Japanese investors have had a major presence throughout Asia for decades and are well known for exporting their knowhow and style of working into the countries where they operate — after all, they were the inventors of the successful just-in-time production system. But the head of one major Japanese company has made Thailand a home away from home in more ways than one.
“The philosophy of Toyota is that for each market we invest in, once we establish a factory we can contribute to the economy, society and the creation of jobs in the market”
“Basically I operate based on the principle of 3 S’s”, says Kyoichi Tanada, the president of Toyota Motor (Thailand). “And these 3 S’s are derived from the Thai language.”
Mr Tanada or Tanada-san as the Japanese would call him, says it’s a philosophy that he has been applying in all the countries that he currently manages which include Thailand, India, Vietnam, Laos, Cambodia, Myanmar and Pakistan.
The 3 S’s — Sawasdee, Sabai Dee and Sanuk Dee — have yielded good results in the workforce of nearly 25,000 people in the seven countries, he said in a recent talk with Asia Focus.
Tanada-san returned to Thailand in 2009 after an earlier assignment in the country from 1985-91. In his new role he had 15 countries to oversee, including big markets such as Indonesia and Australia. A reorganisation has since reduced the list to seven but the mission is the same: to make them all grow and be profitable.
“Four years ago I was surprised to see the serious faces of our Thai staff,” he recalls. “Thai people’s characteristic is to smile. But our people were turning too serious and the business situation at that point was not too good so they were serious.
“The serious face is the Japanese way, not the Thai way.”
His aim was to bring the 18,000-strong Thai workforce back to its natural way, which was to work hard yet enjoy working.
To achieve that, he called in his top 300 executives and told them that it would be his job to make sure they used the 3-S approach, but then it was their job to make sure that the remaining 17,700 staff under them followed suit.
Explaining the 3-S approach, he says that using the greeting Sawasdee signifies teamwork, as one cannot work in a team if one does not have that attitude of being humble and greeting co-workers.
As for Sabai Dee, one has to be prepared both physically and mentally to be able to perform the duties assigned while remaining calm and relaxed.
And Sanuk Dee is something he personally believes in, as a workplace that is dull and not fun to be in will not yield good results. Since a large part of one’s life is spent in the workplace, enjoying the work is necessary.
“To me Sanuk Dee is the most important of all the 3 S’s,” he stresses with a hearty laugh.
The philosophy seems to be working well for this 58-year-old Japanese executive who speaks Thai fluently. The Thai facility of Toyota is the second-largest single-company production facility for the world’s largest automaker after Japan.
“Yes, the overall production in China and the USA are more than in Thailand, but that is based on production from four companies in China and many in the USA but for the entire group, Thailand stands as one of the most important countries across the world for us.”
Toyota Motor Thailand produces 880,000 units annually, about 55% for export and the rest for domestic sale. Toyota’s total global sales stand at about 10 million and production capacity is Japan is about 3 million units annually with half for export as well.
But even if Tanada-san now has fewer countries to manage, the outlook from his 43rd floor office at All Seasons Place is hardly as calm as the view of the Chao Phraya River, as the dynamics have changed in most of the markets he oversees.
“Frankly speaking, this year is a much tougher market than it was last year in every market, especially India,” he admits.
In India, one of the world’s key automotive markets, vehicle sales are down as the economy has slowed, and Toyota is running at barely 70% of production capacity.
“In terms of business in India, the business is not as good as we had expected and we are suffering from the net profit situation; we have to find ways to survive,” he admits.
It may be to Toyota’s advantage that it is still a small player in India, accounting for barely 5% of the market with capacity of 300,000 units annually against demand for 3.6 million, a figure that has since dropped to 3.2 million.
The Japanese company has an array of passenger cars to offer in India but the market is very much focused on smaller cars. As a result, it is looking to use its subsidiary, Daihatsu, to produce smaller cars under the Toyota brand in India. The same approach has worked in Thailand and Indonesia with the Avanza model which is made by Daihatsu but branded as a Toyota as it meets Toyota’s standards.
India is also a tough market for heavy vehicles such as trucks. Tanada-san acknowledges that the company’s Hino trucks are unlikely to enter the Indian market due to the pricing.
“We cannot meet their prices which are very, very cheap. I don’t know the level of quality but the price itself is much cheaper. I think we have no chance to engage in that kind of market in India,” he says.
