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MANAGEMENT
NINA SUEBSUKCHAROEN
Ainsworth: Thai blueprint lacking |
There is no denying that some Thai companies that rely on the domestic market have suffered over the last three years in the sluggish economy. One solution is to look overseas and they could start by sending their mid-level managers to promising markets, says Anthony Ainsworth, the head of RGC Executive Search.
Thai companies have mostly focused on either exports or the local market but few have succeeded in both, among them CP Group, Siam Cement and PTT.
Domestically focused companies have run into a rough patch as local consumption has been sluggish and shows no sign of picking up now that inflation is near 9% and oil prices at record highs.
''Now what can they do? They have to start looking overseas, they just can't rely on the Thai market,'' said Mr Ainsworth.
''I think that in years gone by they said, 'Oh Burma, too small', 'Laos, too small', 'Vietnam, too difficult'. But I think they have to wise up and there are companies that are doing it but they can't just go from domestic player to international player. It takes years of experience to get the right model and the right strategy for these markets.''
Mr Ainsworth suggests Thai firms start building international exposure by sending their mid-level managers abroad, such as to Hong Kong or Singapore, for six months or two to three years and then get them to bring their expertise back home.
This is something multinational and consumer goods companies are doing. For example, the new CEO of Philips, Prakorn Makjumroen, went to Indonesia and turned the local unit's performance around. Today he is the first Thai to lead the local unit of the Dutch multinational.
While few domestically focused firms have networks abroad, Mr Ainsworth said that investing in one could pay off. ''Typically they start with agents or distributors but at some stage they have to go beyond that'', which means moving from a distribution model to a company-controlled representative structure.
However, he is concerned that a lot of these companies may be getting into the game late, given the rising competition, Vietnam being a prime example.
''Vietnam is not solely about cheap labour. It's about a very motivated and dynamic workforce and another thing is that if the government says something is going to happen it will happen.
''They have some macroeconomic issues at the moment, a bit of a bubble to deal with, very, very high inflation, so Vietnam will have a few dips but long-term it will get there and we are starting to see high-end electronics taking jobs away from Thailand.''
In Mr Ainsworth's opinion, the problem here is a lack of policy as to where Thailand wants to be in five to 10 years, with the shaky political situation squarely to blame for this shortcoming.
''There is no blueprint, if you don't know what you want to aim at you are just going to wander, lost in the jungle. There is no focus on saying, where does Thailand need to go?''
Mr Ainsworth says he has noticed an openness among Thais in their 30s to consider a move overseas but those in their 40s are reluctant to do so unless they get very senior positions.
On the other hand, Thailand itself is failing to draw top talent from abroad, although the general economic climate rather than politics could be to blame.
''You know, this has become sort of flat and tired economy,'' says Mr Ainsworth. ''If you strip out petrochemicals, agriculture and autos and their suppliers tell me where the dynamic sectors are _ there aren't any.
''And I think it has lost its way because there is no game plan ... no vision.
With inflation rising, a new challenge for Thai companies is salary increment expectations.
''Typically Thailand has had a CPI (consumer price index) growth of around 3-3.2% for the last three to four years on average. The expected pay increase that often comes out of the Eastern Seaboard is around 6.5% which is double the CPI.''
While getting double the inflation rate this year would be very unrealistic, he believes many people will be expecting to receive an increment equal to inflation, even if that means 10%.
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