Biz SpotlightThailand offers plenty of business and investment opportunities. Whether you’re an entrepreneurial individual, a growing small- and medium enterprise, or a cash-rich corporation looking to establish or expand your presence in the kingdom, Biz Spotlight provides up-to-date insights into the country’s business and financial sectors.
Under the management of Boonyasith Chokwatana, the Sahapat Group includes over 300 subsidiaries, employing over 100,000 people.
The highly successful Thai-Chinese business has managed to ably compete with otherlarge international organizations, generating turnover of 167 billion baht (US$5.5 billion) in 2008. And although the company is now 67 years old, its trading experience is coupled with what is a rather modern and up-to-date Eastern philosophy, reflecting its Thai-Chinese roots.
During a speech delivered during an opening ceremony at the Summacheep Foundation entitled, ‘From SME to a billion-dollar realm of business’, Boonyasith, who is the chairman of the company, said that while the company was labeled a giant organization, or conglomerate, he still viewed it as a small business. Modest beginnings, meaningful roots
Most of the group’s many subsidiaries are small or medium enterprises (SMEs), and were established with fairly modest registered capital.
For example, ICC International (a public company) was established 40 years ago with a fairly modest registered capital of just 100,000 baht (or the equivalent of about US$3,000 today). When it set up a joint venture called Thai Wacoal with Wacoal Corp from Japan, each partner contributed a registered capital of about two million baht ($58,636). At the other end of the scale, the registered capital for the formation of the group's Lion Corporation stood at about five million baht ($200,000, based on the baht rate at that time [US$1 @ 25 baht]).
“Back in those days the Board of Investment [BOI] was responsible for supporting investments. But Sahapat never signed up [as a member of the institute] as we were a small business. Nevertheless, this means we know how to run a small and medium business very effectively,” according to Boonyasith.
A touch of realism
Unlike international companies, boasting decades of experience, local SMEs can often lack professionalism, expertise, and know-how, so it would be a mistake to try and compete at that level, Boonyasith says. “Thai entrepreneurs are better off starting small, before expanding at a later date when they're ready.”
According to Boonyasith, the most important factor when running an SME is to ensure the firms has solid financial management behind it. He said that in the past things were far more difficult than today since there were no special financial institutions during those days to support investment, while the domestic market was far less open and developed. In light of such a situation, Sahapat Group has always had to carefully plan its financial management.
The experienced executive warns against taking out loans from international financial institutions since this could pose further problems with regard to the instability of foreign exchange rate. Rather, it is better to invest an amount that you already have on hand, according to Boonyasith.
As far as Sahapat Group's experience is concerned, loans and trading should ultimately be based on honesty. Indeed, Boonyasith's grandfather built the company's reputation based upon trust and honesty, and these are elements of a business which cannot simply be bought.
A thirst for knowledge
“Our company's policy is no secret. I never hang on to one particular strategy, rather, I take on board all the positives I pick up from other countries and learn from the experience of others. Some of my experience has been learned through joint venture partners. I certainly keep my eyes on the situation going on around us and then look for the appropriate steps to deal with it.”
Sahapat Group was one of the first organizations in the kingdom to establish an industrial park. This development took place in 1974 during a downturn in the economy due to domestic political uncertainty and the world oil crisis. When the property market sank, Sahapat Group moved quickly, and snapped up some large plots of land.
Boonyasith also referred to the stock market, which was often able to generate impressive profits quickly. This has also been a financial source used to help fuel the company's expansion.
Focusing on core objectives
Boonyasith says he is a keen aviator, pointing out that while he flies for fun, he has also learned some practical lessons from his high-flying hobby.
“When you're flying a plane, you really have to focus on your destination. This can also be applied to business since you must set out with a goal. When flying you need to use security checklists and failure could lead to a life or death situation. As is the case with flying, setting out in business also requires you to check on every single tiny detail,” Boonyasith says.
Learn through your mistakes
Mistakes are inevitable in the world of business. While many units of the Sahapat Group have closed during the life of the enterprise, the mistakes made are shared among other employees as a form of case study – that way, learning from the mistakes can become a fundamental part of the company's subsequent successes, according to Boonyasith.
When facing financial difficulties, the company has always striven to avoid any layoffs, based on the argument that employees are a company's most valuable resource. Rather than relying on redundancies, the company has instead chosen to reduce payments in order to cope with such financial challenges.
'Small, deep and wide'
The reference to 'small' here refers to minimizing risk – in other words, a small business is more solid and secure.
The reference to 'deep' means that those responsible for running the
business need to understand the very core of the business, whether it
relate to marketing, production, or sales.
Boonyasith points out that Sahapat Group is actually a 'multi industry'
company. From this perspective, it is firstly an investor, and is
responsible for taking care of the whole production process, from start
to finish.
Secondly, the company is a manufacturer and distributor of several
famous brand name products. The company's marketing team has a strong
channel, which is particularly strong domestically.
Thirdly, the company looks to broaden its horizons by expanding into
other businesses and services, while, finally, the company develops its
own distribution channel, as evidenced through its establishment of its
108 Shop minimart franchise operation. 'Wide' refers to a point that can be advantageous
when comparing a smaller venture like Sahapat Group with its larger
counterparts. The group is a manufacturer and distributor that offers
among the broadest range of products in the capital. Nevertheless, the
company considers its product lines very carefully. For example, if a
counterpart makes a particularly strong entrance in a market segment,
Sahapat Group may choose to 'step back' and focus on other product
lines instead. If the rival company slows down, that might provide a
better opportunity for Sahapat Group to make strides. This flexible
approach offers the company a good deal of advantage when compared with
some other larger organizations that tend to focus on a narrower
product range, according to Boonyasith.
During a crisis period, companies that sell a single product or a
handful of products may be hit hard by sinking sales. Sahapat Group,
however, has another 300 or so units to turn to. And with each
subsidiary generating about 1% of the company's income, this can
actually add up to a very significant amount.
“In this sense, it is possible for smaller enterprises to conquer their
giant rivals,” Boonyasith says. “In terms of the 'war', Sahapat Group
can be a victor despite losing a few battles here or there. This is one
way in which [Thai] SMEs can become leaders.” - Translated into English
and republished with the kind permission of ASTV Manager.
Biz Spotlight 
Biz Spotlight
Thailand offers plenty of business and investment opportunities. Whether you’re an entrepreneurial individual, a growing small- and medium enterprise, or a cash-rich corporation looking to establish or expand your presence in the kingdom, Biz Spotlight provides up-to-date insights into the country’s business and financial sectors.
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