How can Thailand thrive in a world dominated
by China and India?
By Jon Fernquest[Introduction | Vocabulary | Article | Reading Questions | Answers]
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In today's article read about how Sarasin Viraphol of the CP Group envisions Thailand's business future.
Thailand already has valuable expertise in adding value to agricultural products, but it has to put this expertise to better use.
Plans need to be made now for Thailand's future participation in the vast markets of China and India.
You'll also learn about a new way to use tapioca that you may not be familiar with.
Reading Questions
Here are some questions to guide your reading (See answers at end):1. To find a market niche that will allow Thailand to compete with China and India in global markets, what does Thailand need?
2. What should the government's role in forming such a vision be?
3. Do China and India contain within them one economy or several? Why?
4. Has India's thriving IT sector been supported by good infrastructure?
5. What percentage of its food does China currently import? Will this remain the same in the future?
6. What markets does Thailand currently have more expertise in than other countries like China and India?
7. What business potential does Dr. Sarasin suggest for tapioca? (Read forward a couple of paragraphs)
8. Does the government put enough thought into promoting Thailand's expertise in agriculture, according to Dr. Sarasin?
9. What should Thailand do if it wants to become more competitive on global export markets?
10. What is China to the rest of the world?
11. What business opportunities are there in India for Thai companies?
12. What is holding back CP Group from expanding operations in Africa?
13. What is Dr. Sarasin's attitude towards bureaucracy in China?
14. What is an even greater problem than dealing with China and India's bureaucracies?
Bangkok Post Article: October 30, 2006
Contending with giants
Without a vision, Thailand risks falling behind countries in the race to carve out a place alongside China and India UMESH PANDEYThai businesses and government agencies should step up the effort to help create a niche for Thai industries to thrive in the globalised world; if not, the country could be left out in the cold.
"What we need is a purpose or a vision, and once you're confident about this vision you have to start to think about ways to execute it with the resources you have,'' says Sarasin Viraphol, a former diplomat and now an executive vice-president and adviser to the Charoen Pokphand Group, the country's largest agribusiness conglomerate.
The rapid and unstoppable rise of China and India as competitors in many sectors has executives in Thailand pondering how to maintain the momentum of their own business growth.
"We have lived though various periods in the past such as political and military power changes, but what's happening with India and China right now is an indication of what Thailand should be prepared for,'' Dr Sarasin cautions.
"It is frightening to see [other countries in the region] as it shows how they have progressed and we in Thailand are still with no vision and mission.
"If there are opportunities, then the government's job is to try to advocate ways to reach those markets and also, if possible, to support those who are venturing into these markets.''
While Thailand essentially has one economy, he says, countries such as China and India have a number of economies, old and new, in a single country. The old economy is mostly labour-intensive, and then there is a transitional economy that uses technology and expertise for the sake of exports. "You also have the advanced economy [in China and India] too, such as in technology.''
Dr Sarasin cites India as a good example of an economy where the IT sector has flourished despite the lack of even basic utilities in some areas.
"But all this is happening mainly because of globalisation, and a developing country with the vision to move forward can do all this, and this to me is a very powerful lesson for Thailand,'' he says.
"What China is doing today to develop itself could have very good implications for us, so long as we can clearly see the strategic niche we will be fine.''
Although China currently imports about 60% of its food items, in 10 years it could well become the food exporter to the world, Dr Sarasin believes. "Although Thailand claims to be strong in food business, this could pose a question for Thailand as to what [it wants to do] and where it wants to go from here.
"China today produces everything from needles to plans for manufacturing aircraft in the near future, so with all this Thailand and the private sector in Thailand have to question where it fits and what it wants to do in the future.''
For a start, Thailand needs to recognise the strengths it has.
"The agricultural sector is our forte and I can safely say that this sector in Thailand is far more advanced than those we see in China or India, and we are teaching people in these countries about the way we do things in this sector,'' he says.
