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Foxconn-Siam alliance connects ASEAN-China logistics

Joint venture establishes supply chain to capture e-commerce demand

An Alibaba Group warehouse in China. Siam Cement and Foxconn Technology have formed a logistics joint venture to tap growing e-commerce demand in south China, where Alibaba Group Holding is a dominant player.     © Reuters

BANGKOK -- Thai industrial conglomerate, Siam Cement Group has formed a joint venture with Taiwanese electronics manufacturer and Apple supplier Hon Hai Precision Industry to set up an integrated logistics and supply chain in south China.

The venture hopes to tap into growing e-commerce in the region by deploying Siam Cement's expertise in the area of logistics and engaging the vast business network of Hon Hai, better known as Foxconn Technology Group.

The joint venture is headed up by two units of the companies: SCG Distribution and JUSDA Supply Chain Management International that is listed on the Taiwan Stock Exchange.

In a statement, Siam Cement said the JV is worth approximately 333 million baht ($10 million), of which the company will own 49%. The new company will be based in Guangxi and begin operations in the third quarter of 2018. It will focus on trade between southern China and countries in the Association of Southeast Asian Nations especially in the areas of high-tech electronics, premium foods, and e-commerce.

For Foxconn, the collaboration with Siam Cement marks its efforts to strengthen and grow its presence in ASEAN.

For JUSDA, founded in the southern Chinese city of Shenzhen in 2002, the partnership allows it greater access to Chinese cities. JUSDA's logistics network already reaches more than 400 cities and it owns 60 large warehouses globally. It formed a joint venture with Sharp in September 2016 and established another with SK Holdings in October the same year to expand in northeast Asian markets.

Siam Cement President and CEO Roongrote Rangsiyopash said the project was part of long-term business plans to expand beyond ASEAN and particularly into China and India.

"The two countries are seen as very big markets that we should explore and that's why we start the joint venture in Guangxi," Roongrote said.

Roongrote added however that Siam Cement won't rush to expand in the two countries as it needs a period of time to study the markets thoroughly before making further investments.

ASEAN remains a key market from which it generates about 25% of its total annual revenue. Roongrote expects this figure to rise to 40% to 50% within seven years.

Siam Cement recently took full ownership of a long-delayed petrochemical project in Vietnam after buying out its local partner in the $5.4 billion endeavor to build the country's first petrochemical complex.

Siam Cement shares closed at 410 baht on Tuesday, up 0.99% from the previous day.

Lauly Li, Nikkei staff writer in Taipei contributed to this story

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