Yingcharoen plans to combine
modern and traditional shops
for a new kind of urban market
By Jon Fernquest |
If a country is open to foreign business as Thailand is, one benefit you might expect would be Thai business people adapting foreign business ideas to the Thai business environment and the tastes of Thai consumers.
Nowadays, many Bangkok residents couldn't imagine a return to the traditional wet market to do the week's shopping.
Walking through even a portion of a wet market can make some city folk faint after inhaling the fumes of the strange smells often found inside.
Anyway, Yingcharoen Fresh Market is an innovative new venture that strives to combine the best of both worlds, the modern air conditioned shopping mall and the old-fashioned wet market or better "fresh market".
A location of the first planned market is near high-density condominium developments in Samut Prakan.
This site should bring with it a reliable group of customers who wish to minimize travel time in these times of high gas prices.
(Photo to right is a butcher's shop in a traditional wet market)
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Yesterday's Bangkok Post reported on this new idea.
Here is the article in full:
Yingcharoen reimagines fresh markets
To combine modern and traditional shopsKANANA KATHARANGSIPORN
(Thursday March 13, 2008)
Major shareholders of Yingcharoen Fresh Market have set up Yingcharoen Estate Co Ltd (YES) to invest in fresh markets. The new venture plans to spend around 1.6 billion baht to develop six markets in three years and 10 by 2013, when it hopes to list on the stock market.
Parinya Tumwattana, YES's chief executive officer, said the new mixed establishment concept would combine Thai traditional wet markets and modern markets with air-conditioning systems. There would be both open-air and air-conditioned areas in one storey as most Thais did not like to go upstairs.
"I've managed Yingcharoen Fresh Market for eight years and seen the recession and weakness of the Thai retail sector," Mr Parinya said.
"Many fresh markets were closed down and merchants had to sell goods on the street, losing their status to overseas retail giants during the past 10 years as they could not catch up with the entry of the modern trade," he added.
The company will set up a subsidiary to invest and manage each market, starting with the Ying Charoen Market 2, Muang Bang Phli, as the area has around 500,000 people with household incomes of 32,000 baht per month on average.
Scheduled to open on Aug 8 with an investment of 300 million baht for construction, the market will be located on an 18-rai plot on Theparak Km 22.5 Road near the Bang Phli industrial estate in Samut Prakan. The plot will be leased from the National Housing Authority with a 22-year contract and a monthly rent of 380,000 baht.Under one roof, the market will have a total rentable area of 23,000 square metres, including a shopping plaza for 300 retail outlets, brand-name products, service operators, banks, car showrooms, supermarkets and local and international franchises with 400 car parking lots.
The one-storey YES outlets are expected to offer a range of big-name brands alongside a host of small operators offering fresh local foods and other goods.
Rent for a space of 7.5 sq m will be 400,000 baht for a 15-year contract and 3,000 baht for monthly rent. Tenants can spend 100,000 baht in cash while the rest will be supported by TMB Bank and Bangkok Bank.
"We really want to help small retailers to grow together," said Mr Parinya. They will pay 5,000 baht a month for seven years to the bank. The company will use a leasing rights contract as a guarantee for them.
The rent would be a flat rate throughout the contract, while that for overseas retail centres would run for one year with an increase of 7% each year, said Santisuk Fongkajorn, the company's managing director, who formerly worked with a hypermarket company.
YES expects to have full occupancy by June as it currently has 3,000 tenants on its list. It hopes to generate 275 million baht in its first year and 70 million baht per year in the second year onward.
Two markets slated to open next year are Yingcharoen Udomsuk on a 30-rai plot on Sukhumvit 64 and Yingcharoen Amata Nakorn on a 10-rai plot in Amata Nakorn Industrial Estate in Chon Buri with investments of 400 million and 300 million baht, respectively.
