Death of chairman adds to King Power uncertainty as Thai duty-free changes loom

By Panu Wongcha-um and Chayut Setboonsarng

 

FILE PHOTO - Vichai Srivaddhanaprabha, owner of football club Leicester City attends a meeting with the media in Bangkok, Thailand May 18, 2016. REUTERS/Jorge Silva/File Photo

 

BANGKOK (Reuters) - The death of Leicester City soccer club owner Vichai Srivaddhanaprabha adds to challenges his King Power International empire faces as its dominance of the lucrative Thai duty-free industry comes under scrutiny.

 

Vichai, the founder of King Power, was killed on Saturday along with four others when his helicopter crashed and exploded outside the King Power Stadium in the central England city after a Premier League match.

 

His death comes just weeks before Thailand plans to hold an auction for its duty-free and commercial concessions, threatening to end King Power's near monopoly of the sector.

 

State-owned Airports of Thailand Pcl (AOT) <AOT.BK>, which grants the concessions, may consider awarding licenses to multiple operators, analysts said. Unlisted King Power currently controls more than 90 percent of Thailand's duty-free market, being a sole operator with concessions in all major airports in the country until 2020.

 

AOT also plans to expand Bangkok's main airport, which will increase commercial and duty free space up for auction by around 70 percent, increasing competition among retailers.

 

Tourism is booming in Thailand, which received nearly 35 million visitors last year, most funnelled through the airports where King Power is ubiquitous. But public debate has increased over the single duty-free operator structure.

 

"If there is more competition from others and this new generation of leadership (at King Power) is not as effective as Vichai's generation, then there could be changes (in the way the licences are granted)," a senior government official told Reuters, declining to be named due to the sensitivity of the subject.

 

"AOT has not been convincing enough in defending this model so it will be a tough sell for them to come up with a bidding terms or process that limits competition."

 

AOT, which has said the current system is important to provide continuity, declined to comment on the bidding process.

 

"(King Power) has a successful history in duty free retailing and the travel industry, now the question is how effective King Power can be in engaging the government other stakeholders without Vichai's leadership, especially in upcoming auction for concessions in Bangkok, Phuket, Pattaya and Samut Prakan," said Nattabhorn Juengsanguansit, Director at Asia Group Advisors, a government affairs consultancy.

"Winning the upcoming bid is crucial for King Power's business and the future of Leicester football club.”

 

Retail rivals including Central Group <CPN.BK>, the Mall Group and South Korea's Hotel Shilla <008770.KS> are interested in bidding, analysts said.

 

The companies declined to comment.

 

SUCCESSOR

While it is not immediately clear who will take over from Vichai, analysts and sources say Aiyawatt, Vichai's youngest son and chief executive officer of King Power, and his widow Aimon are most likely to run the family business. Aiyawatt's nickname is Top.

 

"Top has been his father's apprentice for more than 10 years so he must have learnt a lot of his trade," said a politician who has close ties with the Srivaddhanaprabha family.

 

King Power declined to comment on who will succeed Vichai as group chairman. Vichai's four children and his wife are part of the executive team of the company.

 

A descendant of Chinese immigrants, Vichai founded what became the King Power empire in 1989 with a store in Bangkok selling duty free goods and souvenirs.

 

His business took off in 2006 when it was granted a concession at the new Suvarnabhumi Airport under the government of then Prime Minister Thaksin Shinawatra.

 

Even after Thaksin's ouster that year, Vichai's close relationship with the royal family and a knack for winning people over helped King Power navigate political turmoil. Vichai became the country's fifth-richest person with an estimated net worth of nearly $5 billion.

 

For the group, which has been expanding into sports, winning the upcoming duty-free license auction has become more crucial to get steady cash flow and fund heavy investments to acquire athletes and managing staff.

 

It bought Leicester City in 2010 and also owns Belgian soccer club Oud-Heverlee Leuven.

 

While Vichai has been public face of Leicester City, he entrusted the task of running the team to Top, his 32-year-old son.

 

Top admitted he made some big mistakes while managing the team, but also learned from them.

 

"If I didn't make those mistakes, I wouldn't be here," he told a TEDx Talk show in 2016, referring to his decision to fire three team managers and buy expensive players who did not perform well.

 

Top said the team's failure to get promoted to the Premier League in 2012/13 season was "torture" but three years later, Leicester City beat odds of 5,000/1 to win the Premier League title.

 

Whether he can hit a similar jackpot with the group's duty-free business remains to be seen.

 

"I don't know how good Vichai's son is," the senior government official said. "If he is as skilful as his father then there is no problem, but we simply do not know."

 

(Reporting by Chayut Setboonsarng, Panu Wongcha-um, and Patpicha Tanakasempipat; Writing by Miyoung Kim; Editing by Lincoln Feast.)

 

-- © Copyright Reuters 2018-10-30

Now that the big boss is gone and so the huge influences and favoritism he enjoyed from a wide circle of powerful people, i'm sure that his children will not be able to defend the wolves with knives that are waiting in the shadows to curve whatever they can from the mighty King power empire... 

Now that the big boss is gone and so the huge influences and favoritism he enjoyed from a wide circle of powerful people, i'm sure that his children will not be able to defend the wolves with knives that are waiting in the shadows to curve whatever they can from the mighty King power empire... 

Since money is sharper than a knife in Thailand, I’m sure he can cut some slack. Little bit money here, little bit over there... and magic happens.


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37 minutes ago, ezzra said:

Now that the big boss is gone and so the huge influences and favoritism he enjoyed from a wide circle of powerful people, i'm sure that his children will not be able to defend the wolves with knives that are waiting in the shadows to curve whatever they can from the mighty King power empire... 

