Growing up on Yaowarat Road, home to Bangkok's bustling Chinatown and the country's dominant gold trading area, Tanarat Pasawongse did not initially see himself as the next in line to inherit the family-owned gold trading business of Hua Seng Heng Group of Companies, Thailand's largest gold importer.
"My father sent me to study abroad," the 45-year-old chief executive tells the Bangkok Post in an exclusive interview. "He had never said anything about our family business since I was young. With this maxim in place, I thought I should endure all the obstacles by myself."
Despite being born into a family that has run a gold trading business since 1951, Mr Tanarat's life path was not paved with precious metals. His early passions were engineering and information technology.
After graduating with a bachelor's degree in industrial engineering from the University of Washington, Mr Tanarat founded his own systems integration company to provide IT solution services.
Albeit unbeknownst to him at that time, Mr Tanarat's passion and experience in IT solutions would eventually prove valuable in helping him run the family business as the third-generation chief.
Things took a turn when he reached 30. Mr Tanarat's father asked him to help run the family's gold trading business, where his four older cousins were already working in various functions.
"My management style is decentralisation with high tolerance, politeness and patience, as I was the youngest and the last family member to join," he says. "This was challenging because I was grouped in the middle between the seniors and juniors."
Mr Tanarat and his family.
In 2008, the Thailand Futures Exchange (TFEX), a subsidiary of the Stock Exchange of Thailand (SET), planned to launch gold futures products. The country's largest gold traders, including Hua Seng Heng Group of Companies, were invited to apply for a gold futures trader licence.
Mr Tanarat established Hua Seng Heng Gold Futures Co Ltd, the first derivatives brokerage house to trade gold futures contracts on the TFEX.
After accomplishing success in gold futures in a four-year period, the TFEX granted his company a full derivatives licence with leading products in gold futures, SET50 futures and single stock futures.
"This [gold futures] was a significant turning point in my life," Mr Tanarat says.
Entering into the realm of gold derivatives was a new chapter of the Pasawongse family after the first generation managed the gold trade through gold ornament branches and the second generation expanded into gold bars and bullion import and export.
Today, the gold bar trade contributes about 90% of the group's total revenue.
Revenue generated from gold ornament branches makes up 5% of the total, but the business is seen as a way of building confidence and enhancing reputation among retail customers, Mr Tanarat says.
TECH-DRIVEN
In his own words, stepping up from the physical gold trade and moving into the derivatives instrument market gave Mr Tanarat a bird's-eye view of connecting with people from different backgrounds and experiences.
"A new market and business naturally have other people wanting to compete," he says. "I learned how to protect and expand our business, while simultaneously learning to allocate resources professionally and enduring a lot of things that came by."
New mandates were also established such as exchange rules, exchange guidelines and practices to manage risk, together with using IT to run the gold business and expand the customer base in the bullion segment.
"Our company operations are IT-driven. We have our own IT-integrated system and technical support," Mr Tanarat says.
With technology disruption continuing to affect every business across the spectrum, companies must be ready to improve at all times or risk being left behind in the race.
"Technology helps us provide better services, but it also allows businesses to compete with one another at a faster pace," Mr Tanarat says. "It helps smaller fish grab a larger share or even eat bigger fish."
After helping to run the family's business for 16 years, he's seen Hua Seng Heng Group's annual revenue rise from billions of baht to the hundreds of billions, thanks to new business approaches and IT incorporation.
TWO WORLDS
At present, Hua Seng Heng Group separates its business into two parts -- offline and online -- with an equal emphasis on both worlds.
"We have a call centre to deal with traditional customers who prefer offline communication," Mr Tanarat says. "For the online world, we have established online operations to facilitate investment and electronic payment."
Although there are plenty customers coming in and out of the group's gold shops every day, some 90% of total customers are derived from the virtual channel.
"The number of gold investors has been growing faster and faster, with many younger people entering this market," Mr Tanarat says. "Those under 18 years old are allowed to invest, but only on the condition that they have their parents' consent to open a gold bar trading account.
"Online is another turning point of our business, as it allows customers to trade around the clock in accordance to global real-time prices. It also helps them reach investment-related information at a greater length."
Some 15% of the company's trading business comes from the after-midnight trading session.
Another strength of developing an online trading channel and social media presence is new market reach. Hua Seng Heng Group has managed to penetrate provincial markets in Buri Ram and Chaiyaphum for the first time.
The group set up an analysis team to prepare a one-stop service for online customers, plus a specific team to deal with customers reaching out through Facebook.
The group is in the process of developing artificial intelligence and chatbots to help customers manage risks and act as a shortcut for the account opening process.
Mr Tanarat says senior customers can learn new technology rapidly, with some of online customers starting to request more complex services such as technical analysis tools or analysis reports.
"As the online channel has contributed a significant portion to revenue, IT, internet trading stability and cybersecurity are among our key cornerstones to ensure service quality," he says.
Being the country's largest gold importer for decades, the group started to expand its business overseas by developing human resources and setting up business operations in Singapore in 2013 through Hua Seng Heng Singapore Pte Ltd.
The group has been dealing with gold banks in Singapore for a long time to hedge and cover positions for Thai customers -- and it was the right timing to expand its role as a local gold bank into a foreign market, Mr Tanarat says.
"We plan to grow conservatively through organic growth, without incurring debts and affecting our businesses and customers in Thailand," he says pointedly.
The group's Singaporean operations have seen active trading volume this year, supported by investors' risk-off sentiment around the globe amid rising uncertainty about public health and the economic growth outlook.
BIO DATA
Tanarat Pasawongse
Age: 45
EDUCATION
- Bachelor of Science, industrial engineering, University of Washington
- Master of Business Administration, Sasin Graduate Institute of Business Administration, Chulalongkorn University
CAREER
- 2014-present: Chief executive, Hua Seng Heng Group of Companies
- 2009-14: Managing director, Hua Seng Heng Commoditas Co Ltd
- 2008-14: Managing director, Hua Seng Heng Gold Futures Co Ltd
- 2004-08: Deputy managing director, Hua Seng Heng Goldsmith Co Ltd
- 2003-04: Managing director, Appworks Co Ltd
FAMILY
- Married with two children
HOBBIES
- Tennis, reading travel books