The Khong Guan Biscuit Company is a Singaporean biscuit manufacturer that has grown into a multinational group of companies with diversified interests including property, food product distribution and commodities trading. Founded in 1947 by Chew Choo Keng, Khong Guan exports its products to more than 40 countries, and manufactures biscuits and confectionaries for supermarket house brands. The brand has received the ISO 9002 certification for product consistency and quality standards since 1995.
Background
In 1937, Chew Choo Keng, an immigrant from Fujian, China, arrived in Singapore at the age of 21. He found a job at a biscuit factory run by industrialist Tan Kah Kee, and attained the position of senior supervisor within three years. When an industrial dispute broke out at the factory, Chew left his job to avoid the conflict. He worked briefly at a rubber factory in Ipoh, Malaya before setting up the Khong Leng biscuit factory with a friend. The Japanese Occupation interrupted that venture, but Chew made his fortune during this period with a soap factory in Telok Anson that also manufactured coconut oil, charcoal and rubber, and by trading in rice and salt.
After the Occupation, Chew sold his charcoal and rubber businesses and returned to Singapore. With capital of $250,000, he set up the Khong Guan Biscuit Factory. At the 50,000 square foot factory at Paya Lebar employing up to 300 workers, biscuits were initially made manually before Chew experimented with using bicycle chains to convey plates of biscuits to the ovens, marking the start of the use of automation. He was heavily involved in daily operations at the factory, from making and marketing the biscuits to designing the company’s logo. Chew brought his younger brother Choo Han into the business, and as the latter had a talent for mechanical engineering, they set up a machine shop to design and build the machines used in the factory.
Expansion
By 1959, Khong Guan had two factories in Singapore, and plants in Butterworth (opened 1954), Seremban (opened in 1959) and Kota Bharu in Malaya. The Singapore factories produced 10,000 tins of biscuits daily and had around 200 employees, while the Malayan factories produced 40,000 tins daily and employed 1,000 workers. About 70% of Khong Guan’s products were consumed in Singapore and Malaya, while the rest were exported to international markets such as Indonesia, Hong Kong, Africa, and the Middle East.
Besides biscuits, the Chew family had interests in other industries often related to their primary trade. They were involved in manufacturing vegetable oils, tin mining and set up a small shipping company to handle transportation for Khong Guan’s ingredients and finished products.
In 1960, Khong Guan Flour Milling Private Limited was incorporated with authorised capital of $5 million, and granted pioneer industrial status by the Singapore government the following year. Completed in 1964, the Tanjong Rhu mill supplied the needs of Khong Guan’s biscuit factories and sold flour to other companies. It initially had a daily production capacity of 140 tons of flour before expansion brought the mill’s capacity up to 420 tons daily with storage for 18,000 tons. The company was listed on the Stock Exchange of Singapore in 1969.
By 1970, Khong Guan’s Singapore factory was producing 15 tons of assorted biscuits and confectionaries daily, and employing 420 people. Expansion in 1972 boosted capacity to 75 tons as Khong Guan moved to producing higher grade and quality biscuits. That same year, Khong Guan Holdings Malaysia was listed on the Malaysian stock exchange as a holding company and investment vehicle. The listing helped raise funds for Khong Guan’s four biscuit factories in Malaysia, at Seremban, Butterworth, Kuching and Kota Kinabalu. The holding company was the Chew family’s vehicle in Malaysia to acquire and hold shares in other companies and subsidiaries, and to manage them.
In 1974, Khong Guan signed an agreement with Australian biscuit manufacturer Arnotts, allowing Khong Guan access to Arnotts’ recipes, formulae, production methods and processes. Khong Guan, which by that time had 10 factories and over 3,000 employees across Singapore, Malaysia, Indonesia and Thailand, doubled its biscuit production in Southeast Asia and also distributed Arnotts biscuits.
In the early 1980s, through its Hong Kong investment vehicle, Khong Guan ventured into biscuit manufacturing in China and distributed its products in the United States and Japan. By 1981, the Khong Guan group had more than 60 subsidiaries and associate companies in Asia, with the three core companies being Khong Guan Flour Milling, Khong Guan Holdings and United Malayan Flour Mills.
Diversification
In 1989, citing unprofitable operating results since 1983 and a competitive flour milling industry, Khong Guan Flour Milling announced that it would move its milling operations to Malaysia and China and redevelop the Tanjong Rhu mill into a residential property project. Khong Guan later announced that it would join other investors to develop a S$60-million condominium project on the Tanjong Rhu site. After the sale of the mill, the company focused on trading commodities like wheat flour, cocoa beans and corn grit, and other investment holdings.
In the 1990s, Khong Guan continued to expand in China. By the middle of the decade, it had biscuit factories in Shenzhen, Shanghai, Tianjin, Zhengzhou and Chengdu. In 1993, Khong Guan was named the second most popular biscuit brand in China, and was estimated to hold a 7% share of the Chinese biscuit market.
In Malaysia, the Chews’ controlling share of Khong Guan Holdings was sold to Malaysian businessman Lim Geok Chan in 1993, thus ending the company's ties with its original founders.
In July 2001, Khong Guan founder Chew Choo Keng passed away at the age of 86. At the time of his death, the biscuit factory that he had founded had become a multinational concern with annual sales of more than US$100 million, and factories and associated companies in Malaysia, Indonesia, Thailand, the Philippines, Hong Kong, China, and the United States.
Author
Alvin Chua
References
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The information in this article is valid as at 2010 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.