The plot for the 30-rai Sukhumvit project will be leased from Chaleo Yoovidhya, the billionaire founder of the Red Bull empire, for 25 years at a rate of 30 million baht a year. Currently, Index Living Mall, Major Cineplex and HomePro are talking with the company about locating on the site.
Mr Santisuk said the plot had potential as it would be surrounded by 9,000 condominium units. The company aims to generate 120 million baht a year.
Another three markets will be in industrial estates - in Chachoengsao and at Bo Win and Amata City in Rayong - with an investment of 200 million baht each. Within five years, it aims to have a total of 10 markets to generate one billion baht a year and total assets of three billion baht.
The company will also manage the market under the same concept for commercial investors who will spend on land and construction. The company will charge 15% of annual income for consultancy and management.
It is laying out the concept for Index, which will develop commercial projects in Koh Samui, Nakhon Ratchasima and on a 30-rai plot opposite to HomePro on Ratchapreuk Road in Bangkok. The Ratchapreuk site will open next January with an investment of 400 million baht for land and 500 million for construction.
"Prime Minister Samak Sundaravej loves cooking and shopping in fresh markets so the government should support fresh markets through the Board of Investment. Then fresh markets will become stronger than in the past," said Mr Parinya.
Set up last year with registered capital of 50 million baht, YES is 70% held by Mr Parinya, 20% by Mr Santisuk and the rest by Vichai Assarasakorn, president of the Thai Gem and Jewelry Traders Association and Yuwarat Kamolvej, the company's president.
Currently, the 52-year-old Yingcharoen Fresh Market on 30 rai in the Saphan Mai area, generates 250 million baht per year from rent and 50 million from other businesses, including a wholesale market and food court.
(Source: Bangkok Post, business section, 13-03-08, KANANA KATHARANGSIPORN, temp-link)
Vocabulary:
city folk - people who live in the city
a wet market - A wet market is a market that sells live animals in an open environment (See Wikipedia)
fumes - unpleasant gases produced by cooking, chemicals, and fuel
fresh market - a "fresh market" is a market that sells fresh vegetables, "fresh market vegetables" are raised to be sold in a fresh market not canned or frozen
open-air - without closed rooms or walls (cannot use air conditioning because air passes in and out freely)
list on the stock market - when a company stock is publicly traded on a stock exchange (this helps the company raise money in financial markets because the company must make financial information publicly available and as the value of the company's stock goes up and down, people get a good idea of how much the company is actually worth)
status - importance among the public
losing their status to - became less important in the public's mind
National Housing Authority - established in 1973 as a state enterprise, plays a significant role in developing and providing low-income housing to Thais (Source)
car showrooms - the large rooms at car dealerships which have model cars to show customers
a car dealership - a retail outlet for automobiles, where you buy cars
a franchise - a system of doing a business with a proven set of methods sold for a fee or a percentage of the profits, a franchise may include such things as national or international advertising, training, and other support services, a franchisor sells a franchise to a franchisee, checks are made to make sure the franchisee are keeping the terms of the franchise agreement and the franchise may be ended if they are not (See Wikipedia on franchising)
a managing director - the term used for the chief executive of a company many countries, indicates role as both a member of the Board of Directors and also as a senior manager
a hypermarket - a superstore, a very large store like Lotus, Big-C, or Carrefour which includes a supermarket, a food court, and also sells a wide range of other goods
a food court, food center - a public eating area with stalls or vendors selling different kinds of foods (found in most Thai department stores and hypermarkets)
full occupancy - all the stores to be rented are full
tenants - renters
the landlord - the owner who rents to tenants
in the second year onward - after the second year
A and B, with X and Y, respectively - A with X and Y with B
X leased from Y - Y allows property X to be used in exchange for regular payments
had potential - had the necessary qualities to become sucessful
consultancy - the business of giving expert advice on a subject (Not this kind)
laying out the concept - describing and explaining the idea
a wholesale market - a market in which goods are sold in large quantities at much lower prices
