Having seen its products widely copied in China for over a decade, Pasaya, a home furnishings maker, thinks it best to counter the counterfeits where they live.
The 32-year-old Thai company, whose fabric bags and bedding products are popular among Chinese tourists, is cooperating with Chinese and Taiwanese partners to bring them genuine products.
Pasaya Sinopia was recently set up with registered capital of 10 million baht to handle the export of Pasaya products to China.
Textile Gallery, the distributor of Pasaya fabric products, holds a 40% stake in the joint venture company, and 20% each is held by Doers Knowledge Management Thailand Co, GEP Spinning Co and Taiwanese businessman Lin Yi-Hao.
The distribution channel will be in a franchise format, whereby franchisees will decorate their outlets to reflect the brand image. Initially, the company aims to expand into key cities such as Guangzhou, Beijing, Shanghai, Tianjin and Chongqing.
"Pasaya fabric has been copied in China for a decade. We cannot solve any problems there," said Schle Wood-Thanan, executive director of Textile Gallery Co. "But the problem is less severe than in the past, as labour costs in China are higher than in Thailand. The joint venture scheme will be a part of our strategy to reduce [the copycat] problem."
The company is planning to register its new company, Pasaya China, to ship products to China and manage inventory.
"There is a huge business opportunity in China because the market size is big and there are only 3-4 strong, local home furnishing companies there," Mr Schle said. "But none of them have their own factories."
He said Pasaya has strong selling points, including having its own factory and better production know-how.
The company expects to open five Pasaya franchises and predicts sales of 100 million baht for the first year of operations. The company aims to open 100 Pasaya shops in China over the next 3-5 years.
Before the joint venture scheme, the company exported fabric to China, Japan, Europe, Australia and Southeast Asia. Finished products are already available in Southeast Asia, with China next on the agenda.
"Overall sales of Pasaya have stayed flat at 1 billion baht for years because of the economic downturn and the relatively low spending power of consumers, which has led many textile factories to close down their operations," Mr Schle said. "Expanding into China will help us resume our sales growth for the first time in 10 years."
The company expects to increase sales by 20% this year to 1.2 billion baht.
At home, the company plans to remodel Pasaya outlets by halving shop size to 70 square metres and opening a further 12 shops this year, bringing the total to 20.
The new Pasaya shops will be located mainly in tourist destinations to promote the products to foreigners.