Mark Gabel Mongolia is a great place to do a business
B.Erdenechimeg Journalist

The CEO series continues. MSM Group was established in Mongolia in 1998 during the transition period from socialist regime to free market economy. For this reason, MSM is considered one of the first foreign invested company in Mongolia. Now they employ a dedicated and professional team of 250 employees. The company is active in 6 main areas of business and Mark Gabel is leading the company.

-First of all, can you tell us where did you start your career?
-I was born in Germany, I am 40 years old. I have three children. My family is in Singapore. I did not bring them yet. Because I want my younger son to get older before they move here. I`m very happy person. I believe happy people live longer.

I started my professional career in Germany, working for Mercedes Benz dealership for many years. They sent me to South Korea to start up Mercedes-Benz truck business. Then Mercedes asked me on my way back to Germany to stop by in Mongolia to see the market potential and what Mercedes can do here. My very first trip in Mongolia was in 2005. While I was meeting the owners of MSM, they liked my market assessment, my proposal to improve further business. Then MSM asked me whether I was interested in to join MSM.

So, I left Mercedes. I was very young not even 30 back then. I considered Mongolia as an adventure to develop myself and learn new things. Because when you work in a large multinational company like Mercedes usually you stay the rest of your life. I was specialist on the after-sale side. In MSM I had an opportunity to do both: sales & aftersales. Because of more responsibility I decided to leave Mercedes.

A few weeks later I met my wife on a business trip to Beijing. She`s a Singaporean. Similar to me she always interested in getting out the comfort zone to live in another country to develop. She was working actually for Mercedes China as a finance director. So, we got to know each other. She visited Mongolia a few times. The first country we lived together was Mongolia.

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I CONSIDERED MONGOLIA AS AN ADVENTURE TO DEVELOP MYSELF AND LEARN NEW THINGS

From personal perspective, I have a very special time here. Because as you know winter is cold and long. Your wife becomes your best friend and beer buddy. Here we became very close and built strong foundation of our relationship. Here you need to stick together. We both obviously enjoyed the weekends, enjoyed country side and nature.

From professional perspective, I enjoyed very much working in Mongolia. Once you built strong relationships with key customers in Mongolia then you can have a good business. If you know right people, you can grow and develop. I lived here from 2006-2011. Then I left Mongolia and set up multi brand truck dealership in Singapore. I decided to leave Mongolia, because you don`t have very often opportunity for global company to set up a business from scratch in a developed market like Singapore. I made Volvo the number one selling truck brand within two years in Singapore, grew the business from 0 to 60 million dollars. Volvo asked me to do the same for the construction equipment side. They shifted me to Indonesia. There I was running 200 million dollars business and grew that business not just in the mining sector, also in construction and forestry.

Then I worked for German company, I was running industrial business in South East Asia. I traveled a lot to Vietnam, Philippines, back to Indonesia. A year ago, I got in touch again with the owners of MSM. I`m back in Mongolia. The first time I was running automotive and industrial business. Today I`m responsible for entire group, automotive, industrial, chemical, agriculture and beverage business. I`m very happy to be back. As you get older you choose more wisely who you work with. Because I always had strong relationship to Laurenz and David (founders and shareholders of MSM).

I felt very comfortable working with them again. Worked for big multinational company in Asia obviously helped me to strengthen my leadership. So, I can use what I learned for 7 years.

YOUNGER GENERATION IN MONGOLIA IS VERY OPEN FOR CHANGE, THEY THINK OUT OF BOX

-You came back after 7 years. Did something surprise you here in Mongolia?
-I find especially younger generation as a leader in Mongolia. Not just demand results in terms of sales and profit. But you need to give them some inspiration, some ideas how to further develop. Therefore, having this experience in Germany, in America, in Asia for 20 years. I can share with them in this culture, in this business you can do this way or that way. Younger generation in Mongolia is very open for change, they think out of box. I have a team here today that is young, passionate and eager to learn. At the same time, we also have experienced people in the office. I think this is the key for successful organization that you have diverse team of energy, experience and different perspectives. I expect my management team members to challenge me. Most of them are Mongolian. I like when one of them tells me ``Mark, at this point you are wrong``. We have a very healthy debate. I think it`s very good to make business decision not just everybody agree. You challenge each other, finally come to conclusion how to move forward. Sometimes every decision is compromise. Sometimes having check different perspectives then makes a better decision.                        

