be subject to blackmail. But if you treat them fair and they don’t deliver, you just release them and look for someone else. That principle worked very, very well over the years and we developed a very healthy relationship with the suppliers. Suppliers have actually become very good friends, because for more than twenty years they have been faithfully supplying us. They also make my life easier in the sense that when I come up with a small little outfit like ours, in spite of the small volume compared with KFC days, they give us the same pricing and the same support.

Staff wise, we thoroughly enjoy working together—my key people especially. In fact when I left in 1997, for three years when I was out on my own, I still played golf every Saturday morning with the senior staff of KFC.

Could you tell us how the business climate in Malaysia has changed over the last ten to fifteen years?

A lot of people in business in my generation are what we call Builders. I mean like the KFC family of franchises going from 17 restaurants to 500. There are other people who can take pride in building that kind of business and it is a very, very strong value. Not belittling the current generation, but a lot of them are receiving things on a hand-down basis, be it through political connection or through their parents’ hard work. So you find that their values are quite different.

One of the biggest challenges Malaysian business has is that many of them have it too easy. They are not looking to those Builders as their role models; they are looking to those who’ve become billionaires overnight. And that is a very dangerous role model because not many opportunities come in that manner. A couple of things will happen. One, you will get disappointed. Two, you might sacrifice your principle in trying to set up and achieve what you’d like to do. My only hope is that there will be more long-term value decisions rather than short-term.

Of course, now a business is a bit more sophisticated and there are more competitors. In the early days it was much easier.

How has technology affected business in Malaysia?

We used to be very labor-intensive people. But today, labor is getting more and more scarce. So we look for labor saving technology to get a better result. We look at things like a cash register machine, a computer program for reporting, for accounting, or costing, whatever it is. Unfortunately, technology is very expensive, in part because it all comes from the West.

So this morning my team is meeting my chairman, who is a politician, and we are applying to ask for government approval to bring about 150 foreign workers to help us in our restaurant sectors, in the kitchen area. No locals want to work in this hot, greasy environment, you know? But how long can I depend on foreign workers? So I need technology that can reduce my workload at the back; I will be more than glad to do so. But we have to find a way to make it less expensive.

What about the role of government in business? I’ve read that the government tends to be supportive because of the desire to grow the economy.

There are two ways the government tries to get involved. One way is to provide the structure for people to build business. This includes laws and enforcement that makes it possible to carry out the business.

The other way is to actually hand down the business opportunity—that culture was very rampant three to four years ago. A lot of business has been privatized during that time. While the principles and philosophy behind privatizing are good, I think the way it has been executed has led to a lot of unhappiness among the people and those who didn’t get the business. There were people who are the so-called “favorite son” of the government that keep on getting businesses. I think the current new government, the new prime minister, is trying to remedy that shortfall.

Compared with other countries in the region – Indonesia, Philippines, Thailand – we have a wonderful opportunity and climate here for people who are willing to work. There’s a very active group of people here who see business opportunity and then work from scratch. Start to build. The beauty about that kind of opportunity in this country is that as long as you have the heart for it, nobody really stops you from doing it, “because you’re a Chinese.” For an entrepreneur, there’s nothing to stop us. And then when you have a good idea, I think this is one of a few countries where you can get bank support—in our case because we always live up to our promise and we honor what we say and we give them a good picture of what we want to do.

Malaysia is a Muslim country, so how does that affect your business?

Since I am a Christian, by law my business must have a Muslim partner with 30 percent ownership. Currently my Malay partner is the same one who was my partner in KFC. He’s a politician, a member of parliament. He has an office here, but he hardly comes into the office because he has his own business. But because we have such a good working relationship, he entrusts us to run the business for him. Unless you are going for some government jobs, I don’t think religion has a very big role to play in running a business.

Urbanization is an ongoing thing. Every month there is a new township. And when that happens, there is business opportunity for retail people like me. I go where people are; I don’t go to rural areas. I think Malaysia is in a wonderful position, where the literacy rate is high enough and where people demonstrate religious tolerance.

Could you talk a bit more about the moderate Muslim climate—how that could lead not only in the region but worldwide?

Well, I think Malaysia over the past few years, has shown to the Muslim world that there is room for moderate people like our current prime minister. There is room for the moderate practice of religion, compared with some of the extreme Islamic principles used elsewhere.

Ever since September 11, a lot of Muslims from the Middle East stopped going to the U.S. and Europe because of the red tape they have to go through for visas, and also the fear of questions. Many of them now come to Malaysia. Those who travel here are affluent people who are in the position to influence. Now the stories are going back, telling about the quality of life here, the lifestyle, and the moderate stance that the government took. Although we are a Muslim country, there’s freedom in many areas of practice. I hope this will be a good selling point—a living example of what moderate Islam can do for the country without destroying it. So I think Malaysia can lead in that area.

Our prime minister is the current chairman of the Organization Islamic Council. I think that will help to put us on the map of the Islamic world. So Malaysia is well-recognized to speak in the Islamic world of the kind of success we have — planting together the religious need and the economic need of the society. And I think we can continue to speak in moderation. That is the strength of our current prime minister; he reconciles with people easily. In the last few weeks in Europe, he has done a tremendously positive job in bringing us back into the international community again.

Is bribery still a common business practice in Malaysia? How is that changing?

It depends on how you define bribery. We still have to take care of certain issues, but it’s much more sophisticated. Rather than pushing $200 or $300 or $1,000 in the pocket and saying, “Will you help me with this?” they’re going to say, “I’ve got this project and I still need to have a 30 percent partner and maybe I should give that to you. You don’t have to contribute for that 30 percent if we deal, but you would have to make sure I have permits.” So it takes a different format.

