CP Group targets reorganisation, expansion
Opportunities seen internationally
published : 2 Sep 2021 at 04:57
newspaper section: Business
writer: Post Reporters
Charoen Pokphand (CP) Group, the country's biggest agribusiness conglomerate, has vowed to rapidly expand the number of its retail and wholesale stores in the region, including cash-and-carry stores operated by its SET-listed subsidiary Siam Makro Plc, as well as other formats within the CP Group.
"Retailing is a global opportunity for Thailand and a sector where we can be successful on the international stage. It is a vision shared by our retail and wholesale businesses," said Suphachai Chearavanont, chief executive of CP Group and chairman of Siam Makro.
CP Group's retail and wholesale businesses are already present in China, Malaysia, India, Cambodia and Myanmar under multiple brands and multiple formats with 337 stores.
"Succeeding in complex global markets requires great speed in decision-making. To enhance our ability to move fast, several of our retail businesses have resolved to reorganise and reduce some layering within the group," said Mr Suphachai.
"A proposed reorganisation, pending various shareholder approvals, will cut layering down and result in Siam Makro becoming the parent company of CP Retail Development Co.
"These changes will streamline decision-making and, among other benefits, give Siam Makro and Lotus the agility to succeed in the international arena."
Suphachai: Agility to succeed
In a strategic move to support its international ambitions and other plans, Siam Makro directors said at an extraordinary general meeting in mid-October they would propose increasing Siam Makro's registered capital to 5.58 billion baht from the current 2.4 billion.
This would be realised by issuing up to 6.3 billion new ordinary shares with a par value of 0.5 baht each, of which 1.36 billion would be allocated for a public offering.
"We want to invite the public to join us in this exciting international growth journey and are offering a bigger part of the business for public participation," said Suchada Ithijarukul, chief executive of Siam Makro.
"Siam Makro aims to double the percentage of its public ownership from the current 7% to be over 15%, while CP Group's shareholding will be reduced from 93% to around 85%."
According to Mr Suphachai, the structural streamlining initiatives of the various companies do not affect the operations of Siam Makro or any other operating company.
"All staffing, management, day-to-day work, the business format, the positioning, target customers, and suppliers will remain and operate as before. There will be no personnel changes and also no changes to the controlling shareholders of the operating companies as a result of these actions that are still subject to shareholder and other approvals," said Mr Suphachai.
'PLATFORMS OF OPPORTUNITY'
According to Mr Suphachai, the various structural initiatives advancing the group's international footprint will also support the recently announced 'Platforms of Opportunity' strategy to strengthen Thailand's competitive position in the post-pandemic global economy by building a stage on which other Thai companies and products can maximise their potential.
"We want our retail operations around the world to serve as a platform from which tens of thousands of Thai smallholder farmers, manufacturers and SMEs can present their products in international markets," he said.
"Creating more retail outlets for Thai products in global markets, especially for fresh foods and agricultural produce, is an essential part of realising Thailand's dream of becoming a 'Kitchen of the World'," he added.
"Our stores will act as a pipeline through which many other smaller Thai enterprises can flow into new markets, together with their produce and products, growing their businesses, and adding resilience to ours."
One of the big challenges faced by Thai growers and manufacturers in entering international markets is the difficulty of getting into another country's distribution system.
The systems often favour established brand names and produce from traditional suppliers, and there may also be many middlemen affecting Thailand's competitiveness.
"We have to use our stores to enable consumers in overseas markets to be exposed to more Thai products. From there, it will be up to the products' performance, pricing and marketing to nurture their ongoing presence," Mr Suphachai said.
"We can also assist Thai growers, SMEs and manufacturers in getting a fuller understanding of the complex local regulations in a foreign market that are difficult to navigate from here in Thailand, and this will help remove another obstacle for Thai brands and Thai suppliers."
Thailand has earned recognition in international retailing by winning top awards from respected global retail associations for innovations as well as owning landmark retail outlets in many countries, but its presence is still small when set against the international giants of retailing.
"In retailing, having scale is one of the most important contributors to success," Mr Suphachai said. "There are huge global retail corporations. The largest two retailers in the world each register more sales than the size of Thailand's entire economy. For Thai retailers going up against these giants on the world stage, it is a tough challenge."
"By collaborating with many other Thai businesses, simplifying our organisation, and moving forward purposefully with sufficient financial resources, I am confident Thailand will have a relatively large and important overseas distribution network in the near future," he said.
Mrs Suchada said that Siam Makro has played an important part in supporting professional customers in Thailand, especially small operators, mini-marts, and the hotel, restaurant and catering sector, for more than 32 years.
She said that this relationship was based on Siam Makro's emphasis on high food quality and safety combined with the right assortment of great value packaged products and fresh produce.
"We are fully committed to supporting our professional customers even better in the years ahead as their trusted partner," she said.
"The accelerated international expansion of our business in the future will also provide our SME suppliers of fresh produce, packaged goods and other products with significant, new growth opportunities and we look forward to that prospect with excitement."