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Pipope Chokwatana, an advisor to Saha Group's distribution arm, describes digital payments as the missing piece to Thailand's e-commerce puzzle. (Photo by Tomohide Yamaguchi)
Economy

Thailand's Saha Group sets sights on e-commerce wave

Digital payments 'missing piece' to boost country's online economy as consumption expands, says advisor

TSUBASA SURUGA and MARIMI KISHIMOTO, Nikkei staff writers | Thailand

BANGKOK -- Thailand's consumer products conglomerate Saha Group, which has grown through numerous joint ventures with Japanese companies such as Lion Corp. and lingerie maker Wacoal, is now set to expand its e-commerce channels. The group in June signed an agreement on business tie-ups with Singapore-based online retailer Lazada Group, through which Saha expects its online sales contribution to soar tenfold over the next three years from the current 1%.

In an interview on the sidelines of the Nikkei A300 Global Business Forum in Bangkok, Pipope Chokwatana, the group's founding family member and advisor to its main production and distribution arm Saha Pathanapibul, said the conglomerate will have "many more partners" to boost the online business. He also said Thailand's consumption will expand in the next two to five years due to government spending on infrastructure projects.

Q: Why do you want to expand your e-commerce channels?

A: Saha Group consists of over 200 companies [from foods, household goods and clothes to cosmetics]. As a distributor, we take care of many channels.

We have our own e-commerce site, and we recently partnered with Lazada, as well as with Japanese wholesaler Paltac. There are many more [partners] that we are starting to get involved with. It's not that the traditional way [of doing business] is not growing in Thailand. But we believe that the trend toward online is coming.

Q: Do you think Thailand has a good environment for e-commerce?

A: Thailand is missing a key piece for the online [economy] to grow -- and that is the financial part of e-commerce. Digital payment in other countries is already mature, but it is still at an early stage here. There are some digital payments already, but we will have to wait for them to become competitive.

Q: What is your view on Thailand's consumption?

A: Consumption has been low, largely due to the high household debt, which is inflated in part because of a government policy [that offered tax incentives for first-time car buyers]. But consumption swerves back and forth, just as our tourism industry seems to be improving since the beginning of the year, when it was quite low.

I believe it will get better in two to five years, thanks to government spending. A lot of infrastructure is being built, such as new roads. On the highly anticipated Eastern Economic Corridor [a special economic zone in Thailand's industrial area along the eastern seaboard], we might soon see our first high-speed train. Thailand is placed at the center of the Association of Southeast Asian Nations, so we could attract even more consumers and new investors. These are part of the government's plan to get the country out of the so-called middle income trap. If we can get out of that, people will be able to spend even more.

Q: How do you see fashion trends going after October, after the end of the one-year mourning period for the late King Bhumibol Adulyadej (during which Thai people wear black).

A: From a business standpoint, there will be different demands -- we are going to switch from black to color, for example. It will likely depend on what the government asks us to do. It could drive higher demand [in colorful clothes], but I don't think it's going to be that strong.

Q: How will your group expand abroad?

A: We do that individually [by group companies], and in a decentralized way. One of the leading expansions abroad will be in instant noodles -- Mama noodles. Newcity [Saha Group's apparel company, which Pipope heads] has been taking our own brand of tights into Malaysia, Indonesia, Vietnam, Laos and Myanmar. Saha's group companies expand abroad on their own, based on their ability. If all the group products were centralized, there might not be that many brands that could go abroad.

Pipope Chokwatana is an advisor at Saha and vice chairman and managing director at Newcity (Bangkok). He has served as deputy secretary-general of the Federation of Thai Industries since 2008. He earned a bachelor's degree in information system at the University of Central Florida in the U.S. He is a grandson of group founder Thiam Chokwatana.

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