It used to be very rampant. I think fortunately in this country, the government leaders are trying to reduce that kind of practice. They want people to really work for what they set out to do, rather than waiting for a handout.

I have also noticed that in the last ten years especially, there’s a new breed of people who are much more educated, even the Malays. Government has sent them by the thousands overseas and they are coming back much more sophisticated than before. So that helps to reduce the so-called bribery and corruption. They are still doing it, but without becoming so blatant in violation.

In my retail business, I have nothing to do with government handouts, fighting for a huge contract, having to entertain people and take them to places where they want to go but would be against my conscience to do. Twenty years ago when I took over KFC, I told my key people one basic principle. “If you have a visitor from overseas, if they want to go to naughty places, okay, it is not your responsibility. If you want to take them, you cannot claim one cent from the company. On the other hand, if they want to have a good game of golf or a good dinner, by all means take them and I’ll approve every cent of it.”

That principle and practice have been in effect for the last twenty years. So KFC never indulged in those “unhealthy” activities. Because I refused to get involved in that kind of business for the last twenty years, I don’t have a lot of experience when it comes to bribery and corruption.

I always believe and tell my children and staff, we’ve got to start from somewhere. In a small way or a big way, it doesn’t matter. You say no. But in the process of saying no, we have to pay the penalty—like paying a fine for speeding, but not bribing the officer.

The health department is an issue because you need licenses from them to operate a restaurant. We don’t indulge in giving them bribes. And actually over the years, if you establish a reputation for that, they respect it. The general rules I have for my people are that you comply with all the laws. Then they have no reason not to give you a license. They can only delay, but they cannot stop. Even if they delay us in Malaysia, I have found a very wonderful loophole. I only get fined ten times the license fees, and you’re only fined one time, which is cheaper than giving the person a bribe. That is the law, and I used that loophole for KFC for the last twenty years. I can still proceed with my business while waiting for a fire or health department license.

I’ll give you another example. In the early days, every time you opened a restaurant, the gangster would come for extortion money of $30 to $50 per month. From day one, I tell my people, “You apologize to them; you say that we don’t do such things. You want a free meal; I’ll give you a free meal.”

I remember one outlet when I was just setting up the system, and he wanted a fair bit of money. I said, “I can’t pay you because we don’t pay money. But Chinese New Year is coming. I can donate one lion costume to you that costs about 2000 ringgit, but I cannot give you cash for 2000 ringgit.” He accepted.

What would you advise other Western companies that were coming here and dealing with this?

I would say to them, “Be very, very careful.” Because a lot of people will tell you they are in a position to give you what you want, but these are all what I call professional commission broker people. I usually recommend that they talk to reputable business people first. Don’t go into the political arena or the government, go and talk to reputable business people and I think they’ll get good advice and also good recommendations from them. The good thing about this country is there are enough good, respected businessmen out there who value their beliefs and who are honorable enough to give you a cup of coffee and have a conversation and to give a rough idea as to where you want to go.

Some people from the West have difficulty sorting out what is a bribe and what is a legitimate service fee.

I think a typical way will be, to say to the local guy, “Hey, look. In the West, for this type of service, the fees will be X percent. Okay? What you are asking is way above what I’m authorized.” Which is exactly what I tell people. “I’ve got an American boss. He only authorized me 3 percent. Beyond 3 percent, no matter how much, even if you say no to me, I have to just walk away. Now you have to tell me if you can live with this 3 percent. And if you cannot help me in this area, I will have to find someone else who can live within this package.” They don’t want to lose that.

What’s your view of business in the West?

I’ll share with you my experience, my difficulty at getting things done in the West. Here I am an honest businessman. I invest my life savings in Australia, using the proceeds from the sale of KFC to purchase a small shopping mall in a suburb of Sydney, with the intention of building apartments and a car park. For six years, the council said no to my applications. I tried to comply with everything. I wasted millions in Aussie money. I say in Malaysia all I have to do is get a broker to handle the local government and he’ll get it organized for me. In Australia they use the word “lobbyist.” The lobbyist tried to get it done, but got nowhere because the people in control are from different parties than the lobbyist.

In Australia they profess to be upright and profess that they don’t have corruption, but they make life so difficult for business people. A lot of my friends who have investment in Australia say, “I prefer Malaysia or Indonesia. We lose less.” It appears to be a political conflict between the local people who don’t want development and the federal government that can foresee a shortage of housing. What do I do? Just be patient and pray. No thought of trying to cut corners or go through the back door. I just tell my brother, “If they say this part is no good, you change it to comply and keep on submitting it.” Just a week ago, my latest application was rejected again. My brother said, “We’re hitting against a wall.” I say, “It’s okay. One more year won’t kill us!”

When you think about the West, you can also think about the number of ethical scandals that have happened in business in the last few years.

You know, about six or seven years ago, a lot of people left Malaysia after the Asian crisis, or left Asia because there is far too much corruption, too much nontransparency in the corporate governance and practices. Then after the Enron and other things that came out in the U.S., they say, “Excuse me, what has happened to all this so-called high and mighty and holy kind of principle.” The sad thing is there’s a big credibility gap between the West and this part of the world.

It’s just like what happened here in Malaysia. The new prime minister inherited a country that has a lot of damage control to do, internationally. And the prime minister is doing a wonderful job and getting positive publicity because of his character. He is what he is; the way he talks, that’s him. Our prayer is that he will not get corrupted, that he doesn’t get it into his head that power is absolute for him. As long as he can keep his status quo, I think this country is heading for a wonderful period of time.

This interview was conducted by John Terrill and Al Erisman in Kuala Lumpur, Malaysia in August 2004.