“We welcome and are happy with Thailand’s direction to transform into a digital economy,” Joseph Hong, managing director of Bosch in Thailand, told The Nation.

Following the global trend, Bosch is going with the so-called three “S” strategies – sensors, software and services. These are the key components for a “simply connected” strategy.

In addition to this, Hong added that his company was one of the leaders in making micro-electromechanical systems (MEM) sensors, which allowed the reading of many things and was a component enabling interconnectivity.

“Actually, three out of four cellphones in the world have Bosch’s MEM sensors inside and they are being connected to everything,” the Bosch executive explained.

The company’s software is designed to get input from sensors and then analyse the collected data. For example, customers can check the temperature in a house by using the sensors installed inside home appliances that are connected to a smartphone.

“To link all data and analytic systems together, we also have our own cloud-computing system called Bosch Internet Cloud,” he said.

Bosch’s three “S” components are core elements of the company for the Internet of Things.

The Bosch boss acknowledged that Thailand was in the early stages of adopting these new technologies but it was good news to hear the government announce that it wanted to drive the country into a digital economy by encouraging all business sectors to get involved with this new development.

“For us, it’s very encouraging because it matches our strategies and we are looking forward to working with Thailand 4.0,” he stressed.

In order to sustainably accelerate growth, the government has to make sure that the legal regulatory framework and security measures are ready for fully implementation in the digital economy.

Smart mobility is an example. He said that future transportation might be about driverless vehicles. So his parent company in Germany is developing automated driving based on the Tesla Model S equipped with Bosch sensors to ensure driving safety for passengers.

The company aims to create automated valet parking in 2018 while it expects to launch autopilot in the near future.

Hong questioned who would take responsibility if an accident happens after the new automated driving was put in place.

Apart from smart mobility, Bosch is also talking with its industrial customers who are interested in entering into the industrial 4.0 sphere.

Why the need to become a smart industry?

The executive of Bosch said that industrial 4.0 would enable manufacturers to increase their production efficiency and reduce costs in order to maintain their competitiveness.

Given the advantage of the Internet of Things, machines can talk to each other and can read through the conditions between components to determine whether some parts could fail. After that, the system will suggest to the manufacturer about required maintenance.

In line with this, the machines are able to track an inventory in order to find a way to reduce waste or materials.

Despite having a low unemployment rate, Hong said Thailand would face the same challenges of an ageing society in the near future like other countries.

“Availability of manpower, particularly in countries with ageing societies, is very important. Therefore, factory automation and smart technology for manufacturing become very important as we do not have enough labour anymore to do manufacturing work,” he explained.

Another area where the company is putting more focus on is smart homes but it will depend on market acceptance.

For smart homes, he said millennials had to accept this concept and feel comfort about using this new technology as well as other new products and services.

 

 

The company last week officially became the first manufacturer of industrial-grade steel products in Myanmar, being one of 20 factories in Thilawa SEZ which have started commercial operations, from a total of 78 companies having purchased land in the zone.

“JICA [Japan International Cooperation Agency], the World Bank and the ADB [Asian Development Bank) have a number of plans for Myanmar,” said Aye Thiha, president of the company, which is a 45:45:10 joint venture between Millcon Steel, General Engineering (GEL) and Yangon-based Thiha Group, respectively.

“We also eye supplying our products to factories in the SEZ. If they all start construction work now, demand will be huge,” said Sittichai Leeswadtrakul, president and chief executive officer of Thailand’s Millcon Steel.

According to the Royal Thai Embassy in Yangon, Myanmar’s construction industry is expected to experience an average annual growth rate of over 10 per cent from now until 2020.

In a paper released in June, the ADB estimates Myanmar will need US$45 billion to $60 billion (Bt1.6 trillion-Bt2.14 trillion) worth of investment in transportation projects over the next 15 years.

To the executives, Millcon Thiha GEL has made a great achievement in commencing operations after a seven-month delay.

Next year, the plant, which required a $16-million investment and employs 60 workers, will be churning out 40,000 tonnes of steel pipes and fabricated products.

