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Jul 12, 2023

Moving Billionaire Jim Thompson Parlays Paper Storage Into Profits

This story appears in the Apr/May 2023 issue of Forbes Asia. Subscribe to Forbes

This story appears in the Apr/May 2023 issue of Forbes Asia. Subscribe to Forbes Asia

ALMOST HALF a century after the phrase "paperless society" was coined, the world is generating more paper than ever—and that's proving a boon for Hong Kong-based billionaire Jim Thompson. Now 83, Thompson has diversified his Crown Worldwide Group far beyond its core business of relocations, and has found a very profitable, if somewhat surprising, niche with an age-old service, storing documents.

The moving business still provides the biggest slice of revenue, 45% of last year's total of $824 million, but his most profitable business is record storage—including keeping mountains of paper for clients. That produced 29% of net profit last year, while relocations generated 16%. (As a privately held company, Crown doesn't disclose profit figures.)

Despite the growing digitalization of data, with billions being spent to create new data centers around the world, ironically the amount of paper records is on the rise too. "The business of our storage of paperwork is growing as well," says Thompson, who is worth an estimated $1.8 billion on this year's Forbes World's Billionaires list. His fortune is based on his sole ownership of Crown, which he started in Japan in 1965 with an investment of less than $1,000.

Crown's chairman sees storage services as a steadier revenue stream to offset the seasonal business of relocations, which happen mostly in the summer. The years when Covid-19 disrupted the global economy didn't dent the moving business—in fact, just the opposite. Crown says it made 45,000 international relocations last year, its most ever.

The paper storage business is under the division of Crown Records Management, a 365 days-a-year operation that's the opposite of moving people and personal effects—it's keeping goods securely in place. "For the whole time, these boxes generate income and constant revenue ... It's a good business in that sense, very steady income," Thompson says in an interview in the first warehouse he developed in Hong Kong, in the New Territories’ Sha Tin district. "And there's the property aspect of it."

Thompson owns 74 air-conditioned industrial warehouses in 48 countries and has leased another 105. Crown's storage business covers not just paper but cosmetics, perfumes and couture as well as art. There are also racks holding 1.1 million bottles of wine. In temperature-controlled cabinets and vaults, there are 1.4 million CD-ROMs and magnetic tapes.

And then there's the paper documents. Thompson started this business in 1984, storing 25,000 boxes, each with a capacity of 1.1 cubic feet. At present, the number in use is about 50 million, and counting; the company projects 52 million by 2025.

Companies keep a paper trail for varying reasons, related to internal policies, government requirements or potential litigation. Unlike electronic data, which can be easily changed, paper also provides a more permanent, and therefore secure, record of information.

In Hong Kong, Thompson notes, contracts and related documents must be retained for seven years, and it's not uncommon for firms to choose to keep them for 12 years. Some banks have in-house rules to retain physical records for as long as 15 years.

As these businesses might not have the space to store all that paper, they hire Crown to store it for them. "There's more and more information as a result of the internet. And a lot of it is electronic, but a lot of it ends up on paper and those paper documents are retained," Thompson says. "So both are growing."

To handle his expanding storage business, Thompson accumulated a collection of industrial properties whose value has shot up, thanks to increased property prices, especially in places such as Hong Kong and Singapore. When he built the four-story Sha Tin warehouse on land bought in 1985, it was one of the tallest buildings in the neighborhood. Today, it is dwarfed by commercial and residential high-rises.

"For the whole time, these boxes generate income and constant revenue."

Thompson says that property accounted for 15% of the Crown Worldwide's net profit last year. Crown's property unit leases warehouse space to the group's record-management company. With a property portfolio worth more than $1 billion, bankers have proposed to Thompson to set up a real estate investment trust. But he turned it down, wanting to stay completely private. "I’m a collector of property, not a trader," he says.

Henry Chin, property consultancy CBRE's global head of investor thought leadership, Asia-Pacific, says in the past demand to lease space for storage was limited as many businesses just used basements or other spaces they owned. But in the last decade that's changed, he says, with growing need for smart warehouses equipped with automation and robots, air-conditioning and solar panels.

In Asia-Pacific, the overall storage business is still small compared with the United States—meaning Thompson has plenty of runway for growth. CBRE put the U.S. total of industrial warehousing capa-city, at the end of 2022, at 588 million square feet, a 17% increase over the previous year. Europe had 260 million square feet (a 13% increase) while Asia-Pacific had only 51 million square feet (up 8%).

