Hiroyuki Suzuki, president of Toto (Thailand), said the Thai unit aimed to increase the proportion of domestic sales from less than 20 per cent of the total to 30 per cent by 2020.
Although currently running its sanitary-ware plant at full capacity, the company has no plan to increase its production capacity but will instead reducing its exports to make way for more local sales.
“It is Toto’s policy to have local production to serve the local market. Even when we meet the 30-per-cent [local sales] target, we will still not have to expand production capacity,” he said.
At present, Toto (Thailand) makes 60 per cent of its sales revenue from its exports to Japan, 15 per cent from the United States, and about 5 per cent from Europe.
Thanks to a Bt2-billion investment made prior to its takeover of the local operations from Siam Cement Group in October 2013, Toto has a sanitary-ware production capacity of 540,000 pieces per year.
“We have to see how the US and Japanese markets grow. And Toto Vietnam is constructing a new factory. Toto group has to consider Asia in the overall picture,” he said.
According to official documents on the Toto.com website, the Japanese company is building its third factory in Vietnam with a total investment of 9.7 billion yen (Bt3 billion). When completed in March 2018, the Hung Yen plant will have a capacity to produce 600,000 pieces of sanitary ware per year. The new Vietnamese market will also serve “other rapidly growing Asian countries”, according to Toto.
At present, Indonesia is Toto’s largest production base in Asia outside Japan, followed by Vietnam, whose capacity is already three times Thailand’s, Suzuki said.
He said Vietnam’s production costs were similar to Thailand’s but its wage costs were currently about half of the Kingdom’s. Nevertheless, Vietnam’s labour costs are rising by 20 per cent per year, and sanitary-ware shipments to the US from Vietnam will be subject to an import tax, while Thai products are not being taxed.
“Our sales in Vietnam are very good and thus we have to open the new factory,” he said, adding that Toto is now the No 1 player in Vietnam’s sanitary-ware market.
Suzuki said Toto’s separation from SCG was successful, since it is already making a profit and running its plant at full capacity. The company believes it has about 8 per cent of the medium-to-upper-end segment of the Thai sanitary-ware market, which accounts for about 30 per cent of the total market here.
Suzuki said Toto would seriously penetrate the Thai market this year and would launch a new product in April. It will also invest Bt20 million to renovate its Bangkok showroom to have a corner to display its state-of-the-art technologies.
“This year we will penetrate the market seriously, with a focus on enhancing our products’ appeal and to intensify our branding efforts. We’ve found some Thais who still think Toto is a bed sheet,” he said.
Toto aims to boost its sales in Thailand by 30 per cent this year, after growing by about 20-30 per cent in 2015.
“The parent company has high expectations for the Asian market. The top three markets that it has given the highest priorities are Thailand, Vietnam and India. That’s why we have to set a high target here,” he said.
Suzuki said that since an increasing number of Thais had been travelling to Japan every year, Toto believed many of them might have a chance to experience Toto products such as its signature washlets that are equipped with electronic toilet seats, and would love to use these products here too.
Toto recently won trust from |three high-end residential projects |- Saladaeng One, The Residence@Mandarin Oriental Bangkok, and NUSA Sriracha – to use its sanitary ware and other bathroom products in their projects.