While 75 per cent will initially be exported to Thailand, 100 per cent of the output is targeted to be sold domestically by 2018 at the latest.

The bright future for the joint venture is warranted, Sittichai said, highlighting the natural barriers to entry that include low-skilled labour and unclear regulations.

Located in an export-oriented zone, the facility now enjoys seven-year waivers of corporate taxes, import duties on raw materials and machinery, and commercial tax.

Shifting later to satisfy domestic demand, it will be liable to Myanmar’s 5-per-cent commercial tax, but a lot of money could be saved in other respects if no product has to be shipped overseas, the CEO said.

An advantage of being the first-comer in the sector is that the company can build up a strong relationship with wholesalers, Aye said, adding, “People don’t change suppliers often.”

Having put an enormous effort into solving licensing ambiguities over the past two years, its main challenges now are in the training of labour and know-how transfer, in order to ensure industrial-standard products are made in a country where no steel standard exists.

Meanwhile, the three partners are also looking for new business opportunities.

Steel-pipe demand in a country where the use of wood remains more popular is still low at around 20,000 tonnes per annum, but more high-rise buildings could spark demand for fabricated products that could shorten the construction period.

“In Thailand, with fabricated products, we can finish a 32-floor building in 13 months. Here, with the same height, it takes some three years [using traditional methods]. Our products could be a fast and cheap answer,” said Thitipong Tangpoonphonvivat, chief executive officer of GEL.

To Sittichai, the new plant is a crucial part of Millcon Steel’s plan to shift focus from commodity steel to value-added products.

Aside from Myanmar, it is exploring possibilities in putting up plants in other CLMV (Cambodia, Laos, Myanmar and Vietnam) countries to manufacture commodity products, while the plants in Thailand – including one in partnership with Japan’s Kobe Steel – will focus more on specialised steel products, he said.

The goal is to raise revenue from value-added products from about 10 per cent now to 40 per cent in 2020.

“The grand opening today [of Millcon Thiha GEL] is part of our success in inviting Thai investors here – and we hope to see many more,” Chainarong Keratiyutwong, charge d’affaires of the Royal Thai Embassy in Yangon, said at a ceremony attended by Myanmar and Thai guests.

Petch Osathanugrah, chairman of the executive board and chief executive officer, said Osotspa had been working to improve its organisational management systems while moving towards the goal of becoming Thailand’s best consumer-products company.

It is doing this in three significant areas. First, it is striving to become an organisation that focuses on enhancing the well-being of consumers and society by offering an array of high-quality products made using advanced manufacturing innovations. Second, it is building an organisational culture that adheres to best practices. The third priority is good governance by operating its business based on international regulations and standards.

“Osotspa is marking our 125-year history during a time of significant change in both the domestic and global economies, along with increasing competition and higher expectations from stakeholders including shareholders, executives and employees, customers, business partners, and society,” Petch said.

“We are committed to making continuous improvements to achieve excellence in each and every aspect of the company. This includes enhancing our business-management capabilities; delivering a diverse range of high-quality products; implementing advanced technology systems; reinforcing our organisational culture and developing our staff’s personal skills and potential; becoming a learning organisation; and adhering to transparent administration based on international principles of good governance.

“These improvements will ensure Osotspa is administered effectively and is capable of extending and enhancing the competency of our business operations for sustainable long-term growth.”

Osotspa president Wannipa Bhakdibutr said that to reach its goal of becoming the best consumer-products company in Thailand, it was making major changes in eight key areas.

It is improving its business structure to enhance efficiency through the use of advanced technologies for management. It is taking a new approach to managing the company’s brand portfolio to match the requirements of consumers and customers.

It is implementing organisational resource information management to increase the effectiveness of customer and consumer services.

It is reinforcing the strength and competency of its business operations in terms of data management and retail and digital marketing.

It is integrating and restructuring manufacturing administration for more efficient cost management while improving operational procedures and supply chain systems.

It is becoming a learning organisation by enhancing the knowledge of executives and employees.

