BANGKOK -- Four days after the coronation of King Vajiralongkorn Bodindradebayavarangkun in May, Thailand's richest businessman arrived at the Grand Palace in Bangkok for an audience with the new monarch, his two chosen successors in tow.
Dhanin Chearavanont, the 80-year-old senior chairman of conglomerate Charoen Pokphand Group, came clad in a dark suit and a yellow tie -- a color traditionally associated with the king. That the meeting happened so soon after King Vajiralongkorn's accession was a testament to Dhanin's close relationship with the royals and his stature after a career spanning almost 50 years.
The two sons he has picked to take over his $63 billion a year food, retail and telecom empire may not have nearly that long to make their marks, however.
In a rare interview with the Nikkei Asian Review earlier this month, Dhanin revealed he intends to let his eldest son, Soopakij, and third son, Suphachai, run the group as chairman and CEO respectively for 10 years. He also expressed his willingness to pick a CEO from outside the family and emphasized the potential of the global company's leadership training school -- into which CP has poured 7 billion baht ($223.5 million) to foster future generations of top executives.
As CP's transition plays out, the family-run corporations that have long dominated Asian business might want to take notes from one of Southeast Asia's most influential corporate leaders.
"The succession strategy of CP Group should be closely watched by other conglomerates in Asia," said Akira Suehiro, professor of International Social Sciences at Gakushuin University in Japan and an expert on Asian economies. "Many Southeast Asian conglomerates run by second-generation overseas Chinese have faced or will soon face similar challenges."
Those challenges include adapting a sprawling conglomerate operating in traditional industries to a world where technology is accelerating the pace of change at an unprecedented rate.
CP Group traces its roots back to the 1920s, when Dhanin's father and uncle, Chia Ek Chor and Chia Siew Whooy, opened a small store for imported seeds in Bangkok's Chinatown. Dhanin, Ek Chor's fourth son, took over the family business in 1969 and since then has expanded the company well beyond its agribusiness roots.
CP Group now has three main pillars. The agribusiness arm Charoen Pokphand Foods, which operates in 17 countries and exports to more than 30 countries across five continents, is the world's largest animal feed producer. It also is one of the largest poultry, swine and shrimp producers.
CP All operates over 11,000 7-Eleven stores in Thailand. And True Corp. is the country's second-largest mobile carrier.
Today, CP comprises more than 200 companies, with 310,000 employees and investments in 22 countries.
Now, after decades of expansion, the billionaire is slowly but steadily transferring power to his two sons, Soopakij, 55, and Suphachai, 52. In January 2017, Dhanin slid into the role of senior chairman.
"Although important decisions are still mostly made by Dhanin, we've started seeing cases where his sons take over Dhanin's position in negotiations and decisions," a CP business partner said.
Dhanin praised both sons' capabilities in a serialized autobiography published in the Nikkei Asian Review in 2016. And both helped CP to grow before they reached the top.
Of Soopakij, Dhanin wrote that "he is very good with people and is surrounded by numerous friends." He has worked to expand CP's business in China, where the company was the first foreign investor after the economy opened in the late 1970s. Soopakij previously served as the vice president of the Thai-Chinese Promotion of Investment and Trade Association, building connections between the countries just like his father did.
Suphachai graduated from Boston University in the U.S. with a bachelor's degree in Business Administration and later took charge of the group's telecom operations. CP entered the market in 1990 by acquiring a stake in TelecomAsia, a joint venture with an American company that was set up to install and run 2 million telephone lines in Bangkok. Under his stewardship, the business eventually become True Corp., the country's second-largest mobile carrier and largest internet provider.
Dhanin wrote that Suphachai "steadily learned the [telecom] business from the ground up, one step at a time." His education included shepherding it through the Asian financial crisis of 1997.
Based on their backgrounds, the sons will handle different geographic areas. "In terms of investment," Dhanin said, "I will leave Soopakij to be in charge of China, Japan and Russia, whereas Suphachai will [heavily focus] on North America."
A 7-Eleven convenience store in Bangkok. CP All operates over 11,000 stores nationwide. (Photo by Shinya Sawai)
The two sons will face a number of challenges in what is an increasingly broad and complex array of operations.