-What remarks would you give on business environment in Mongolia?
-Mongolia has changed dramatically over the last 7 years in terms of development, living standard. Today it is not just enough to represent a strong brand like Mercedes, Moёt & Chandon or BASF. To be relevant in the market you need to be better than your competitor. You need to be very professional and to be able to deliver outstanding customer service. Then you have a place in the market. Ten years ago, it was enough to represent a strong brand. But today you have to work much harder to have a strong place in the market. 12 years ago, Mongolia was very different than it is today.

In terms of culture, meeting customers I feel very comfortable here. I think Mongolians are very good entrepreneur people who look for business opportunities. Sometimes funding is a problem. As a supplier, business partner we also need solutions, out taking too much risks. But today this situation improved. Big local banks provide quite a lot of funding for businesses.

In general, I would say the work and business environment improved. I came from Korea to Mongolia. In Korea, I found more difficult to communicate. People are not as direct. Here many people speak German or English. It`s easier for me to adopt to Mongolia than it was to Korea.


 

IN MONGOLIA, YOU REALIZE YOU DON`T NEED SO MUCH TO BE HAPPY
 

-You`ve been in South Asian countries. As a geographic area Mongolia is an Asian country. But some people say that Mongolia is more similar to Europe. Mentality, life style is closer to Western countries.   
-It`s of course mix. In Korea, Japan, rest of South East Asia culture is very different by country by country. For example, In Indonesia, the culture is non-confrontational if you don`t agree you will always find a nice way to convey the message. You will never confront to raise your voice.

In Mongolia, in conversation if someone is unhappy they express quite clearly in a Western way. Mongolia has a lot of traditions. There is also respect towards older generation which you will see across Asia. I think you just need to be aware, always try to adapt to the cultural norms. I can`t change my heritage. So, by nature I`m somebody who is result oriented, structured and organized. But I don`t expect every employee is like this. Ultimately, I think it`s about adapting. But you should always drive to further improve and respect local culture regardless where it is. I think a key of a foreigner living in another country is adapt yourself. We cannot expect that the country adapts to you.  

I lived in Singapore for many years. It`s a concrete jungle. Very fast pace of life and stressful. Here when you go to the country side, not just the nature, so calming, relaxing. People are very helpful. They always offer you something to drink, eat and welcome you to the ger. In Mongolia, you realize you don`t need so much to be happy. For myself this is one of the big learnings to be happy ever less to enjoy nature, friendly people. I truly being enjoyed to be here.

-Nowadays young generation prefers to study abroad, especially in USA, Germany, Japan and Australia. In Germany, high education is still free of charge and education quality is accepted. What is your advice to them who wants to study in Germany?
-German engineers are excellent. That`s why the biggest and famous car brands of Mercedes, BMW, Audi and Porsche; all come from Germany. Germans are very good at producing engineering high quality products. But not always very good entrepreneurs. In terms of business or adapting to other cultures. For young people to study in Germany, it really depends in which area they want to develop. If it is on the engineering side, Germany has a lot to offer. In terms of entrepreneurship, learning new things, seeing business opportunities, maybe America or China has developed. For IT Korea, Japan can be helpful.

Every country, every culture has their strong points.

We live now in a world where things are changing very rapidly. Marketing, social media is very different 10 years ago. For my own children, I want them have international mindset, think global. Obviously, technology is influencing our life through phones and artificial intelligence. It will continue. I`m an old-fashioned guy. I still write Christmas cards by hand. Because it takes time. So ever receiver recognizes oh, he took some time for me to write this. But ultimately, I think for younger generation exposed to new technology. Here I really amazed that younger generation is so adaptive to new technology and waits to use that more than I see in Germany.

