Thai Multinationals: Expanding Worldwide

Courtesy of The Economist, a report on several Thai companies that are expanding globally:

THEY don’t look like much. But the tins displayed in the boardroom of Thai Union Frozen (TUF) in Bangkok have propelled this little-known company into the league of global multinationals. As befits Thailand’s biggest canned-seafood producer, there are plenty of its local tuna and sardines on show. But pride of place goes to TUF’s foreign acquisitions: tins of John West, Britain’s leading brand of tuna; of Petit Navire and Parmentier, France’s top tuna and sardine brands respectively; and of Chicken of the Sea, the largest canned-tuna brand in America.

This collection represents about a fifth of the world’s output of canned tuna. But since there is little to identify TUF as the owner of the brands, foreign fish-munchers have probably never heard of the Thai parent company, despite sales of over $3 billion a year. Foreigners may also be blithely unaware of the global advances of Thailand’s other big companies.

In July the state-owned oil-and-gas company, PTT, caused by stir by outbidding Royal Dutch Shell for a company with rights in a large gasfield off Mozambique, paying $1.9 billion for Britain’s Cove Energy. And last month ThaiBev, a food-and-drink conglomerate, did battle against Heineken, a Dutch brewer, for a share in Asia Pacific Breweries, the maker of Tiger beer. Heineken won—but only after buying off ThaiBev handsomely.In 2011 Boston Consulting Group (BCG) included four Thai companies in its list of the top 100 multinationals from emerging economies—two fewer than from Russia and twice as many as from Indonesia, which has over three times Thailand’s population. In the four years to 2007 Thai companies spent a puny $1.5 billion on overseas assets. Between 2008 and July 2012 they spent almost $21 billion.

Thaksin Shinawatra, a former prime minister, once tried to brand his country the “kitchen of the world”. Like a good wok, that didn’t stick. But agribusiness and food-processing companies have been leading Thailand’s charge abroad. The Charoen Pokphand (CP) Group, one of the world’s largest poultry producers, has operations in 17 countries and owns the third-largest 7-Eleven chain in the world. Along with TUF, it is joined on the BCG list by PTT, an oil firm, and a more unlikely candidate, Indorama Ventures, the largest global producer of polyethylene terephthalate, an essential ingredient in plastic bottles.

Why have these Thai companies started to expand abroad? They are cash-rich, partly because they are well run and partly thanks to caution. Pavida Pananond, an expert on Thai business at Bangkok’s Thammasat University, thinks Thai firms were so seared by the Asian financial crisis of 1997 that they have “become very prudent and conservative”. Only now are they moving abroad—cautiously—having outgrown their small domestic market.

But that is not the whole story, argues Thiraphong Chansiri, TUF’s boss. TUF works hard to keep the chicken of the sea cheap, using big fishing fleets and operating warehouses in low-cost countries such as Ghana and the Seychelles. “Our competitive advantage is on the supply chain, as low-cost suppliers,” he says. “And we apply that to the big brands.”

This entry was posted on Friday, October 26th, 2012 at 4:56 pm and is filed under Thailand.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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