Their first task is to improve synergies between the food processing and retail divisions. They will also have to manage the expansion of CP Foods through international acquisitions and cross border investment -- such as the recent move to make Vietnam a new export hub for the poultry business.
Eventually, Dhanin would like to collaborate with Japanese fruit, beef and pork producers to improve their productivity and bring their luxury produce to wealthy Asians.
In China, CP runs a range of businesses from motorcycle manufacturing to finance. It holds a significant stake in one of the world's largest insurance companies, Ping An. These pose their own particular challenge at a time when China's economy is slowing and the country is locked in a trade war with the U.S.
But the biggest and most pressing task might be managing the group's latest diversification. CP recently won the contract to build and operate a high-speed railway connecting major airports in Thailand. The $7 billion project could pose as much of a risk as an opportunity for the new leadership team.
This is CP's first foray into the rail industry. It has brought in infrastructure expertise through partnership with a Chinese railway construction company. But the decision by Itochu's project management business and rolling stock maker, Hitachi, to stay out of the project have sparked questions over the project's profitability.
Dhanin is aware of the challenges facing his company, and believes the answer may lie in expanding the pool of talent and expertise at the top, while also implementing more frequent leadership changes.
He has already identified two grandsons as potential successors to his own sons. They are Soopakij's eldest son, Tanit, who currently runs the group's Siam Makro wholesale business in India; and Suphachai's eldest son, Korawad, who founded workplace messaging app company Eko Communications in 2012.
But there is no guarantee that all the top jobs will stay in the family. While the group chairman's position would be reserved for a relative, "the CEO position is open for anybody suitable and capable, if I cannot find the right person in my family," he said.
CP may well find that person 170 km northeast of central Bangkok, in the lush mountains of Khao Yai.
There, a hulking, almost castle-like structure serves as the training center for the entire CP Group. Trainees come from everywhere the conglomerate has a presence -- Thailand, of course, but also China, India, the U.K. and other countries.
Surrounded by glittering chandeliers and other Western-style decor, they learn to lead.
Dhanin came up with the idea for the CP Leadership Institute around eight years ago after touring training facilities of some of the world's largest corporations, including General Electric, Boeing and Samsung Electronics.
A month after the king's coronation, Dhanin visited the training center to observe a session involving around 300 trainees and executives. The buzz in the auditorium turned to reverential silence when he entered, sitting in his reserved seat at the center of the hall.
The participants made presentations on improving store operations and revenues, translated simultaneously into Thai, Chinese and English.
Exchanges between the trainees and the executives, including Dhanin, were intense. An executive pounced on claims about competition by two women training to run a 7-Eleven store in central Bangkok. "How many offices are around the area? How many floors? How many people are working? You must utilize these data to correctly evaluate your judgment," the executive said.
Three trainees pay close attention to a note from an executive during CP's Future Leadership Program in Khao Yai, Thailand. (Photo by Masayuki Yuda)
The training that day was part of CP's Future Leadership Program for new recruits under the age of 26. For six months, they are dispatched to work at certain businesses with specific goals. Every two weeks, they return to the institute to share what they have observed and how they would improve it.
Eighty percent of Future Leadership trainees go to the next level, with two more stages to follow. "Potential executive trainees are constantly evaluated, throughout their CP career, on whether they are qualified to be elevated to the next level," said Wannawiruch Wiruchnipawan, the institute's deputy director.
Dhanin intends to get more involved in the process. "I have been spending 20% of my time in Khao Yai, since the opening of the leadership institute, but I intend to increase the proportion to 30% or 40%," he said.
The senior chairman expects the center to produce disciplined, responsible, adaptable leaders. "In the era of Industry 4.0, leaders must take risks in business and adjust the group quickly to changes," he said, referring to the new era of data- and automation-driven industries.
And that is one of the company's biggest challenges after decades operating in traditional industries, say experts. "It is questionable if CP has fully incorporated the power of innovation in its business," said Suehiro. "This is a challenge that future leaders of the group must face," he added.
Not everyone at CP has been happy with the idea of investing so much in training, Dhanin said, but he often has to use his authority to push through new initiatives. This was no exception. "In the end," he said, "human resources are priceless."
Nikkei senior staff writer Hiroshi Murayama in Tokyo and staff writer Marimi Kishimoto in Bangkok contributed to this report.