-We are closer to South Korea and Japan. So, influence can be stronger.
-Maybe. Also, it is in the blood, in the mentality. I think Mongolians are very curious to learn and try new things and never give up. I think you all have self-drive.       

-No one hesitates in German and Japanese quality. Not only car brands, mostly all German brands are famous and accepted. I wonder how did all companies, regardless which sector you work for, reach to the top level of standard. It must be hard and required long procedures.      
-The reason is in Asia there’s is no strong middle class. In Europe actually, rich and poor people live. But majority are middle class. They typically work in smaller companies. They take pride what they do. Even if there are simple clock maker, they don`t earn so much. They do very best for their job. They think my name`s behind it. For European products, it helped to reach high quality. Not only management, processes, quality systems, also personal ownership is very important. I`m might not be a doctor or director.

MY GOAL IS TO GROW 30 PERCENT THIS YEAR. WE GREW FROM 2017-2018 BY 15 PERCENT
 

-MSM is active in 6 main areas of business. On which area are you focusing more? 
-We focus at the moment a lot on the service side of things. Even coal prices are down and coal mining customers do not buy new equipment they still need to run their operations as equipment gets older more repairs are required. So, we invested in our service capability. We sent our technicians to the training. Now we can provide with this service to the international standard. In the past, 10-15 years ago many customers were running a brewery and tried to repair by themselves. If you are not qualified you break down a compressor other equipment and full production shuts down. Today more and more businesses in Mongolia focus on the core business. They outsource not core business to suppliers they can trust. With this focus on more service we should be less volatile to the next downturn and will be increasing expertise’s in the servicing aspect of equipment.

-You mentioned about next crises.
-It is always difficult to predict about crisis. Next year parliament election will be held. Mongolia needs to pay back international loans. Economy might slow down. But on the other hand, gold, copper prices are quite high at the moment. Basically, you never know what is from global economic prospective happens. There never was so much debt in the world as it is today. With rising interest rates, Trade war between China and US, there are a lot of uncertainties. The world economic forum in Davos was just happened. The common feel is that world economy will slow down. But there is no sign of crises. Hopefully, we have to be optimistic. 2019 will be still globally, particular in Mongolia a good year.

As MSM, we always have contingency plan. If something happens we can quickly implement, take actions to make sure that we can manage the crises. MSM went through good and difficult years. It`s important that managed well. Most importantly we retain our talent, our top people in the crises. But at the moment we are quite optimistic. By June this year our employees should be 300 from 250. We are hiring, we are expanding. My goal is to grow 30 percent this year. We grew from 2017-2018 by 15 percent. Mongolian GDP was 6 percent. So, we grew more than double. This year I want to be even more ambitious. I think 30 percent growth is possible. We have strong team, diversified business, we represent very strong brands. We have everything to be successful.

-What kind of challenges do you face in your business today?
-10-15 years ago, here were maybe 3 or 4 car selling companies. Today there are 11. I can say if you do not sell 50 vehicles per year, it`s very difficult to make money. There are so much investment in dealership facility, training people, running workshops. I believe those companies who sell less than 50 vehicles will struggle.   

I see that from 11 car dealers today, there will be less in the future. Those who are left will become bigger probably. Because last year more than 60 thousand vehicles imported into Mongolia. 3000 are new vehicles, rest are all used ones. When you look into other Asian countries as a market development, customers shift from buying used vehicles to new vehicles. So obviously the portion of new vehicles will increase. Therefore, I see strong opportunities for automotive business. We are very well positioned to catch this growth. Also, I see some new trends. So far 95 percent of the vehicles that sold in Mongolia are sport utility vehicles. But slowly I see smaller, newer vehicles are being bought. So, there is a generation who says instead of buying used vehicle prefer the new ones.

If they finance smaller vehicle which cost them less than 800 thousand tugrugs a month, this is better than used vehicle. If somebody works in UB who does not travel much to the country side small vehicle is useful. So obviously we look into this and to have offering small vehicle as well. 