It is developing its workplace for a more positive and pleasant atmosphere and environment.

Finally, it is promoting safety among employees in its offices and throughout its operations to reduce accidents in the workplace.

“Although Osotspa remains a leading producer and distributor of energy drinks, with several brands in the consumer-products category, the company will continue to focus on developing and enhancing our operational excellence to ensure we can deliver a wide range of products with uncompromised quality and services for customers and consumers, which will provide a solid foundation for Osotspa’s future business expansion,” Wannipa said.

Napat Chareonkul, managing director of the firm’s lifestyle group, said his company was going in the right direction. It currently has eight developments in operation, which are expected to earn Bt2 billion in revenue this year, an increase of 11 per cent from 2015.

The eight projects are Asiatique The Riverfront, Gateway Ekamai, Pantip Plaza Pratunum, Pantip Plaza Ngamwongwan, Pantip Plaza Bangkapi, Pantip Plaza Chiang Mai, Centerpoint of Siam Square and Box Space Ratchayothin.

During the first five years of the plan starting in 2017, the company will focus its investment on retail business development in Bangkok with five flagship brands, namely Asiatique The Riverfront, Pantip, Gateway, Centerpoint of Siam Square and Box Space.

Napat said that during this development period, the company would launch the second phase of Asiatique The Riverfront, which will include an 800-key five-star hotel, a convention centre and shopping mall; Gateway Bang Sue; Gateway Rama 2; the second phase of Centerpoint of Siam Square; and Box Space Bang Na.

After that, the company plans to branch out the Asiatique model to other key tourism destinations such as Phuket, Chiang Mai, Hat Yai and Udon Thani. Each location is expected to occupy at least 50 rai (8 hectares).

“The investment on those existing brands is expected to be at least Bt20 billion, excluding land,” he said.

The company also plans to create a new brand for 30 provinces. Under this new business model, the company will join forces with partners including Big C Supercenter to turn this plan into reality.

He did not disclose further details about this new project but revealed that the total new investment should be more than Bt20 billion.

“There is more room to grow in the provinces, particularly after the implementation of the Asean Economic Community early this year,” he explained.

Once all 29 new projects are developed, the total area managed by the company will rise to 650,000 square metres from 170,000sqm now.

Asked about the firm’s overseas expansion, Napat said that the company had been in talks with potential partners but not finalised any deals yet. Expansion outside Thailand might be through joint-venture, consultation or management agreements.

Besides establishing new outlets, the company is putting emphasis on marketing activities as well as upgrades of existing |projects to boost visitor traffic| and sales revenue.

Manop Kumsawang, general manager of Asiatique The Riverfront, said that in the near future, new highlights such as the re-creation of a royal vessel from the reign of King Rama V would be constructed nearby. Asiatique will host a series of cultural events next year to attract both local and international travellers.

Veerarit Somboonsub, general manager of Pantip Pratunam, said its marketing budget would be doubled next year after a major renovation was completed this year.

Premin Lenoraset, general manager of Centerpoint of Siam Square, said that next year her mall would launch new pop-up stores and zones to encourage shopper traffic.

In 2017, TCC Land Asset World expects revenue of Bt2.3 billion, an increase of 15 per cent from Bt2 billion this year.

So far it has exported only soap made of natural ingredients under its brand Skin a day. The company will use this brand only for all its export products.

One of the company’s two co-founders and managing director Kasitpat Chinudomporn, 36, said that now Tan was looking for Asian partners to help distribute its products in other Asian countries.

“This is the first step to tap the international markets and we’ll try to expand to other countries, such as Vietnam, Indonesia, and Myanmar,” he added.

Kasitpat or “Ham” graduated with a bachelor’s degree in engineering from Mahanakorn University of Technology. He started up his own businesses when he was studying, ranging from an Internet cafe and CCTV sales, to a coffee cafe.

Kasitpat and his high school classmate Virunputt Tiradapongpisarn, who graduated with a degree in chemistry from Kasetsart University’s Science Faculty, co-founded Tan Laboratory Co in 2009 with a joint investment of Bt1 million. Their idea was to produce the skin-care products from natural ingredients to cater to Asian complexions.

