Back to the Farm

	Back to the Farm
		Back to the Farm
		A corporate overhaul sends the giant CP Group back to its roots as a major food supplier.
		GOOD NEWS IS in short supply nowadays across Thailand’s beleaguered corporate landscape. But after a major structural overhaul, agribusiness giant Charoen Pokphand Group is one Thai company that seems to have emerged leaner and better focused after the country’s economic meltdown. As a rare restructuring success story, the group has returned to the top of the REVIEW 200 line-up after a one-year hiatus in the No. 2 slot.
		Like that of many Thai companies, the group’s focus blurred during the boom days, resulting in high debt levels for many investments that lacked synergy with its agricultural core, including interests in electronics and car parts. Three years later, most of those businesses have been put to pasture as debt/equity ratios have been harnessed and restrained. Now, Chairman Dhanin Chearavanont has a simpler, but equally ambitious, charge: to make the group “the kitchen of the world.”
		Central to the restructuring effort has been a renewed emphasis on food production and processing. “We are working up the food chain as a way of cli8mbing the value-added ladder,” says Sarasin Viraphol, the group’s executive vice president. That climb means committing more resources and involving more foreign expertise in research and development for processing technologies.
		Indeed, while many Thai corporations fight to keep foreign buyers away from their debt-burdened assets, the group chose to open wider, inviting new foreign investment in many of its subsidiaries since the Asian Crisis. That open attitude kept most of the group’s credit lines fluid during debt-restructuring negotiations. In turn, that allowed CP to simultaneously downsize and expand its operations---the firm moved aggressively into more value-added agribusiness areas this year, including export-oriented ventures.
		Deeper business synergies are taking root as a result. For instance, the group plans to export its newly launched Thai fast-food restaurant, Bua Baan, which serves only CP’s processed foods. That could open a vista of new opportunities as CP has high hopes of turning Bua Baan into a global franchise in the style of KFC and McDonald’s. “There is a greater linkage and more focused direction of our businesses now.” Says executive vice-president Sarasin. It’s a long-term view that keeps CP abreast of global agribusiness trends and at the top of the REVIEW 200 poll as the company most consider it desirable to emulate.
		IN WITH THE NEW
		By all counts, the New Economy is off to a slow start in Thailand. But those companies that have taken the tentative plunge placed favourably on the REVIEW 200 poll. For one, perennial favourite Thai Farmers Bank was the first Thai bank to introduce Internet banking. The move fit nicely with Thai Farmers’ post-crisis shift toward a greater consumer-orientation. “We’re gradually putting more technology into our product mix,” says Banthoon Lamsam, the bank’s president. Nearly all other Thai banks are now scrambling to catch up.
		Another company making a strong overall showing in the poll is traditional leading music company Grammy Entertainment. In Recent years, Grammy has widened its focus toward becoming a more broad-based entertainment company, developing local television dramas and films to complement its menu of pop stars. Financial analysts cheered the company’s move onto the Internet---its Web site has become one of the country’s most popular. The Internet play keeps Grammy at the top of the poll’s ranking for innovative responses to customer needs, a slot it has held for four years.
		Making the biggest jump in the poll overall was Shin Corp., moving up from the 23rd slot to sixth. Because Shin had hedged nearly 70% of its foreign-currency exposure before the baht’s devaluation in 1997, the company has the strongest cash position in the country. That has allowed it to go on a post-crisis technology spending spree, including the purchase of television station iTV and fast expansion of its digital mobile-phone network.
		With the eventual digital marriage of mobile phones, television and the Internet, Shin’s acquisitions look set to add up to the most cogent New Economy strategy in Thailand. ?
		Source/Reference: Far Eastern Economic Review: Dec. 28, 2000 - Jan. 4, 2001 Vol. 163 No. 52