One competitor for Crown in Asia is New York-listed storage firm Iron Mountain, which has operations in 60 countries, including a records storage business. It manages 97 million square feet, including 23 million that it owns. By comparison, Crown has warehousing capacity of 45 million square feet. As of April 10, Iron Mountain had a market cap of $15.3 billion.

Aside from paper storage, Crown also handles transportation for fine arts.

THOMPSON ISN’T the first member of his family involved in moving. His father worked for a California-based mover with operations in Japan. While studying aeronautical engineering at San Jose State College (later renamed San Jose State University), Thompson visited Japan and loved it. Upon graduation, he found employment with the same firm where his father worked, allowing him to return and work in its Yokohama branch, until there was a parting rooted in disagreements. The father persuaded the 25-year-old son to start his own moving business in Japan.

Thompson had one local employee and a rented truck. But he also had a valuable mentor in his father, who had lived in Japan at one time. The first job was moving a family's belongings from Japan to California. The second was a sizable inbound shipment for an executive in Tokyo. Thompson helped with packing and loading containers. "It was hand to mouth in the first year," he recalls. Three years later, he purchased his first truck. In 1970, Thompson brought in a business partner, with whom he launched a company in Hong Kong. In 1978, he bought out his partner and made his own relocation, shifting base from Japan to Hong Kong.

Moving always has a storage component, as people need to temporarily store household items. In large warehouses in the U.S. and U.K. in the mid-1970s, Thompson noticed something not then seen in Asia: racks of document boxes next to household goods. He began offering a record-storage service to clients in Hong Kong, using leased space. The timing was good, with China opening up and Hong Kong office rents shooting through the roof. "We had to introduce the concept of outsourcing that work to companies, to convince them to send it out of their offices," he says.

Thompson started Crown in Japan in 1965 with an investment of less than $1,000. Now he owns 74 air-conditioned industrial warehouses in 48 countries and has leased another 105.

With an expanding client base, Crown entered two decades of acquisitions, until 2000, to move beyond Asia. Particularly busy were the late 1990s, with acquisitions in North and South America, the U.K., Australia and South Africa. "We have been growing since the 1980s," he says. "It has never stopped."

In 2006, Crown paid about $87 million for the business services division in the U.K. and Ireland of then-New York-listed Sirva, which raised Crown's storage business to 14 million cartons for 10,000 clients in 46 countries.

From 2015–2020, Crown's map spread again, boosted by acquisitions in Malaysia and Australia. And Thompson aims for expansion "over the next few years," so he keeps looking for records companies that might be for sale. Asked what places are priorities, he names the cities of Adelaide and Tianjin as well as India and Vietnam.

Thompson says top markets for 2022 for record management, including physical and digital storage, digital scanning and retrieval services, were Australia, India and Hong Kong, in that order, but "all of Southeast Asia was very strong as well."

In percentage terms, the country with the fastest revenue growth for storage last year was India, with a 12% increase, while established markets such as the U.S. and Europe grew from 4% to 6%. For the next couple years, Thompson expects annual global revenue growth of at least 6%, adding that may be a conservative figure.

Along the path to Crown's success, there have been bumps. In an authorized company history published for its 50th anniversary in 2015, Thompson talked about dismissing disloyal managers and dealing with mass defections. Thompson relinquished the CEO title in 2019 to then-chief financial officer Ken Madrid.

His designated successor is the older of his two children, Jennifer Harvey. At 54, Harvey has been with the company since 1993 and now heads U.S. operations from New York. His son, Jim Thompson Jr., a fluent Mandarin speaker, runs his own real estate investment company, Throne, from Beijing.

Harvey, a marathon runner, says in an email that perhaps the most important of many things learned from her father is connecting with people. "He will meet someone once, then see them again ten years later and remember very specific things about them," she says.

Until last year, Thompson marked his birthdays by doing the same number of push-ups as the age he had just reached. A shoulder injury made him halt the tradition after 82. He clearly isn't exiting the business soon. "I like buildings, I like trucks. And I have skilled people working for me; that's the way I build a company."

Correction: April 24, 2023

An earlier version of this story incorrectly stated that Jim Thompson was executive chairman of Crown Worldwide Group. His title is chairman.