With her chemistry knowledge, Virunputt, 36, conducted research and development to produce facial and body skin-care products, which have obtained approval from the Thai Food and Drug Administration (Thai FDA). The company has wholesaled the products on an OEM basis to the small hotels, spas, traditional massage shops, and online cosmetic shops.

“We started with the wholesale business as we have no experience in a retail business,” Kasitpat said.

Later the company expanded its product line to produce soaps made of Thai fruits to tap customers who favour cosmetic products made of Thai fruits.

Early this year the co-founders brainstormed a plan to start exporting products to Asian markets. They joined a Department of Export Promotion road trip to China in a bid to seek business opportunities in the massive market.

One month after coming back from the trip, Chinese people, who had bought the company’s soap range made of fruit at their booth, contacted them and that resulted in six contracts to export the products to China.

Kasitpat said that then the company created the Skin a day brand, which would be only be exported because the company did not want it to compete with the brands of its Thai customers whom it supplies products on the OEM basis.

After securing the deals in China, the company expanded the production capacity of its small factory to cater for the rising number of orders.

When Deng Xiaoping, who had fallen out of favour during the Cultural Revolution, returned to prominence as China’s supreme leader, he designated this fishing village a special economic zone and made it a model district for introducing foreign investment.
Many foreign companies viewed the Shenzhen special district skeptically, but I figured Deng could be trusted. Even before the Cultural Revolution, he had demonstrated a pragmatic way of thinking about the economy that did not rule out the role of the private sector. When I returned to China in 1979, I immediately sensed that the people were desperate for a better, more prosperous life. This convinced me that China would never return to the path of the Cultural Revolution.Open playing field
In 1980, the Chinese government formally designated the four cities of Shenzhen, Zhuhai and Swatow (Shantou) in Guangdong province and Amoy (Xiamen) in Fujian province as special economic zones. My father had long run a farm in Swatow and had many friends among the local officials. Many of these officials lost their positions and influence during the Cultural Revolution, but were soon restored once it ended. Among them was a senior official in the Guangdong provincial government. It was at his personal residence in Guangzhou that we held negotiations for setting up a joint venture.
A joint venture was established between Charoen Pokphand Group and Continental Grain of the US. The first two of the four Chinese characters for the joint venture’s name were taken from the seed store -Chia Tai – that my father had founded in Bangkok. Since then, the Chinese word for Chia Tai Group has been the name we’ve used for CP Group in China.
In short order, China issued a certificate permitting us to invest in Shenzhen, bearing the number “0001.” In other words, we were the very first foreign company to move into Shenzhen. In 1981, we started operating a feed plant there. Near the plant, we built chicken and hog farms and began to set up the same kind of vertically integrated production we had in Thailand.
In Swatow, too, the Chia Tai Group became the first foreign investor. There we built a carpet factory, because Chinese hotels had a shortage of carpeting, and we eventually expanded the business into Guangzhou and Zhuhai.
In Shanghai, the largest commercial city in China, our business negotiations did not move forward right away. We tried to explain to the mayor at the time, Wang Daohan, how a single farmer in Thailand could raise 10,000 birds, but words were not enough. Knowing that seeing is believing, we invited Shanghai’s deputy mayor and other officials to Thailand.
When the group of Shanghai officials arrived at Bangkok’s Don Muang Airport, they were startled – it was several times larger than their airport back home. Moreover, the roads were filled with automobiles. While China had been stagnating during the Cultural Revolution, Thailand had been reaping the fruits of economic growth.
The officials were unable to hide their astonishment. “We thought Thailand was a backward place,” one said. “We were obviously wrong.”
Once we showed them that a single farmer really could raise 10,000 chickens, several nights of negotiations immediately followed. It was decided that our poultry production system would be introduced in Shanghai, and that chicken and hog raising, as well as meat processing, would begin in the city.
After Shanghai, the Chia Tai Group entered the farming regions of Sichuan provinces and three provinces in the northeast, becoming one of the largest feed producers in China.
Chia Tai Group brought vertical integration to China, and local companies were quick to imitate not only our modern production methods but also our cutting-edge technology. In a short period of time, China’s production of feed, chickens and hogs expanded and became more efficient. In this way, CP Group helped spur the advancement of Chinese agricultural technology.
Before China opened its economy and began introducing reforms, its people could only eat eggs and pork if they saved up enough ration tickets. Now they can easily get their hands on these and other foods.
Private-sector companies accomplished what people’s communes and state-owned enterprises could not.

