EXPORTS New markets, diversification and an increase in value-added products are vital factors in the campaign to raise the level of foreign sales
From shrimp to semiconductors

The first Patara in London; now it is an international chain of Thai restaurants

his year exports will earn Thailand $65 billion, says the department of export promotion (DEP). This would be about six per cent down on last year, but still ahead of several other South East Asian nations. At the present time, Thailand’s three main markets are the US, Japan and the European Union, each absorbing 20 per cent of the country’s exports. A further 12 per cent is exported to members of Asean and 28 per cent to other countries.
Overall, the value of exports to the US, the EU, Japan and Asean states fell by 2.3 per cent to $30 billion in the first eight months of 2001.
The DEP, an agency under the ministry of commerce established to promote ‘Made in Thailand’ products, is boosting efforts to lift sales to new markets to 40 per cent of total exports by 2003. Shipments to new markets rose in value by 0.8 per cent to $11 billion in the first eight months of this year.

Banphot Hongthong, director general of the DEP, says that in order to achieve the 40 per cent target, Thailand will have to export more products to China, India, the Middle East, Africa, Latin America and Eastern Europe. New trade offices in strategically-located countries such as Egypt and Argentina will form part of this strategy.
“The second strategy is to diversify our products,” Mr Banphot says. “We try to find new products for the world markets, and increase value-added and quality products.”
He points out that agricultural exports account for only eight per cent of the total. The DEP wants to raise this to 12 per cent. This will be achieved by selling more rice-based products, for example, rather than just rice. Other value-added products include furniture instead of timber.
Vehicles and parts, air conditioners, gems and jewellery, transformers and processed shrimp have a bright future too. Vehicle exports increased by 20.5 per cent in the first nine months of this year and frozen shrimp was Thailand’s best performer in September, with exports worth $5.49 billion.

Anun Nithipitigan, managing director of the Thai Fishsauce Factory, says the market for its products is becoming more competitive

Thai cuisine has gained an international reputation, thanks to mass travel and the introduction of its food in British supermarkets. The opening of Thai restaurants in cities and towns up and down the country has also boosted interest in the country’s cuisine.
Fish sauce is one of the key ingredients in Thai cooking. Among the leading manufacturers is the Thai Fishsauce Factory (Squid Brand) Co, whose managing director Anun Nithipitigan says the market is becoming increasingly competitive. “Because of this, we are now looking to expand our exports, which provide a significant part of our revenues,” he says.
“Although fish sauce is a popular product, used in every Thai household, the market has become fragmented by a number of new brands, which appear to come out every couple of months or so.
“Moreover, competition among foreign retailers has left us with a really low margin. I can only see the competition intensifying, so we have to focus on the export side where there is a more profitable market.”

Vitoon Sila-On, business development manager of S&P Syndicate, plans to establish better ties with overseas importers

The company has been exporting for 28 years now, and about 35 per cent is sold abroad, mainly in South East Asia. All the ingredients are sourced in Thailand.
Another family business has not only expanded its food production but has opened two restaurants in London and is planning a third. The publicly listed S&P Syndicate, with an annual turnover of about $50 million, owns a large bakery in Bangkok which supplies S&P’s 100 shops. It also owns around 50 restaurants.
Business development manager Vitoon Sila-On says: “Our international business operates through S&P Global, which runs our Patara Thai restaurants, and this provides the majority of overseas sales. We expect to open one Patara restaurant a year. Exports should increase by 50 per cent a year for a few years as we establish better ties with foreign importers.
“When we decide to invest in other countries, we find partners or local consultants. We have a Patara restaurant in the Hotel Beau Rivage in Geneva and our partner is the owner,” he says.
S&P has a joint-venture partner operating four Thai restaurants in Singapore. “In London we operate our own restaurants and we use local consultants,” adds Mr Vitoon.

Thai Fishsauce Factory (Squid Brand) Co Ltd has received the prime minister’s export award in recognition of its high-quality fish sauce products

About 80 per cent of Thailand’s electronic components are produced for export. Semiconductor Ventures International (SVI) plans to double production by investing around $6.7 million next year in new plant. “We are not rushing into expansion,” says managing director Clive Poole. “The investment will depend largely on market conditions later this year.”
Defying the downturn in the industry, SVI posted an overall growth rate of 72 per cent in turnover in the first half of the year. It expects to see profits of at least $6.2 million this year.
The company exports 95 per cent of its products to Europe, primarily the UK, Germany and Scandinavia, so it will not be affected by the decline in US and Japanese economies. It’s products include parts for coolers and motors and, unlike other electronic components, demand is expected to rise at about 30 per cent a year.
Mr Poole says: “Given our successful marketing shift to industrial electronic components from consumer electronics, we haven’t been affected or experienced a drop in sales due to the US economic downturn.” However, he expects sales for the rest of the year to decline slightly in line with the world economy.
“We don’t expect to see spectacular growth in the second half. We are trying to maintain our margin levels at 12-15 per cent. The current level of 16.9 per cent is relatively high.”

Piya Chongvatana, president of Patkol, believes Thailand could be the first country in South East Asia to recover from the financial crisis

Highly complex electronic products now contribute about 83 per cent of sales revenues, up from 41 per cent in 1997. Of these, electronic components for industrial use account for 41 per cent of sales; telecoms, professional audio and video equipment 20 per cent; printed circuit boards for computers 13 per cent; automotives eight per cent, and consumer products 18 per cent.
Piya Chongvatana, president of the Bangkok-based Patkol Public Co, an engineering group that specialises in making refrigeration units and ice machines, says the ‘Made in Thailand’ promotion “presents Thailand as a high-quality producer at an international level”.
Patkol, which established its reputation serving the government sector, is expanding within the region and plans to export to the US. It aims to become world leader in its field within five years. “In order to reach wider markets internationally, we plan to diversify, manufacturing more types of ice machine to better serve needs worldwide,” says Mr Piya. “We are already investing in mass production.”

Jean-Paul Thevenin, chief executive of Thainox Steel, expects rising demand and falling production costs to aid recovery

The group has branched out into turnkey activities, setting up systems for food processing, and is one of the few Thai companies to carry out its own research and development.
Thainox, Thailand’s sole producer of stainless steel. Majority-owed by French steel giant Usinor, Thainox has poured $300 million into a new production line at its Rayong plant and plans to raise output by over five per cent to 135,000 tonnes next year.
In anticipation of rising demand in Asia, and particularly in China, the company also aims to increase exports by five per cent to 60 per cent of annual output.
“Despite stainless steel prices plunging and a slump in consumption worldwide, we are looking to next year for signs of a recovery,” says chief executive Jean-Paul Thevenin. “We expect a surge in demand and a reduction in production costs. We understand that we are operating a long-term business, unlike other companies in Asia.”
The existence of Thainox is a result of Usinor’s global expansion drive. “We wanted to be known internationally, so we targeted South East Asia,” says Mr Thevenin. “The largest potential market was in Thailand.”