Adding value to agricultural products is a demonstrated strength of Thailand. Making better use of tapioca to produce ethanol to cater to growing demand for energy in China would be a good start, says Dr Sarasin, since it would attract foreign direct investment and also help increase farmers' incomes.
"We cannot just focus on petrochemicals and other high-tech industries, but we are talking about more humble things such as food,'' he says. "The government doesn't think about all these issues.''
China, which imports 120 million tonnes of fossil fuel annually, is looking for alternative fuel sources and is seeking to shift away from production of ethanol from corn and sugar.
As a result, there is demand for non-grain-based ethanol and Thailand's tapioca resources fit the bill. China is already considering setting up an ethanol plant in Thailand and is ann opportunity worth seizing.
"This is a very simple example,'' says Dr Sarasin, stressing the need for self-assessment by Thailand of what it can promote in a globalised world.
Those looking to export tapioca, mangoes, natural rubber and other products for which Thailand is known can start by studying how to add value to resources in which the country is abundant.
"China has now turned into a huge global factory consuming 40% of the world's natural resources, the country is now proving to the world that it is not just the world's largest marketplace but also the world's largest factory,'' says Dr Sarasin.
India, on the other hand, is looking to open its agricultural sector to more input from other countries and Thai companies should take advantage of this. Opportunities to develop infrastructure in India are also plentiful.
"The opening up of the Indian market in the agricultural sector is inevitable and is only a matter of time,'' he says, adding that CP is ready to expand its presence in India as the need arises.
However, the biggest challenge CP faces in its various ventures across the globe is finding the human resources to expand its operations. Business potential in Africa, for example, is going untapped because of a lack of people skills.
Among the other challenges that companies moving out of Thailand have to face is bureaucracy in countries such as China and India. "All these problems are solvable. In a traditional western business sense they say that the Chinese bureaucracy is detrimental to businesses, but we find it the other way around,'' Dr Sarasin says.
Based on his long experience in China, he says Chinese officials at times are far more helpful in resolving problems, when approached in the right way.
"I am saying this because doing business with officialdom is not bad but on the contrary it is recommended. But it also depends upon the human relationship as well.''
The bigger problem, he says is to keep tab of the changing behaviour of Chinese and the Indian consumers in light of fast and robust growth in wealth and higher purchasing power.
"When we went in there (opening a Shanghai mega-mall) nine years ago, 'cheap' was the catchword, quality was secondary,'' says Dr Sarasin. "But today it is a different issue. The livelihood has changed as the strata have changed.''
Vocabulary
CP Group - Thailand's largest conglomerate founded in 1921, Charoen Pokphand Foods founded in 1978 grew into Thailand's largest agribusiness firm (See Wikipedia on Charoen Pokphand and Charoen Pokphand Foods)
contending with - dealing with and overcoming a problem
a vision - a long-term plan for what you would like your business to be in the future (See Wikipedia on Vision Statements and Mission Statements)
carving out a place - create a niche (see below)
step up the effort to - make more of an effort to, work harder to
create a niche for - create a market niche, create a specialised and secure market for oneself
agribusiness - a company that adds value to agricultural products (either in the production stage or later in processing or packaging)
a conglomerate - a large corporation that owns and operates several, often unrelated, businesses
to maintain momentum - to keep making progress, to keep a project moving forwards
to advocate - to argue for and support a change
a transitional economy - an economy that is changing from traditional to modern
for the sake of x - in order to achieve x
flourished - do well economically, do well in business
globalisation - increasing economic interdependence, integration, and interaction between different countries and cultures around the world (See Wikipedia on globalization and anti-globalisation)
a strategic niche - a special strategy (not shared by many other companies)
to pose a question - to ask a question
a forte - a strength
adding value to - adding value to a product by any stage in the design and production of the product, this includes new ideas for product features, the labor contributed by workers, and the capital contributed by machines and facilities (See Wikipedia on value added)
humble - not proud, does not believe they are better than other people
fossil fuel - a fuel such as oil or coal (that comes from the ancient remains of plants and animals buried under the ground)
ethanol - an alternative fuel made from plants, unlike fossil fuels ethanol is renewable meaning plants can be grown on a piece of land over and over again (See Wikipedia on ethanol fuel)
tapioca - a plant used for a popular desert, plentiful and easily grown in Southeast Asia (See Wikipedia)
to fit the bill - to have everything necessary to do a job
expand its presence in - do more business in a country or market
untapped - unused, unexploited
people skills - skills in working with people (for instance with people who speak another language and have another culture)
bureaucracy - government departments (has a reputation for moving slowly in solving problems)
officialdom - the world of government officials
robust - strong
purchasing power - greater ability to buy things (from increasing incomes)
Answer Key:
1. To find a market niche that will allow Thailand to compete with China and India in global markets, what does Thailand need?
