The owner of Beko electrical appliance brand in Europe is investing US$100 million to build a refrigerator factory in Thailand and cash in on rising demand from the imminent Asean Economic Community (AEC).
Mustafa Koc (right), chairman of Koc Holding, Levent Cakiroglu (centre), global chief executive of Arcelik A.S. and Dhevan Liauburindr, president of Titanco International Co, the Thai distributor for Beko, are at a briefing on the Thai investment.
The Thai factory will also serve as Beko's production hub for Asean.
Mustafa Koc, chairman of Koc Holding, the parent company of Arcelik A.S., which owns the Beko brand, said the plant was being built on a 164-rai plot at Hemaraj Industrial Estate in Rayong province.
The refrigerator plant, which had a stone-laying ceremony on Tuesday, is due to start production in 2016 with annual capacity of 500,000 units. It will hire about 900 employees.
Some 90% of total production capacity is projected to be exported primarily to Indonesia, the Philippines, Vietnam, Malaysia, Singapore, Australia, New Zealand and China.
Within three years, the company expects export sales of Beko home appliances from Thailand to Asean countries will reach 10 billion baht.
"Southeast Asia is one of the world's most important economic areas and we believe Thailand has strong potential to be a manufacturing hub in this region," said Mr Koc.
The $100-million budget is an initial investment in Thailand and Koc Holding, the leading industrial conglomerate in Turkey, will invest more depending on market demand.
He said Thailand was selected as a regional production hub because the Thai economy has a lot of potential and the network of supply chain industries is very strong. Other factors considered in the decision were its central location in the region, good infrastructure, attractive investment incentives, and Beko's confidence in the Thai people.
The group has 15 production facilities around the world, including Thailand.
"Having a production facility in Thailand that can quickly respond to regional market needs is the key to achieve our AEC growth plan," said Levent Cakiroglu, global chief executive of Arcelik.
Arcelik expanded its Beko home appliance business to Asean only last year. The company's products are available in both Malaysia and Thailand. Titanco International Co is the local distributor for the Thai market.
The company expects to expand its business to the Philippines in the next couple of months and then Indonesia and Vietnam later in the year. It forecasts generating sales of around $500 million or 16 billion baht from Asean by 2018. Of the total, 12% will come from the Thai market.
Beko products are available at 30 leading electrical appliance channels in Thailand, which it plans to increase to 100 shops to access more Thai customers.
Koc Holding, headquartered in Istanbul, has consolidated sales of $34 billion or about 1.1 trillion baht from four business areas, comprising energy, automotive, finance and consumer durable goods.
Beko sales recorded $5.8 billion or 185 billion baht in 2013.