TOKYO: Siam Cement Group (SCG) is set to announce a multi-million-baht deal this week to acquire a controlling stake in a European research and development (R&D) company, a move its chief believes will help push the industrial conglomerate towards becoming a sustainable business leader in Asean.
Kan: We can become a leader in Asean
The European company is engaged in R&D for the chemical industry, said SCG chief executive and president Kan Trakulhoon.
SCG is one of a handful of Thai companies keen on investing in R&D in order to have their own technologies.
"We can become a leader in Asean if we invest in R&D," he said during a trip to Japan to receive the Deming Distinguished Service Award for Dissemination and Promotion (Overseas) award, the first Thai and non-Japanese businessman to win the award.
The government and public sectors have earmarked 50 billion baht for R&D, a mere 0.3% of the country's GDP, while paying 200 billion baht a year in royalty fees to receive licensed technologies.
SCG set an R&D budget of 4 billion baht this year, of which 1.26 billion was spent in the nine months. The company's R&D spending has increased every year from 370 million baht in 2007 to about 2.07 billion last year.
It also raised the number of staff responsible for R&D and product designs from 364 in 2007 to 1,264 in 2013.
SCG started selling lightweight corrugated boards, a brainchild of SCG's R&D collaboration between its paper and chemical units, to a Vietnamese company, said Mr Kan. The company also sells chemical products used for the lightweight corrugated boards to the licensee.
It is also a co-licensor with Japan-based Mitsui Chemicals for the technology to produce high-density polyethylene to large manufacturers.
R&D has been key in helping SCG raise revenue contributions from high value-added products (HVA), offering a competitive edge against rivals and allowing a higher profit margin.
Its revenue generated from HVA nearly quadrupled to 150 billion baht last year from 38.8 billion in 2007. For the first nine months this year, HVA sales revenue jumped 14% from 127 billion baht in the same period of 2013.
In terms of HVA sales as a percentage of SCG's total revenue, the tally widened to 35% in 2013 from 34% in 2012 and 17% in 2007.
In a related development, 53 SCG staff have completed the Total Quality Management (TQM) course training since 2007, saving costs of 530 million baht on their 214 projects, most of which are HVA manufacturing.
SCG adopted TQM as a management approach focusing on customer satisfaction in 1992. Siam Cement (Thung Song) became the first Thai company to receive the Deming Prize in the corporation category in 2002. Since then on, SCG has committed to TQM in its entire operation.
Siam Cement Group shares (SCC) closed on Friday on the SET at 448 baht, up two baht, in trade worth 346 million baht.