Some businesses just don’t work out: Saha Group chairman’s story (19)

Boonsithi Chokwatana is chairman of Saha Group, Thailand’s leading consumer products conglomerate. This is part 19 of a 30-part series.

Saha has grown through collaboration with many Japanese companies. So far, I have mainly discussed those that were successful, but of course some did not pan out. I would like to discuss a few examples that did not go as planned, if only to admonish myself.

When I went on a business trip to Japan in the late 1960s, I spoke with Yuji Naito, the president and a member of the founding family of Eisai, a pharmaceutical company.

“I’d really like to expand our business into Thailand,” he said.

At that time, the Thai pharmaceutical market was dominated by European and American companies, and Eisai were having difficulty in making inroads. Saha’s detergent and cosmetics businesses were doing well. We thought we could replicate our success in pharmaceuticals, I said yes to Eisai’s proposal and set up a sales joint venture in 1969.

We started importing gastrointestinal medicines and painkillers, but they differed in important ways from the daily necessities we were used to handling. For example, it took a vast amount of time and effort to get government approval for drugs. Eisai was hoping to leverage Saha’s strength in sales, but we did not have any expertise in selling these products. Unfortunately, the tie-up also coincided with a boycott of Japanese products.

If things had continued, we would have caused more trouble for our partner. With that in mind, we bowed out of the project and the joint venture was dissolved after a few years.

Saha later reentered the pharmaceutical industry by acquiring a Thai company that had gone bankrupt, but the project with Eisai was a bit premature. I think that was the first time we dissolved a joint venture with a Japanese partner and it remains a bitter memory.

We also started a beef-bowl chain with Yoshinoya in 1995. When I was in Osaka, I mentioned that sukiyaki was my favorite dish. When I later visited Japan again, I had a beef bowl at Yoshinoya and thought it was delicious. Later the Japanese fast food chain approached us, and we decided we could make it work in Thailand.

The first store opened in a shopping center in Bangkok. However, reality was not as sweet as the seasoning of the beef bowl.

At that time, income levels were still low in Thailand and eating out was not widespread, except for food stalls. In addition, Thai Buddhists have a deep-rooted belief in the bodhisattva Avalokitesvara, and many Thais do not eat beef, as cows are believed to be the reincarnation of Avalokitesvara’s father. People also tended not to eat beef because cattle are draft animals used in farming.

We opened five or six stores and felt that it was very tough. The Asian financial crisis of 1997 was the last straw. The baht plummeted, and the cost of beef imported from the U.S. and Australia soared. When our partner asked to pull out of the arrangement, I knew we had no choice.

The joint venture ended after just three years.

These days, more and more people prefer to eat beef. Yoshinoya reentered the Thai market in 2011, this time in partnership with distribution giant Central Group. In that sense, our beef bowl chain was just ahead of its time.

In contrast, we seemed to have been a bit slow when it came to setting up karaoke chain Big Echo, which we did in partnership with Japan’s Daiichi Kosho. The first shop of two opened in Bangkok in 2002.

Karaoke was always seen as a nightclub activity in Thailand, but karaoke “boxes” let family or friends enjoy singing together, and even meals. We correctly predicted that they would be a hit in Thailand and we drew many customers.

However, when we considered shifting from laser discs to karaoke on demand, which was already widespread in Japan, Daiichi Kosho told us that it would be difficult to provide on-demand music in Thailand. But without new music, the company was unable to attract young customers. Our joint venture ended in 2013, but it might have developed into an interesting business if it had continued.

So in a sense, the experience of failure is also a valuable asset for us. Japanese companies rely on Saha’s sales and information capabilities, so we have tried our best to meet their expectations. But when we hit a wall, we need to work together to solve problems.

In general, I think that if the Japanese people sent to the joint venture come with a sense of “founding spirit,” the chances of success increase.

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.


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