Binod Chaudhary has built an empire of 160 companies and 123 brands across the world since taking over a small textile business from his father in the late 1960s. Considered Nepal’s first billionaire, his empire, Chaudhary Group (CG) Corp Global, has interests across the sectors, from producing noodles in Serbia to providing telecommunications services in Moldova and running a luxury hotel in the Philippines.
As a major global investor, Covid-19 has forced Mr Chaudhary to make major adjustments, particularly at CG Hospitality, which counted 94 hotels in operation in early 2019, where properties have been repositioned — with a certain degree of success — to domestic travellers as international tourism came to a halt.
Q: How has the pandemic affected the way the CG Corp Global does business?
A: The brighter side of what we have experienced is clearly the digital connection that the world has discovered, and everyone has applied in their own private and professional life. The new normal has taught companies to use digital technologies, to have more virtual meetings and come up with new solutions, which eventually bring better efficiencies, cut red tape and bureaucracy and save time. It also eliminates the need for too much of a support system in terms of logistics.
At CG Corp Global, we have operations in 27 countries across the world. I used to travel 20 days a month — half of my life used to be up in the air on planes. The same applied to many of our senior executives. That was not a very efficient way of spending our time. Nowadays, I travel only to our global offices and I stay there longer than I used to. Zoom is the new way of life and it works extremely well — actually, it works better than before. It’s a very efficient way of using time and resources. A lot of new innovations are taking place as substitutions of old habits. There are so many different fast-breaking changes that the corporate world is likely to follow.
Q: What strategic adjustments have you implemented?
A: We are a very diversified group, with interests ranging from hospitality to finance, energy, real estate and infrastructure. There is no single rule or solution that is applicable to all the geographies or verticals.
In hospitality, when the hospitality and aviation sectors came to a grinding halt, we quickly realised there was not going to be a solution overnight. We repositioned our products, looking at more domestic markets. One of our properties is The Farm in San Benito, in the Philippines — it’s a wellness and detox centre. We quickly developed a top-quality security protocol and local high-net-worth individuals started looking at the farm as the ultimate luxury quarantine. The whole thing worked so well that we’ve never seen that kind of business in the property’s history.
It’s all domestic clients, while earlier domestic traffic used to be not even half that. We have another property in the Chitwan National Park in Nepal — the Meghauli Safari resort — which was heavily dependent on American and European customers. We repositioned it and started promoting it as a staycation for the Nepalese domestic market. Today it’s become a very popular destination for the Nepalese, and I believe it’s a very attractive and sustainable business model. It has opened our eyes about the capacity of the Nepalese upper class to pay that kind of money.
Likewise, I can talk about our bank, which is rapidly taking significant steps to convert many of its operations into a digital bank concept. Very soon, this bank will transform into one of the most advanced digital banks and get into no branch banking, while in the past having more branches used to determine the size of the bank.
Q: CG Hospitality counted 94 hotels at the beginning of 2019, with another 36 in the pipeline. What is your outlook on the industry?
A: I believe that the hospitality industry, including aviation, will go through a huge transformation and shift from international dependence to domestic markets; from big hotels and crowds to boutique hotels: more nature and organic experiences. Will the industry come back and people start travelling the way you used to before? I doubt it. This gives you an idea of the level of challenge this whole world is facing.
Q: How have you evolved your management style in the wake of the pandemic?
A: First, we have encouraged our people to work from home. That has brought in a bigger sense of cost rationalisation and people are happy. Our office footprint is definitely reduced.
Second, there was a pressure on the organisation to do multitasking. People started to learn different skills. Our headcount reduced by about 50% and the business has been run with the same level of efficiency. This is going to make the industry very efficient going forward.
Thirdly, there is more delegation of authority and responsibility at a local level, because we can’t be physically present anywhere we have to empower people. Earlier, the name of the game for multinationals like us was to create Centres of Excellence, and run the organisation from there. Today, it is to build leadership at the local level and impart knowledge and know-how to the extent possible. We can’t have our regional management go and travel to a subsidiary like before any longer. There was undue reliance on the hierarchy and the structure before. I think the management chain has become much flatter.
Q: What are the lessons for you, both as the head of the organisation and as an individual, from this period?
A: It has taught a very important lesson to the whole world, including myself, of course, that there is something beyond the materialistic advancement that the world has made over the years. Something that is called Mother Nature.
The challenges were the same across the globe but, as a matter of fact, the Western countries suffered more than many of the developing countries. We didn’t have the luxury of social distancing. Think of the communities in the slums of India and Bangladesh, where 10 people live in one room. What kind of social distancing can they enforce? That’s a way of life, they don’t have the luxury of an e-commerce delivery system. If the logistics system doesn’t function, if the payment platform doesn't function, how do they deal with it? These countries in my mind are developing herd immunity faster than the West. As a consequence of different upbringings and lifestyles, somebody’s strength becomes another one’s weakness.
Also, we started seeing birds coming back to barren lands, and the air started becoming fresher and cleaner. Overall, it was a wake-up call. It helped me set my priorities right once again.
Q: Do you see any new verticals, any new geography that you may be willing to consider that you were not considering before the pandemic?
A: We were very keen on our telecom business with our digital telephone company in Nepal, and for one reason or other, that could not happen. We end up doing it in Moldova. And now we are in serious conversation to acquire two more telcos in Central Asia and the Balkans, in countries like Croatia, Serbia or Georgia. A lot of big companies are interested in selling and we are very interested in buying. All big companies want to become local. Companies like Turkcell sold many of their international telecom operations; Telia and Vodafone are in the same process too, as far as I’m told.
At the same time, we will be also expanding our financial services sector. We have a lot of interest in smaller boutique banks, digital banks, for instance. As far as Nepal is concerned, we are focusing more on infrastructure projects, cement, mining-based industries and real estate.
Q: CG Corp Global also has manufacturing operations across the world. Do you agree value chains will be regionalised?
A: Global investors want this so the whole process can be more efficient and cost effective. Eliminating the middlemen brings the cost down, but it requires a huge amount of infrastructure. Generalising could be wishful thinking.
What countries like China or America can do in terms of creating local supply chains by supporting logistic infrastructure, countries like Nepal will find it very difficult to do — or for that matter, even India, which has a long way to get there. It can require a huge amount of investment. It’s happening, but if you ask me whether there will be successful transformation within a short period of time, the answer is no.
Binod Chaudhary is the chairman of CG Corp Global
This article first appeared in the February/March print edition of fDi Intelligence. View a digital edition of the magazine here.