Daimler Chrysler (Thailand) with a
lesson to learn
Local culture is proven once again to be a very
important factor in doing business in Thailand, and differences in culture could disrupt
an operation. Different from the German car maker Bayerisch Motoren Werke, which adopts a
soft approach in forming BMW (Thailand) with its Thai partner earlier this year, Daimler
Chrysler AG holds a tougher stance in approaching the Thai market.
Daimler Chrysler (Thailand) was established fully-owned by its German
parent, discarding its old local partner, the Viriyaphan family, which sold the car for
more than half a century. Difference in cultures have made the German giant to go alone at
its own risk, said industry sources. Top executives of DCT said last week that the Thai
operation has been smooth. But the fact is that there has been no new Mercedes cars
available in the market in the past four months, said the sources.
There used to be more than 100 Benz dealers in Thailand, and those made the Kingdom the
fifth or sixth largest market. Daimler Chrysler disintegrated the old dealership, trying
to set up a new distribution network. Germanys Daimler must learn from a lesson with
Yawaze family in Japan, and from Ford Motor Co who maintains its strategic ties with
Sukhosol and Sarasin families in doing business here, in an effort to assimilate the Thai
Ford Operation opens 4 subsidiaries in
past six months
Ford Operation (Thailand), which controls operations of
Ford, Mazda and Volvo cars in Thailand, has set up 4 more subsidiaries in the Kingdom in
the first half of this year, in a plan to expand operations, says chairman David Sneider.
Ford has also invested into a finance company, United Capital Co., and now has a total of
11 subsidiaries/operations in the Kingdom.
Ford Operation recently set up Mazda Sales (Thailand) to take care of
sales and service of Mazda cars, while another subsidiary, Mazda Engineering Thailand will
be responsible for engineering works, Mr. Sneider said. Ford Sales also oversees the
operation of Volvo Thailand and Thai-Swedish Motor Co., which assembles Volvo cars here.
Ford Operation has been set up as back room to support all the
subsidiaries, while sales and marketing operations of each car, Ford, Mazda and Volvo,
will be separated. Ford Operation is determined to expand B-Quik auto clinic
chain, a total of 100 branches is projected in a three-year period, from 13 branches at
Phuket Floatplane prepares for takeoff
late this year
Phuket Floatplane Co. said it hopes to bring two
floatplanes into service in the southern tourist resort later this year when the project
is approved by the department of aviation. The seaplane, which also has the capability of
landing on a land runway, will take tourists up to see the beauty of Phuket and its
satellite islands, said Jeff Edwards, the managing director.
The floatplane service has been among several investment projects in
tourism in the booming Phuket area in the first 6 months of 1999. Investment in tourism
has constituted 85% of the overall investments in the same period, said Veera
Tantiwattanawallop, chief of local trade registering office. A total of 228 investors with
Baht 1,186 billion in investment capital have applied for licenses between January and
June, he said.
The floatplane will offer 30-40 minutes flights for a glimpse of Phukets beauty
from the sky. The company will have to spend Baht 25 million in starting up the service
with 2 small seaplanes. The investment projects, and the cost, in the tourist resort
island have sharply increased from 180, and Baht 325.3 million, in the same period in
GM (Thailand) mulls Asian car
General Motor (Thailand) is close to finishing
construction of an assembly line to produce Opel cars in Thailand, while at the same time
planning a new family car for the Asian market. The plants body production units,
made by Japans Yoshida heavy industry, have been tested intensively, resulting in an
impressive outlook, said GM sources. A complete assembly line at GMs Rayong plant is
expected in October, they said.
The Opel Zafira will be constructed out of 40% locally-made parts,
while the rest of the parts will come from Europe, said the sources. Only 30% of the
Thai-made car will be sold in the domestic market while the other 70% will be exported.
Meanwhile, the company is studying a plan to produce a sedan model for the Asian market,
The Asian car project was proposed by Holden, which is responsible for
GM car production in Thailand.
The GM assembly plant, designed in 1997, was to bring out 100,000-units/year of the
Zafira utility car. The Thai crisis has, however, changed the companys plan, and the
output has been reduced to 70,000 units a year with the capability to expand.
Tax cuts & new customs duties
among measures in new recovery package
The ministry of finance proposed the long-expected
recovery package for cabinet approval on July 20. The new package, the third in a series
implemented since August last year, aims to spur the economic growth. The proposal
involved cuts in income taxes, lower import/export duties and a new fund to drive property
According to ministry sources, measures to inject liquidity into small
and medium-sized industries, and to help boost income from the tourism industry, were also
included in the new package. The plastic, chemical and steel production industries will
highly benefit from the new package, said the sources who declined to be name.
A total of Baht 50 billion in loans will be allocated to help stimulate
sales in the property sector with the Government Housing Bank to lead in providing loans
to lower group of lenders.
Duties on imported items for tourists, which include sunglasses and fountain pens among
others, will be reduced to an historically low rate.
Refinery to close temporarily for
The largest oil refinery in Thailand, Thai Oil, will
close from July 31 for a 45-day periodical check. The closure is expected to help reduce
the oil surplus in the market.
