Chinese and South Korean companies: Saha Group chairman’s story (28)
Boonsithi Chokwatana is chairman of Saha Group, Thailand’s leading consumer products conglomerate. This is part 28 of a 30-part series.
I have so far looked back on the Saha Group mainly through our collaborations with Japanese companies. Now I would like to shift the focus to our cooperation with South Korean and Chinese businesses, although we have not had so many joint venture deals with them.
Our relationship with South Korea’s Samsung Electronics traces back to my hobby of flying small aircraft. As readers may remember, I belonged to a club of flying enthusiasts in Sriracha, southeast of Bangkok. The son of the club’s leader was working for the Thai office of a Samsung group trading company back in the 1980s.
This person told me his company wanted to sell 14-inch picture-tube TV sets — the top selling segment in Thailand — in our country, but had not received government permission. It appeared the government had reasoned there was no need to allow entry by any more foreign home appliances makers because many Japanese manufacturers, including Toshiba and Sony, had already entered the Thai market. To help out, Saha agreed to apply for approval on Samsung’s behalf, setting up a company owned equally by Saha and Samsung.
At that time, however, Samsung was not the company it is today. Its products, be it TV sets or washing machines, were typically cheap, low-quality products. Saha took on the role of selling them, but customer complaints rate rose as high as 30% at one point. Because these complaints risked harming our reputation, we repeatedly asked Samsung to improve.
When the Asian financial crisis hit in 1997, we lowered our stake in the company from 50% to 10%, as we no longer had the capacity to support the investment. Samsung thus began handling sales of their products on their own.
The remarkable success of Samsung thereafter needs no retelling here. Its products are more popular in Thailand today than Japanese products, and we now receive more dividends than when we owned 50% of the joint venture.
One thing that came as a shock to me when we began working with Samsung was how South Korean corporate culture differed from that of Japan. South Koreans were “businesslike” in everything. For them, emotional elements, such as close personal relationships and long-standing relationships, had no place in business.
I had met former Samsung Chairman Lee Kun-hee, who led the company’s growth and died last year, only once. And to be honest, I do not have a good impression of the experience.
After the launch of the joint venture, I set up an opportunity for Lee, who was visiting Thailand, to meet my father, Thiam. We were having a meal together, but his subordinates did all the talking, while Lee remained silent. Also, when I visited the Samsung headquarters in Seoul some year later, he did not show up to meet me. From these bitter experiences, I do not bother to come out and meet South Korean executives assigned to Thailand when they visit our office to greet us.
Meanwhile, in 2004, we signed a tie-up deal with the Anbao group, a Chinese paper packaging company. When I visited their plant in China with Thai President Foods CEO Pipat Paniangvait for a tour of a facility, we were consulted about their plan to set up shop in Thailand. We subsequently set up a plant under a joint venture with Anbao.
I think Japanese instant noodles back then were typically packaged in Styrofoam containers, but in Thailand, plastic containers had been the packaging of choice for a long time because Styrofoam was more expensive.
Anbao had a technology to manufacture double-layered paper containers that had excellent insulation. Their products were easier and cheaper to mass-produce than plastic. Thai President Foods thus became the first in Thailand to introduce paper containers.
Anbao is about the only Chinese company that we have teamed up with in recent years, which may come as a surprise considering that I am an ethnic Chinese, but it is only recently that Chinese companies began entering the Thai market.
Charoen Pokphand Group, another ethnic Chinese-led conglomerate in Thailand, was quick to enter the mainland Chinese market and expand there, but Saha did not have many Chinese-speaking staff for such an endeavor. Still, China is no doubt an attractive market. We will need to think about operating in the country if we can find a good partner.
I have always felt that Japan has a culture similar to that of Southeast Asia, compared with South Korea or China, in that Japanese attach importance to establishing trust with their business partners. Still, quick decision-making is an attractive advantage for Chinese and South Koreans.
The Japanese currently give me the impression that they are in a “defensive” mode, but Chinese and South Koreans are patently “on the offensive.” Although we will, of course, maintain close relationships with Japanese companies, it just might be that we will have more opportunities to choose Chinese or South Korean companies as business partners in the future.
This column is part of The Nikkei’s “My Personal History” (“Watashi no Rirekisho”) series of autobiographies. The series first appeared in The Nikkei in 1956. Since then, a wide variety of world-changing individuals have written or dictated their life stories for publication.