Leader in Spare Parts Supply in Kuwait: KAPICO Group Holding

Interview with Ahmed A. Al-Ghannam, Chairman of KAPICO Group Holding

KAPICO is a family business that started in 1950 with a small shop. How did you manage to grow so much over the years?

KAPICO Group is a holding family group between two families. The Al-Ghannam family started with my father along with his two brothers, Ahmed and Yusuf. In 1950, they bought a small shop for used spare parts. They have developed our automotive business through the Group until it became one of the largest automotive spare part and aftermarket companies in Kuwait and the GCC region. We represent spare part manufacturers worldwide. From there, we have diversified our automotive business geographically into the GCC region, South Africa, and India.

You are currently present in four core branches, including automotive, healthcare, lifestyle, and infrastructure. You are pushing mostly for automotive and healthcare. How are you involved in the healthcare industry?

We are a second generation. When we came in, the company was concentrating only on the automotive branch. We then did a preliminary study on how to expand into other areas. We entered into different lines, such as food and beverage. We eventually came to the healthcare sector, where we have established a one of a kind hospital merging health services and hotel services. Because of this concept, Royale Hayat Hospital is now one of the most famous hospitals, not only in Kuwait, but worldwide.

Is this your only hospital? Are you planning on adding new medical centers?

Ten years after establishing Royale Hayat Hospital, we are quite proud to see it as a model. According to third parties who have surveyed our clients, Royale Hayat Hospital has become one of the best hospitals in Kuwait and our services have been recognized. Kuwait is an emerging market for the health sector. There is much to do in terms of expansion here. We are seriously examining how to expand in Kuwait in different lines as well as different sectors, north and south of Kuwait, and in Kuwait City.

In which areas are you looking to expand?

Royale Hayat Hospital began with mother and child services, concentrating on OBGYN and children. We have expanded and added other specialties, including dental, cosmetic, and family business. Royale Hayat Hospital is now at one hundred percent occupancy. We expect to add other specialties like orthopedic, physiotherapy, and a one day surgery center to help accommodate the market.

In Kuwait, we have good retail counters where we can provide a wide variety of spare part brands, from Japanese to American, Korean, and Chinese.

Who are your clients at Royale Hayat Hospital? Are you serving Kuwaitis or also medical tourists from the region?

Of course, Kuwaitis are the first client, but we have a large number of expats in Kuwait. In some of the specialties, especially cosmetic, we have a relationship with a well-known surgeon in the region, and people specifically come to Royale Hayat Hospital to book a surgery with him. As long as our services at Royale Hayat Hospital are over and above, people will continue to come.

The concept here is that this not just hospital, but a hospital where you are extremely comfortable. In Europe, the only thing about caring in a hospital is the medical aspect, and the aspect of being comfortable is forgotten.

The vision behind Royale Hayat Hospital is merging the health sector with the hotel sector. When we started to implement that idea, it was not only bringing the expertise, but also developing the facility for that expertise. When you come into the lobby, you feel like you are entering a hotel, not a hospital. Therefore, our rooms are considered suite rooms. All the medical equipment is hidden. You feel like you are in a hotel room with nice sofas and nice bathrooms. Inside the bathrooms, you have your towels, robe, and toothbrush, and all of this is facilitated along with nice colored doors. We also have a nice cafeteria. Over and above, the housekeeping is different from any hospital. Adding to that is the room service. With our room service, you pick up your phone and you have a menu like at a hotel. Your food comes to you on a nice trolley with nice silverware. The smile from our staff will reduce the sickness that you have. These are the things that make you feel comfortable.

What is your strategy to develop and push this concept, and in the healthcare sector in the medium term?

Our three to five year strategy is to start expansion into different areas in Kuwait with our one day surgery center and various specialties. Our priority is to expand into the GCC region, starting from the Royale Hayat Hospital concept. We have been in discussions and there are some groups that are already very interested.

Into which countries will you expand?

We are aiming for Saudi Arabia, UAE, Qatar, and Oman. The Royale Hayat Hospital concept of mother and child care is the bread and butter of the healthcare sector. OBGYN and obstetrics are a major area in this sector, especially for the younger population.

How are you different from other suppliers in supplying spare parts for international manufacturers? Are you the leader in the market? If you go to South Africa or other countries, what can you provide as a key competitive advantage as a Group?

The aftermarket spare part sector is a very delegated line. There is imitation in the market and trust issues. The Group has emphasized trust in this area. They have built up that trust for the client and we are being very transparent with the client. This is one of the main elements for the retailer or the wholesaler. The Group is the leader in the aftermarket sector today. From the beginning, they have built up a good infrastructure and a good warehouse to supply regionally, not only to the GCC but also into the MENA. The Group was the first supplier of aftermarket spare parts in the region. In Kuwait, we have good retail counters where we can provide a wide variety of spare part brands, from Japanese to American, Korean, and Chinese. In addition to that, we also supply all types of aftermarket spare parts, from windshields to batteries, lubricants, tires, and chassis. If you bring us a chassis, we can build up an automobile with the engine, body part, gears, and all types of aftermarket spare parts.

What is your strategy for the automotive segment? Do you want to grow further in the region?

Our strategy is to grow this sector by merging unique services, as we did with the health sector by merging the hotel with the hospital. When you go to a garage, it is always dirty, oily, and greasy. Now, we have new showrooms that do not feel like a garage. You can bring your car in for service, changing tires, or buying spare parts or accessories, and there is a café, a service office, a nice television to watch the news or a movie with a nice coffee. It is very relaxing. This is the new concept. Our strategy is to develop the retail portion. Our next strategy is to diversify geographically into the region, going further to other countries. In India, we have a distributor and also in other countries in Africa and some of the countries where we do not have a joint venture. We went further to South Africa and we have established a headquarters. After doing research and study, we found that South Africa has a very promising automotive market. We started in that market almost sixteen years ago, and now it is the second largest operation for us in the automotive sector. In South Africa, we started in Johannesburg as a distribution for other dealers in Cape Town, Durban, Port Elizabeth, and other areas. Then, we decided to service our client there. So, we also went into Durban and Cape Town and opened our own structure, and it has developed very quickly. I can now supply my client with one day delivery instead of three day delivery from Johannesburg. Another strategy is to go into the manufacturing of spare parts and have our own brand. Our name is well established now and trustworthy in the market there.

Are you beginning manufacturing in South Africa or in Kuwait?

The manufacturers are in the far east. When you sign with them, you give them your specifications for the automotive parts. They need the volume to give you your own brand.

They crate this brand for you under your own name?

Yes, we are working on that brand, now. It is a very long term strategy to create our own brand in the automotive sector.

Can you replicate your expansion in South Africa in other countries to appeal to other regions?

We believe in going to other countries, but there are criteria you must fulfill. Especially when you are an investor, you must be very relaxed on the partnership that you do and the country scope and bylaws of the investment.

Where do you see the company and the automotive spare parts and aftermarket sector in the medium term of three years’ time? What would you like to have achieved?

Now, we are focusing on developing the retail business. We foresee that retail everywhere is becoming the strength of any trader. When we went to UAE, we started as a wholesaler. After six or seven years, we have now started developing the retail sector. In South Africa, we also started as wholesalers and are now developing the retail side. We foresee that the demand on the retail sector will provide a very big income.

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