Meanwhile, Thai Oil said last week it will relocate its head office
from Bangkok to Sriracha this August 1. The relocation will help save about Baht 20
million a month.
The closure of refining units will enable Thai Oil to reduce a surplus
of 100,000 barrels of oil produced each day by the refinery, said the company sources.
Thai Oil has already reduced the diesel oil output in an effort to bring down the surplus,
and to stimulate demands in the market, which will help boost marketing margins, they
Sources said Thai Oil would do anything to show efforts in cutting
costs in order to please investors.
The industry has seen a small increase in refining margins recently, but a new refining
plant in Vietnam has brought woes to the Asian market.
Modern trade makes color labs
Rows have ended with Kodak (Thailand) losing nearly 200
minilabs in its chain. Industry experts fear that the loss will reduce Kodaks brand
loyalty in the film market. Rebelling minilabs, led by former Kodak lab clubs in Thonburi
and Nonthaburi, said Kodak (Thailand) had focused more on sales through convenience stores
and have charged them higher prices.
Kodak (Thailand) is known to have spent about Baht 30 million for
exclusivity inside 7-Eleven and AM/PM chains, and is selling more expensive film to its
minilabs. Practices by Kodak (Thailand) have been against the economy which is on a
downward turn, said club leaders. Most color labs under Kodak have been forced to turn to
lower-priced smuggled film, mainly from Malaysia, to have more margin, they said.
Kodak (Thailand) sells a pack of 2 rolls of film for only Baht 180 in
convenience stores, while forcing minilabs to sell the film at Baht 120 a roll.
Sales promotions through modern trade facilities have also hurt minilabs. Negotiations
with Kodak (Thailand) have failed time and again before they decided to leave the chain,
said the leaders.
Seafood from 8 producers barred
from European market
Seafood products by at least 8 companies in Thailand
have been rejected from Denmark, Spain, Greece, France and Italy after high levels of
contamination were found. The European Union is expected to take tougher actions against
imported products found tainted with toxins or hazardous chemical agents in amounts that
exceed safe levels.
High levels of cadmium have been found in Thai-produced canned and
frozen products, mainly prawn and squid, said sources in the Ministry of Commerce.
Products by the 8 producers have been barred from entering the respective European
nations, said the sources.
Experts have suspected that the Gulf of Thailand is highly polluted by
onshore industrial waste tainted with chemical hazards. Contamination does not happen
during the make of the foods but from within the fish itself.
Exports to EU, which are already in trouble after the GSP system was abolished, may be
entering yet another round of troubles. Products by leading food processing companies -
Seahorse, Kingfisher to name a couple - are among those banned. Frozen products came under
the EU Automatic Detention Directives issued last April.
Big leap for Black Canyon coffee
One of the oldest and largest coffee shop chains in
Thailand, Black Canyon, has been selected by the operators of the Queen Sirikit National
Convention Center to cater its high quality coffee to conferences and other events there.
Black Canyon (Thailand), operator and owner of the chain, is to open its largest ever
branch covering 300 square meters inside the NCC this September.
Black Canyon has opened a total of 36 branches since it started more
than 10 years ago. The NCC deal is under a 5-year agreement between the company and NCC
Management Co., the operator, said Pravit Chitnarapong, chairman of Black Canyon
(Thailand). Its presence in the convention center will help boost the chains image
as there have been over 1 million visitors to NCC each year, Pravit said.
The chain will also open up 2 more branches this year; at Major Cineplex Theater Pin
Klao and Siam Center. More Thai cuisine will be added to the NCC branch to woo foreign
visitors. Black Canyon has won the right to operate the coffee chain at 22 BTS train
terminals. Sales are expected to increase by 10% to 15% this year, to about Baht 250
Donut shop takes on new look
Dunkin Donut Co., Royal APB Co., owner and operator of
the Dunkin Donuts chain in Thailand, is to add more choices to its coffee menu while
making a change to the look of Dunkin Donut shops nationwide. The move follows the model
set by Dunkins US parent. Dunkin Donuts has won the right to operate its chain at 10
of 22 terminals of the Bangkok Transit System trains, which are to start service in
December this year.
Espresso and cappuccino cups will be available in almost all Dunkin
Donut shops and kiosks this year, while the bread and milk menu is under consideration,
said Varin Naruela, managing director of DDC and RABP, which also runs O Bon Pain bakery
chains. The facelift will follow the 2000 Concept scheme by the American chain
to have a more modern look, Varin said.
Currently, coffee sales constitute only 10% of sales in the donut
shops, but it is believed that the raising of the number of coffee flavors of freshly
brewed cups will increase sales to 25%.
The new changes in looks have already been made to Dunkin Donut shops at the Mall 3,
Hua Lam Pong central railway terminal and Lotus Supercenter on Ratchada Pisek Road. Seven
to eight more kiosks will also be added to the more than 150 existing outlets this year.
Copyright 1998 Pattaya Mail Publishing Co.Ltd.
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Updated by Chinnaporn Sangwanlek.