King Power keen to grow within Asia
King Power Group, the country's sole duty-free operator, plans to spend more than 8 billion baht on its first business expansion abroad.
King Power chairman Vichai Srivaddhanaprabha wants to expand his duty-free business to Japan, Myanmar and Vietnam.
It will initially invest in two Asian countries: Japan, where most of the 8 billion baht will be spent, and Myanmar, for which it has a 100-million-baht budget, chairman Vichai Srivaddhanaprabha said.
The two international duty-free shops are expected to open next year.
"The number of international flights and the number of foreign tourist arrivals are key factors for King Power to make an investment decision outside Thailand," he said.
Japan is a popular destination for both Thai and Chinese tourists.
"Every country wants to draw Chinese travellers since they're high-spending shoppers," Mr Vichai said.
King Power estimates spending by Chinese travellers at its duty-free shops at 30 billion baht, making up more than half the group's revenue.
In Japan, King Power will work closely with major travel agents, while its presence in Myanmar will involve joint ventures with local investors.
Whenever King Power gets the right partner in Japan, it plans to open its duty-free outlet right away.
In the past, the obstacle to expanding business abroad was a labour shortage, not money, Mr Vichai said.
Today the group has 9,000 employees and will soon have 10,000 with the opening of a downtown duty-free complex in Phuket.
King Power will send 20 skilled workers from Thailand to supervise and train local staff for foreign outlets.
The group sees potential to expand its duty-free business in Asean. Apart from Myanmar, Mr Vichai is also interested in entering the growing tourism market of Vietnam.
Last year, group revenue grew by 25% to 68 billion baht.
Mr Vichai expects revenue will increase by another 25% to 85 billion baht this year thanks to the new duty-free outlets in Phuket and the growth in foreign traveller numbers.
King Power is optimistic about the purchasing power of Thai travellers. Revenue from Thai travellers at its duty-free outlets was 9 billion baht or 20% of last year's total.
Meanwhile, Visa and MasterCard have revealed Thai tourists spent 70 billion baht abroad in 2015.
With that in mind, King Power is confident the Thai market will grow.
Although some new players are making an effort to enter the duty-free business, Mr Vichai brushed aside such worries, citing his 26 years in the segment.
"Doing duty-free business requires location, connections and trust from suppliers," he said.