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Interview

Exclusive: Thai billionaire 'open' to outside CEO at CP Group

Dhanin limit on sons' tenure signals shift in Asia's family conglomerates

CP Group Senior Chairman Dhanin Chearavanont says he intends to "always" have a family member as chairman but the CEO post is up for grabs. (Photo by Kosaku Mimura)

BANGKOK -- Thailand's richest man says he is willing to bring in a CEO from outside the founding family at his Charoen Pokphand Group, one of the world's biggest food and agriculture conglomerates, in the latest sign that many such closely-controlled Asian companies are beginning to open up to maintain competitiveness.

Dhanin Chearavanont, whose CP group generated $63 billion in revenue last year, told the Nikkei Asian Review in an exclusive interview that while his two sons had taken over as chairman and chief executive when he stepped back in 2017, their leadership would be far shorter than his own roughly five decades.

"I intend to always fill the group chairman position with a member of my family," Dhanin told Nikkei in the interview. "But the CEO position is open for anybody suitable and capable, if I cannot find the right person in my family."

In January 2017, Thailand's largest family-run group decided to elevate Dhanin, now 80, to the role of senior chairman. His eldest son, Soopakij, was appointed chairman and his third son, Suphachai, was made CEO. "The group leadership succession to my sons is mostly complete," he said. "I try to refrain from intervening in what they decide on a day-to-day basis."

Dhanin's comments comes as family conglomerates in several Asian countries are showing signs of change at the most senior management levels.

In some cases the change is fueled by pressure to conform to global corporate governance standards. Shareholders in South Korea last year forced Hyundai Motor to scrap a restructuring plan designed to smooth succession from the chairman to a son, while Korean Air Lines Chairman Cho Yang-ho was ousted from the board of the company in March.

In Southeast Asia, where family management is a less contentious issue, the shift toward outside executives is seen more as a proactive move by conglomerates to widen their management options and maintain their competitiveness.

Thai retail and lodging conglomerate Central Group, for example, started recruiting non-family executives into top management posts a few years ago to keep up with changing retail and digital trends.

Despite only recently passing the baton to his sons, Dhanin revealed in the interview that he does not intend to leave them in charge anywhere near as long as his own roughly 50-year reign. "We only have less than nine years left till the next succession," he said.

Dhanin raised two names from his family as potential heirs.

One is Soopakij's eldest son, Tanit, who currently runs the Indian business of wholesale arm Siam Makro. Another is Suphachai's eldest son, Korawad. He founded workplace messaging application provider Eko Communications in 2012, when he was 17. In 2016, Korawad was listed in Forbes Asia's 30 under 30.

A CP Foods chicken plant in Thailand: The agribusiness company is one of the conglomerate's main pillars. (Photo by Ken Kobayashi)

Dhanin took over his father's business in the late 1960s. Born in Bangkok and educated in China and British-occupied Hong Kong, Dhanin is fully bilingual in Chinese and Thai, and used his heritage to lead the group's march into the Chinese market. After China opened itself up for foreign direct investment in 1978, CP was the first foreign company allowed into the Shenzhen Special Economic Zone created the following year.

"Our revenue from the Thai business and from the Chinese business are currently about the same," Dhanin said. "But I expect Chinese revenue to surpass Thai in the near future."

CP Group and its leadership will face a delicate balancing act as the Chinese business expands. "Thais are not the most pro-China people in the world, after all," said Akira Suehiro, professor of International Social Sciences at Gakushuin University in Japan and an expert on Thailand's economy and corporations. "CP would be better off running businesses, especially in Thailand, if the next leaders can present the group as a global conglomerate instead of pro-China."

Meanwhile, the succession process continues. In recent months, Dhanin resigned as chairman of agribusiness giant Charoen Pokphand Foods and convenience store operator CP All. Soopakij replaced him at both companies, while Suphachai was admitted to the two boards.

Looking further ahead, it is possible that future top executives could emerge from the group's own training center.

In 2016, the group opened the CP Leadership Institute for everyone from entry-level employees to executives across subsidiaries. Dhanin expects the institute will foster disciplined and responsible leaders who embrace change.

With investments in 22 countries, CP Group has a diverse range of subsidiaries but three main pillars: CP Foods, which includes livestock farming and ready-to-eat meal production; CP All, the sole operator of 7-Eleven stores in Thailand; and True Corp., the second-largest mobile operator in the country. Dhanin, for his part, is the richest person in Thailand, with a net worth of $16.4 billion according to Forbes Billionaires 2019.

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