Indonesia’s cigarette king
The Chinese character “Wang (king)” is ubiquitous in the House of Sampoerna, which ranked No. 1 on TripAdvisor for tourist attractions in Surabaya, Indonesia.
“The founder wanted to become the king of tobacco,” says the guide as we gaze at the character “Wang” on stained glass, walls and souvenir shirts at the former cigarette factory.
Founder Liem Seeng Tee, who passed away at the age of 65, changed his name to Sampoerna, meaning “perfection,” when after a lifetime of hard work, he finally made his fortune in the 1930s.
Today, his billionaire grandson Putera Sampoerna, 69, is one of Forbes’ top 10 richest in Indonesia. Putera’s son Michael, 38, runs Sampoerna Strategic, which has interests in agriculture, finance, forestry, telecommunications and property.
Rags to riches
It all began when Seeng Tee left Fujian province in China in 1898.
After his mother’s death, his father decided to seek a better future. On the way south, he gave up his daughter for adoption in Singapore and continued to Indonesia with 5-year-old Seeng Tee. The father passed away of illness after some months, and the boy was adopted by a Chinese family in East Java.
Though Seeng Tee did not undergo formal schooling, he learned the mercantile trade from his adoptive father. At 11, he sold food to railroad passengers and became a waiter serving in rail cars.
He saved up to buy a second-hand bike, which he used to go around Surabaya, selling charcoal. He married Siem Tijang Nio and they lived in a dwelling under a bridge.
Seeng Tee started blending and rolling cigarettes. The couple bought a stall from where they sold snacks and cigarettes. Seeng Tee also distributed the cigarettes by bike.
In 1916, the couple had saved enough to buy tobacco products from a trader, adding chocolate and spices like cloves into the mix. Their tobacco became popular as the kretek (clove) variety.
The couple sold their wares by day and rolled cigarettes by night, using only the light from a kerosene lamp. Their hard work paid off. They incorporated their business, whose Dutch name in 1930 became PT Hanjaya Mandala Sampoerna.
By then, the business has grown and was already producing several products: higher-priced cigarettes with spices (like the famous Dji Sam Soe) and lower-priced ones with artificial flavors.
Live and work together
The couple’s original home was gutted by fire. In 1933, with their five children in tow, Seeng Tee and his wife moved to a former orphanage that had enough space to live and work in.
Like many overseas Chinese, Seeng Tee required his family to live at the factory, not only for them to manage operations firsthand, but also for the children to learn the ropes of the business.
This practice continued for three generations. The children were exposed to the entire process: blending spices and tobacco at 5 a.m., rolling cigarettes at 6 a.m., packing and distributing them for the rest of the day. The factory operated seven days a week, for up to 15 hours a day.
A structure in the family complex became a theatre, a way for the family to give back to the community. Weddings were held there, as well as movies (Charlie Chaplin visited the site) and other significant events (the first Indonesian President Sukarno gave speeches there).
The next generations
The founder passed away in 1956. Three years later, his son Aga Sampoerna took over.
Trained by his parents, Aga zeroed in on hand-rolled cigarettes, using research to improve their top-tier kretek products.
Two decades later, the company was handed over to Aga’s son Putera, who was schooled in Hong Kong, Australia and the US.
Sampoerna expanded under Putera’s watch, and in 2000, his son Michael took over.
In 2005, the business community got a big surprise when the family decided to sell their 95 percent share to tobacco giant Philip Morris for 18.5 trillion IDR ($1.4 billion).
This proved wise, as the family decided to leave tobacco to consolidate various businesses in Sampoerna Strategic.
Putera also created the family foundation, with daughter Michelle at the helm.
With his grandfather as inspiration, Putera says in the company website: “We [should] move beyond conventional approaches, [like] charity or even education, to empowerment—the enabling of individuals to apply their experience, knowledge and skills to implement political, social, economic change for … Indonesia.”
Queena N. Lee-Chua is on the board of directors of the Ateneo de Manila’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail [email protected]). E-mail the author at [email protected].