The other new trend I see is electrification. The pollution in UB of course is actually less than 5 percent is contributed by the vehicles. Mongolian Automotive Association, they discussed with the Government. The Government wants to have charging stations for electric vehicles in the city. These cars at -30 degrees have of course much less battery capacity because of the cold weather condition.

But if somebody just drives in the city for 40-50 kilometer a day. Then actually you could drive with your electric. At night charge your car. And then if you want to go on the weekend to Terelj, you need battery power to load a normal engine kicks as a hybrid solution. So, at the moment infrastructure is missing. But I foresee the next 4-5 years this trend will further develop. MSM obviously want to make sure we are involved in this solution available for the customers when it comes to charge the vehicle.   

AS A GENERAL MANAGER, CEO OF THE GROUP I`M NOT EXPECTED TO BE AN EXPERT IN EVERY FIELD

-What is your management style?

-I like to meet customers. I`m not somebody who hides behind desk. I like to go out. I listen and like to understand what customer requirements are and listen to my team what challenges are. Instead of always providing immediately solution, I challenge the team to make some proposals. I try to guide and they come with own ideas. Recognizing talent, nurturing it by providing opportunity in difficult work situations where they can really challenge themselves helps in the development.         

I have worked for Mercedes for 11 years, for Volvo 5 years. As a general manager, CEO of the group I`m not expected to be an expert in every field. In every division I have very capable, very experienced team members. I can really say I`m proud of the team. My duty is to provide value to the shareholders. Personally, more satisfaction I get when customers give us positive feedback what we do well. I can help my direct reports to grow, develop and take on more responsibility. One example is my industrial general manager. She actually got a job in multinational company in Singapore. She`ll move to Singapore.

I believe MSM gave her opportunity to run the division successfully to grow as a leader. Other companies see that and try to also get talent from MSM. I don`t see this as a loss. I see this as a compliment. We do things right. As a leader, you want to grow and develop. Also, company environment needs to be good to make you successful.

MONGOLIAN GOVERNMENT DOES LIKE TO TALK WITH BIG COUNTRIES. THEY LISTEN A LOT TO JAPAN AND AMERICA

MSM is established 20 years ago and expanding its activities. In your opinion, what are the main factors that affected MSM to be more competitive and successful?
-I think one is a long-term view. You cannot expect to make money all the time. You have to invest in the long-term. You need strong team. We talked about that. Relationship with our business partners, companies like Mercedes, BASF. Also need to understand Mongolia is small country. But product and service requirements are quite unique to other countries. Business partner need to understand and adapt. For example, diesel quality in Mongolia does not fulfil Euro5 emission standard. if the manufacturer only wants to focus on the developed countries and only provide Euro5, Euro 6, then this product is not available for Mongolia. It`s our job to make Mercedes aware from this even the volume is not very high. This is what market requires. Working well with business partners so that we can continue to product and services relevant for Mongolia.

Another one element that MSM made strong is we are dependable and reliable business partner.             

-Do have any failed project experience in the past?
-Of course, every day we win some business and loose some business. We evaluate a lot of our lost sale. For me it`s not enough just to hear that our price was too high, … time was too short as usually. For bigger projects we lose, we sit together and analyze. What we could done better? What is our lesson learned now? I think there is no successful company in the world that says `We never had failed yet`. Failing is part of it.

I give an example. It was a tender for crane. We reduced our price. But we lost it. Later we found out that before the tender was already released. The company already made a decision more or less what to buy which happens all the time. So, the lessons learned is we involved too late. If we would have engaged with the customer at early stage, if the customer would have known. The crane needs to be designed best what customer try to build. Failing is frustrating, painful. Because we spent a lot of time, working on engineering solution. Then worked on the price. Actually, it was not about price. It was the design. Unfortunately, discussed too late with us. For bigger projects, it`s always important that we as a company engage with decision makers, sometimes procurement, sometimes the business head. But also with operations, with all stakeholders.

We are investing now to improve our DMS/CRM management tool. I want to see how many sales leads have been generated per sales person. When we have 100 sales opportunities we will send out at least 80 quotations. From 80 quotations, hopefully we get 25 orders. So, the ratio of 100 to 25. The sales pipeline needs to be always full.