Another segment of the market, pickup trucks, is one for which he has some hopes, as some customers may prefer quality over price.
The market in Thailand, meanwhile, has slowed dramatically after skyrocketing sales in 2012 thanks to the government’s first-car scheme, which offered tax rebates of up to 100,000 baht rebates to first-time car buyers.
Industry-wide passenger car and pickup truck sales in Thailand this year are forecast at 1.2 million, down from 1.43 million last year. However, Tanada-san is not worried, saying that 1.2 million is still healthy taking the historical averages into account, and sales had never exceeded 1 million until 2012.
“Currently it has come down but still the sales have not dropped below 100,000 per month, which means 1.2 million for the year and this is not bad at all.”
Even so, does he feel pressure from headquarters?
“Yes, I get pressure to beat the performance seen the year prior but it is my job to explain to the parent company although they may not listen to what I say,” he says, adding that about 70% of the people he talks to understand the situation but the rest still insist on raising the sales figures.
“Once my job of explanation is done, I am done, and I don’t stress and lose sleep over it,” he says simply.
It was just after Songkran this year when it became evident to him that Toyota’s sales for this year would not meet the targets. He flew to Japan and “once they knew what the situation was, I was comfortable — not happy but not stressed either”.
“I cannot change the market dynamics; the market last year was too good,” he admits, while saying that 2014 is not expected to be any better.
“I think we have to observe how the market situation will be in the latter half of this year and I expect this kind of market situation continuing until the end of 2014.”
The muted outlook makes it a challenge for a company that has a production facility in almost every market it operates in, with the exception of those that are too small such as Brunei and Singapore.
“The philosophy of Toyota is that for each market we invest in, once we establish a factory we can contribute to the economy, society and the creation of jobs in the market,” says the former baseball player whose office is filled with baseball memorabilia. It’s a total approach, he says, while challenging his visitor to name any other global automaker with a similar strategy.
“That’s the way of Toyota: we have a factory in Thailand, Indonesia, the Philippines, Vietnam, Malaysia, India and Pakistan.”
The company also hopes to establish a plant in Myanmar once the investment rules are clearer, he says. “Myanmar has 60 million people and that’s the future.”
But some plants are not able to expand due to the influx of cheap second-hand imports from Japan. That has been the case of Pakistan where the influx is so large that new-car sales have failed to take off. The plant is running at its full capacity of 50,000 and is profitable but still is not able to expand.
Daihatsu may also have to play a role in Pakistan where demand for smaller vehicles remains strong.
“We may ask Daihatsu to manage other projects such as India, Pakistan and even in Thailand,” he says, noting that it was finally time for Toyota to announce its eco-car project in Thailand.
Tanada-san, who first came to Thailand 27 years ago as a coordinator for five years, is fluent in Thai as he took the language in his college. The avid golfer says he is a firm believer in knowing the local language and culture to operate in each country.
He has recommended to the parent company that people assigned to this region first come and learn the language and then join the company.
“I learned the Thai language when I was a student in university and it has helped me gain a better understanding of Thai people for sure,” he says.
While in India and Pakistan one can get away with knowing English, he says, that is not the case in the Mekong countries or some others.
“In the case of Vietnam and Indonesia when we have a chance to talk to our dealers, if I can speak the local language then it is very beneficial and good.”
For that reason, when Tanada-san is sizing up candidates, knowledge of a local language is a key factor.
“That’s why when I talk to the HR people in Japan I always recommend them to send some young people to go and study the language first. That makes all the difference,” he says.
With responsibilities that keep him in Thailand about 50% of his time, he gets to meet Toyota dealers and speak their language, which gives him a better understanding of what’s happening in the market.
“I wish I could do the same as I do in Thailand when I go to Indonesia and Vietnam; that would be of great help to me,” says Tanada-san who plans to become a human resources professor once he reaches retirement age in seven years.
“I’m not interested in salary or money but on a voluntary basis in the human resource area, maybe I can tell something to Japanese students,” he says.
But despite being at the helm of the company that offers driving pleasure to millions across the world, Tanada-san is unable to get behind the wheel in Thailand.
Under his company’s policy all staff, even junior members who are sent from the parent company, are not allowed to drive in Asia, expect in Singapore, “for safety concerns”.