Thailand needs a vision about what kind of global markets it will specialise in, in the future.
2. What should the government's role in forming such a vision be?
The Thai government should:
a. Advocate ways to exploit opportunities in international markets.
("If there are opportunities, then the government's job is to try to advocate ways to reach those markets and also, if possible, to support those who are venturing into these markets.")
b. Support Thai businesses in their efforts to seize and develop opportunities in international markets.
3. Do China and India contain within them one economy or several? Why?
China and India contain several economies, both old and new:
a. The old labor-intensive economy.
b. The transitional economy geared towards exports.
c. The advanced technology-based economy (internet-based ecommerce)
4. Has India's thriving IT sector been supported by good infrastructure?
No, "the IT sector has flourished despite the lack of even basic utilities in some areas."
5. What percentage of its food does China currently import? Will this remain the same in the future?
China currently imports 60% of its food requirements, however "in 10 years it could well become the food exporter to the world." ("the" here clearly implies the largest)
6. What markets does Thailand currently have more expertise in than other countries like China and India?
Agricultural markets. ("Adding value to agricultural products.")
("The agricultural sector is our forte and I can safely say that this sector in Thailand [Thai] is far more advanced than those we see in China or India, and we are teaching people in these countries about the way we do things in this sector.")
7. What business potential does Dr. Sarasin suggest for tapioca? (Read forward a couple of paragraphs)
Tapioca could be used to produce ethanol and sold to China to meet its growing demand for energy.
China is looking for alternative fuel sources and shifting away from oil and grain-based ethanol made from corn and sugar.
Tapioca can be used to make non-grain based ethanol, so China is considering making foreign direct investment (FDI) in Thailand to set up a plant that produces ethanol from tapioca. Such a plant could increase the incomes of farmers.
8. Does the government put enough thought into promoting Thailand's expertise in agriculture, according to Dr. Sarasin?
No, "the government doesn't think about all these issues."
9. What should Thailand do if it wants to become more competitive on global export markets?
Thailand should add value to the "resources in which the country is abundant" such as tapioca, mangoes, and natural rubber.
10. What is China to the rest of the world?
The world's largest factory "consuming 40% of the world's natural resources."
11. What business opportunities are there in India for Thai companies?
Infrastructure development and also agriculture since India will be opening up its agricultural sector soon.
12. What is holding back CP Group from expanding operations in Africa?
"People skills." The article does not specify whether these "people skills" are of African or Thai employees, but one could well imagine that it applies to both.
Thai nationals with the necessary intercultural and linguistic skills would be a valuable asset.
13. What is Dr. Sarasin's attitude towards bureaucracy in China?
He believes that Chinese officials are helpful in solving problems "if approached in the right way."
14. What is an even greater problem than dealing with China and India's bureaucracies?
Finding new opportunities in Indian and Chinese markets.
Tracking the "changing behaviour of Chinese and the Indian consumers in light of fast and robust growth in wealth and higher purchasing power" is necessary to find these new opportunities.