-In your opinion what did MSM add to Mongolia in the last 20 years directly and indirect way? 
-For 20 years we were among top 100 tax payers. We pay our taxes. We work in a very compliant way. We deal with many Government agencies from customs to GASI.

For lifting equipment if something goes wrong somebody dies. The law is very much based on Russian law. We share manufacturer certain safety features with GASI.

We recently added some load sensors when somebody is on the lifting platform you cannot moved anymore. It was not originally there. But we retrofitted that to make it safer. GASI also liked that and there is an adaptation, inspection being done. We have cooperation with State theatre, Arts Council and Mongolian fencing federation. MSM supports art and sport activities as much as possible. We try to contribute to the society as much as we can.  

RUNNING A BUSINESS IS REALLY NOT EASY. WE CANNOT ENDLESSLY TAKE LOANS TO GROW THE BUSINESS

-Who do you respect more in Mongolia from business sector?
-Jargalsaikhan DeFacto. I am not interested in politics. But he`s number based and factual.  We have discussions on automotive trends, diesel quality or cement production which is related to our BASF. Also, I like to talk to Enkhmaa, CEO of Petrovis. She`s very successful businesswoman.

I spend a lot of time with European Ambassadors here in Mongolia. We are discussing to establish European Chamber of Commerce in UB.  There are German and French Chambers in the city and a few Italian and Swedish businessmen. By having all European countries together under one European Chamber of Commerce, advocacy to the Government will be at similar level of AMCHAM. (American chamber of Mongolia) AMCHAM is doing this work. They had produced a lot of wide papers and is very active in lobbying the Government. We can do something similar. Mongolian Government does like to talk with big countries. They listen a lot to Japan and America. Having European partner would be helpful to promote more investment from Europe into Mongolia.

I have been a board member of European Chamber of Commerce in Singapore for many years. So, I feel many more million dollars from Europe can be invested in Mongolia, providing more opportunities to those companies. Vice versa The European Embassy here is working on some projects to allow SME in Mongolia to export tax free into Europe. A chamber could have obviously both ways; get investment, and help companies to do more business with Europe. I hope chamber will be established this year. I think energy, waste management, electrification, charging station sides can be attractive to the investors.                

-As a CEO what ethic codes do you follow in the business?
-Honest and direct communication, to be fair each other, to be respectful in a way when one talks, the others should listen, not play with their phone. If you have a conflict with someone you have to solve both, not in front of others. Obviously, customer should take priority over internal meetings. I cannot accept that if customers wait to see you and you say that I`m busy.     

-Who is a businessman? Are you a job creators or exploiter?
-Money does not come easy. As an employee, you have to work very hard to buy an apartment and have a healthy life. As a business owner, of course you want to make profit. Also, they have responsibilities for the people of your organization. Like I said there are difficult times and good times. We in the good times give a lot back to our employees. In the difficult time the company suffers. Running a business is really not easy. We cannot endlessly take loans to grow the business. Sometimes we are conservative. We do not want to grow at any price. Because we know if we grow too fast, something unexpected happens, the last thing we want to do is lay off employees. We rather grow steady and solidly. If you have too much debt then you kill the company. I think we would have not survived for last 20 years if we would have not found healthy balance. It`s a eco system: making money and looking for employees and customer. These three things have to come together.        

-At the end this interview, what steps do we need to take to improve business environment in Mongolia?
-Political stability and communication to the outside world is important. Mongolia is a great place to do a business. Need to do more promotion on this. Those are main factors. Linking back to the European Chamber of Commerce, providing guidance to the Government if you change the law, get our input. If you just change then you recognize or it has this implication in this business or negative PR to investors. It can be avoided. So, it`s really to give better business impact, the business voice also to the Government that before law changes happen. Then implementation can be more successful. Private sector has to be asked for opinion. Government and private sector have to work closer to understand each other for the benefit of the people and the development of the country.          

-Thank you for your time.

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