Dhanin Chearavanont is chairman of the Charoen Pokphand Group.
This is the 18th of a 30-part series of “My Personal History” by Dhanin Chearavanont.
Reprinted with permission from The Nikkei Asian Review.

The chemicals business unit of Siam Cement Group (SCG), one of Asean’s leading industrial conglomerates, is currently showcasing the new products – a “next-generation” high-density polyethylene (HDPE), and CIERRA, a functional material – at “K 2016”, an international trade fair being held in Dusseldorf for the plastics and rubber industries.
Today is the final day of the event, which opened its doors on October 19.
President Cholanat Yanaranop said SCG Chemicals was gearing up to launch the new HDPE – a result of the company’s R&D collaboration with its Norwegian research arm, Norner – late next year or early 2018.
CIERRA, which is a result of its collaboration with Oxford University in the United Kingdom, is expected to be launched towards the end of 2018.
SCG expects CIERRA to create a “big bang”, due to its wide variety of possible applications and potentially huge markets, he said.
The material has three main applications: anti-microbial, flame retardant, and controlled permeability for barrier packaging and film.
“If we can get into the right business models, it [CIERRA] can bring in tens of billions of baht in sales revenue,” he added.
Timothy McCaffery, 38, former executive at a global specialty chemicals and performance materials company, was recruited in June to spearhead SCG’s new business under the title of global business director for New Materials and Technology.
He said the company was using the “K 2016” event to find potential partners to help it bring CIERRA to global markets.
The potential market for CIERRA in the flame-retardant segment is in the tune of “a billion US dollars”, while for packaging it is “tens of billions of dollars”, and for the anti-microbial segment, “hundreds of millions of dollars”, he suggested.
Cholanat said CIERRA, thanks to its better properties, could replace aluminium foil in the packaging market and silver nano in the anti-microbial |market.
Similarly, SCG believes its new HDPE will create a big impact on the petrochemical industry, and that it will help lift the company into the world’s top-three polyethylene (PE) producers in terms of value in the next four to five years.
Packaging film will be a major application of the new HDPE, in addition to PE pipe, for which SCG is already one of the world’s top five manufacturers.
SCG is redesigning and modifying its HDPE plant at Map Ta Phut, in Rayong province, to make half of the facility’s 800,000-tonnes annual capacity capable of producing both old and new HDPE resins – at a total investment of less than Bt1 billion.
It expects to manufacture 10,000 tonnes of new HDPE in the first year, and to reach full 400,000-tonnes capacity within the next four to five years.
CIERRA is part of SCG Chemicals’ drive into non-petrochemical businesses.
Besides functional materials, the company has also diversified into industrial-solutions business, including robotics, design solutions, consulting, factory maintenance, reliability and overhaul service, and eco-innovation.
Cholanat said non-petrochemical businesses were expected to contribute as much as one-third of SCG Chemicals’ revenue in the next five to 10 years, thus helping it to offset the cyclical nature of the petrochemical industry.
The president added that he was quite certain SCG Chemicals would be able to increase its R&D budget from 1.6 per cent of sales to 2 per cent in the next two or three years. It also expects to have more than 140 new patent applications this year, compared to just 40 a few years ago.
SCG Chemicals expects to book revenue of Bt180 billion this year.
Earnings before interest, depreciation and amortisation totalled Bt30.42 billion during the first half, up 43 per cent from the same period a year ago.