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| • EXCH RATES |
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Baht/$ 33.39/42
Bid/Ask
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GOLD |
14,650
+ 150
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INVESTMENT
KRISSANA PARNSOONTHORN
The Japanese trading giant Marubeni Group has been downsizing its textile business in Thailand due to the shrinking market and the strong baht, which has affected its export competitiveness. The group, through its Thai subsidiary Marubeni Thailand, has adjusted its investment portfolio here by scaling down the textile operation and focusing on chemicals, metal and machinery.
Marubeni recently sold its 36.05% stake in Erawan Textile Co, along with Toyobo, another shareholder, to Saha Group. However, it still retains investments in dyeing subsidiaries.
''It doesn't mean that we won't invest more in the textile business. It depends on opportunities and partners we will have in the future,'' said Kazuaki Saeki, chief financial officer of Marubeni Thailand.
But downsizing is its focus in the short to medium term as it is difficult to run Erawan Textile's factory on the back of the baht appreciation.
S. Ohashi, vice-president and general manager of the textile division at Marubeni Thailand, explained that most of Erawan Textile's fabric products were for export markets and the strong baht had affected their competitiveness.
''The strong baht has hurt Erawan Textile for 21/2 years. At the same time, the market has been shrinking while competition is getting tough. Our profits are going down and it's difficult for us to survive under this circumstance,'' he said.
In early 2006, the exchange rate was about 40 baht against the US dollar, but the rate was 33.49 baht yesterday.
After the sale of Erawan Textile to the Saha Group, Erawan remains a major fabric supplier for Marubeni.
Mr Ohashi believes Saha Group is able to manage Erawan Textile as the group wanted a weaving factory to complement its textile and garment business. Moreover, Erawan Textile acquired advanced fabric technology from Toyobo, a leading Japanese textile company.
In general, Mr Ohashi said, Thailand should focus on high-grade textile and garment products in the export markets as it can no longer compete with China in the basic segment.''Thai products are welcomed. Japan is looking for more textile suppliers from Asean countries,'' he said.
The two executives said higher oil prices and rising raw-material costs had affected the operations of its suppliers, who were reluctant to raise prices following fiercer market competition.
Mr Saeki said Marubeni was not worried about the current economic and political situations in Thailand.
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