It's all about the size of the envelopes and I see AoT has been getting plenty as they are resisting any change to the status quo.  Amazing to make $5 billion since 2006 as without the monopoly he was an average shop keeper. I am sure the people that dished out the monopolies have been of the receiving end of the largest envelopes.

He's been ripping off the traveling public for years - let's hope things change now and more competition is allowed

I remember a major scam a few years back at King Power stores at the main Bangkok airport, whereby unlucky passengers were fleeced of sometimes huge amounts of money, in addition to missing their flights. Obviously it was a deal involving the store and the police. Could this be karma in action ?

11 minutes ago, canopus1969 said:

He's been ripping off the traveling public for years - let's hope things change now and more competition is allowed

Not sure how Kings were ripping off people....they have prices on their good as do all other duty free outlets....if people buy them, as they obviously have been, and making Kings lots of money...where's the rip off?

34 minutes ago, ChrisY1 said:

Not sure how Kings were ripping off people....they have prices on their good as do all other duty free outlets....if people buy them, as they obviously have been, and making Kings lots of money...where's the rip off?

There were a few reports of items being added to the duty free bags without the customer seeing and then on leaving the outlet they were checked and accused of stealing. How true it all was I have no idea. Maybe just one of those 'stories' who knows.

5 hours ago, Gunna said:

It's all about the size of the envelopes and I see AoT has been getting plenty as they are resisting any change to the status quo.  Amazing to make $5 billion since 2006 as without the monopoly he was an average shop keeper. I am sure the people that dished out the monopolies have been of the receiving end of the largest envelopes.

It was Taksin who gave  king power the sole monopoly. I wonder how much he received in bribes.

52 minutes ago, overherebc said:

There were a few reports of items being added to the duty free bags without the customer seeing and then on leaving the outlet they were checked and accused of stealing. How true it all was I have no idea. Maybe just one of those 'stories' who knows.

Yes...I think we all remember that little number being reported....caused a bit of outrage here in TVF......and most likely it was correct

1 hour ago, canopus1969 said:

He's been ripping off the traveling public for years - let's hope things change now and more competition is allowed

Don't bet on it...

Someone will be along to replace him as before.

 

Corporate rule is what we've become comfortable with.

1 hour ago, gamini said:

It was Taksin who gave  king power the sole monopoly. I wonder how much he received in bribes.

Quite a lot probably but that was 12 years ago and he has been dealt with. Should you not concern yourself with those who have benefited more recently and have not been touched ?

I would never consider buying anything from a monopoly duty-free provider; the description itself is enough to deter.

It's time the monopoly ended. There is enough in the duty-free trough for all the oinkers to feed. 

1 hour ago, ChrisY1 said:

Yes...I think we all remember that little number being reported....caused a bit of outrage here in TVF......and most likely it was correct

It was reported by several customers over a number of months, and in the UK press, but almost certainly it was a lower level scam someone at Swampy dreamt up - guards, shop assistants, security staff, police, and a certain Sri Lankan named Tony (?) who subsequently was never heard of again.

3 hours ago, canopus1969 said:

He's been ripping off the traveling public for years - let's hope things change now and more competition is allowed

Only those gullible enough to buy from King Power. Sang Som is more expensive at Swampy than at 7.11.

3 hours ago, canopus1969 said:

He's been ripping off the traveling public for years - let's hope things change now and more competition is allowed

Sorry, double posting. 

Above all, the prices at the duty-free stores are not worth it now....

3 hours ago, canopus1969 said:

He's been ripping off the traveling public for years - let's hope things change now and more competition is allowed

Yeah, 300 bath for a cheese & tomato sandwich, where a farmhouse loaf only cost  32 baths then,

34 minutes ago, observer90210 said:

Above all, the prices at the duty-free stores are not worth it now....

When has duty-free ever been a value?

 

Most easily sucked in.

His monopoly which is what it was has now been thrown into new territory, while family and business will try to keep the status quo watch out for the sharks ready to come in on a feeding frenzy to pick off what they can !

I have always despised King Power,  and have never bought a single item there. The problem is simple. Duty free is supposed to be cheaper, i.e., no tax on the items sold. In Thailand, and most of the rest of Asia, duty free is in fact normal prices marked up usually by 30% or more in order to exploit and rip off a captive and gullible market [tourists]. These people are the worst. No disrespect, but it's important that people know how someone became rich enough to buy two football clubs, a string of top flight race horses, helicopters, London houses etc etc. Obviously the exchange rate, cronyism, tax evasion, and corruption were  somewhat in his favour.             Really, wake up everyone!

Once there is another operator with a real duty free concept it might be possible to buy products which indeed are cheaper than the duty paid products in town. 

Looked at watches; some watches were 15% more expensive duty free than their duty paid counteroffer in town. 

Kuala Lumpur is some 50% cheaper than King Power in Thailand, so it is quite obvious that only the country-side Chinese, roaming the Kingdom by the millions, are paying thise overpriced inflated prices. 

Since the Chinese are in town it is remarkable, that no alien farang got "caught" with some stolen items as the staff seems to be busy actually selling the stuff rather than "positioning" it into shopping bags and pouched by those alien farang who got shaf"*ç%ted before. Good luck to his son, a (business wise) difficult heritage to take over if you are not a complete cr"*ç%k! 

Possibly the only airport, worldwide, with a toilet/duty free ratio of 1:20 ???? 

55 minutes ago, ChrisY1 said:

Not sure how Kings were ripping off people....they have prices on their good as do all other duty free outlets....if people buy them, as they obviously have been, and making Kings lots of money...where's the rip off?

Charging 4 times for a beer what it costs outside, and claiming to be duty free, and not having competition.......that's the rip off.