The Central theme of the Chirathivat success story

[webfact]

The Central theme of the Chirathivat success story

By Somluck Srimalee
The Nation

 

 

With the plan to list Central Retail Corporation (CRC) on the Stock Exchange of Thailand this year, Thai conglomerate Central Group will have its three core businesses listed on the SET with market capitalisation at more than Bt700 billion, or about four per cent of the bourse’s Bt17.67 trillion market cap.

 

The Central Group had humble beginnings. In 1974 Tieng Chirathivat and his son Samrit Chirathivat set up Central Trading for the sale of books, fashion products from the domestic market and imported products such as dresses, shoes, shirts, etc at Soi Charoen Krung.

 

Seventy-two years later, what began as a small shop has expanded into the Central Group, encompassing three major businesses.

 

The first is CRC, the flagship business of the group, that has been in operation for 72 years. As of March 31, CRC operated 1,979 retail stores in 51 provinces. The company also owns 134 retail stores in Vietnam and Italy with sales valued at Bt240 billion.

 

CRC’s business covers three segments: food business such as Tops Market, Tops Daily, Tops Plaza, Central Food Hall, Family Mart, Big C Vietnam (some of the Big C Vietnam outlets have already changed their name to GO!),and LanChi Mart in Vietnam. The food business generates 43 per cent of the company’s revenue.

 

CRC’s fashion business, which includes Central Department Store, Robinson, Robinson Lifestyle Centre, Super Sport, CMG, and Italy's La Rinascente, generates 35 per cent of its revenue.

 

The third is hardware, which includes Thai Watsadu, Baan and Beyond, Power Buy and electronics chain Nguyen Kim in Vietnam, which generate 22 per cent of CRC’s revenue.

 

The next giant in the group is property developer Central Pattana Plc, which operates shopping centres and residential projects both in Thailand and Malaysia and has total assets valued at Bt163.08 billion as of March 31.

 

The third business segment of the Central Group is hospitality. Central Plaza Hotel Plc operates hotels under the Centara brand. In addition to Thailand, the chain is expanding overseas with assets valued at Bt27.06 billion as of March 31.

 

The three businesses of the group recorded total sales exceeding Bt300 billion last year and have continued to average double digit growth annually.

Since inception, the Central Group has been managed by the Chirathivat family, from the first to the third generation, with the stage set for the fourth generation to take the reins.

 

“It is difficult for a family business to be managed from the first to the third generation with constant growth, and without any conflict among family members,” Dr Somchai Pakapaswiwat, an economics and politics indipendent acadaemic,  told The Nation.

 

But the Chirathivat family has managed to remain united and driven the group’s business, which is different from other families in Thailand, Somchai said.

 

He explained that the Chirathivat family has a family council, which manages the family members and ensures benefits to all. The family also has a business committee, which is open to outsiders and operates separate from the family council.

 

“Having a family structure and an organisation that is open to both family members and outsiders with ability has helped drive business growth over the long term,” he said. 

 

The family has also been successful in selecting the group’s leader from the second to the third generation, enabling them to be ready for change in customer behavior and push diversification to match customer demand.

 

That explains how the group, founded as a shopping centre, diversified to embrace food, lifestyle, hospitality, and property.

 

While retail remains its core business, the group is now ready to move into digital and e-commerce business.

 

“The key to the success of the Chirathivat family comes from the strong family structure,” says Somchai.

 

The Chirathivats are the only family in Thailand to retain family control over a conglomerate from the first to the third and fourth generations because of strong family relations and strong business compared with other tycoon families, which have transitioned only from the first to the second generation.

 

Currently, the key person driving the growth of CRC is Tos Chirathivat, from the third generation of the family. He is the son of group co-founder Samrit Chirathivat and the grandson of founder Tieng

 

 

“We started as a small family business 72 years ago. Now, as the leader in the Thai retail market, we operate a wide range of multi-format stores, ranging from the first department store in Thailand to other retail outlets with diversified formats, including specialty stores for specific products. Furthermore, we have added value to our offline channel with the launch of Omnichannel strategy to cater to consumers’ shopping behaviour in every dimension,” Tos, chairman of CRC’s executive committee, said at a press conference last week when he announced the plan to list CRC on the Stock Exchange of Thailand this year.

 

“The Central Group positions itself as the “Central of Life” for all our stakeholders. We will continue to revolutionise our platforms in order to create a ‘Central Experience’, offering a unique, frictionless proposition throughout a customer’s journey," said Tos.

 

He has played a key role in devising the strategy that transformed Central Group from a domestic firm into a regional and global firm by expanding investment, opening and acquiring major stakes in shopping centres in Vietnam, Malaysia and Italy, after steering the group through the 1997 economic crisis.

 

In 1997, the Central Group was one of the conglomerates impacted negatively by the crisis. But the group has learned its lessons and marched on.

 

“We are expanding overseas because we want to balance our portfolio and create sustainable growth for our group,” Tos said recently.

 

It is generally a challenge for family businesses to remain united, especially when the reins pass on from the first to the third generation. But the Chirathivats are a good example of a strong family that has shown the ability to grow the family business through all crises and challenges, Somchai noted.

 

 

Source: https://www.nationthailand.com/premium/30374143

 

-- © Copyright The Nation Thailand 2019-08-05

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[sunnyboy2018]

Good story about Thai determination and hard work  

[canuckamuck]

It's hard to give much credibility to a report that says 1974 was 72 years ago.

They have done well for themselves though. Ensuring that you can only find the same products in the same stores in every mall in Thailand. And if you don't feel like Japanese inspired fast food, You are left with Pizza Company, Sizzler, KFC and MacDonald's. Good luck finding Thai food outside the food court.  It works for the Thais, but I would love to see some variety.

[mikebell]

How do they make money in Thaiwatsadu stores; there are always more staff than customers and that's only the ones you can see; there's other groups hiding away in the basement in case they are asked about a product.

[ratcatcher]

18 minutes ago, mikebell said:

How do they make money in Thaiwatsadu stores; there are always more staff than customers and that's only the ones you can see; there's other groups hiding away in the basement in case they are asked about a product.

"No have" basement. Sorry. But agreed, and without their mobile phones they would be even more bored.

[bowerboy]

3 hours ago, sunnyboy2018 said:

Good story about Thai determination and hard work  

 

Actually about Chinese determination and hard work. These are Chinese Immgrants and the Grandfather barely spoke Thai.

[bowerboy]

1 hour ago, mikebell said:

How do they make money in Thaiwatsadu stores; there are always more staff than customers and that's only the ones you can see; there's other groups hiding away in the basement in case they are asked about a product.

 

If you had enough power and influence and had the ear of the people that control the Thai Baht then you could keep it artificially high so that everything you import to sell becomes cheaper.

 

Also helps if you have a near monopoly of your market.

[phkauf]

The secret to success is "somehow" getting politicians to erect barriers to competition. With competitive retailers like Walmart or Costco unable to enter the market unless they have a useless Thai partner, it's easy to build a conglomerate that dominates the market at the expense of most Thai people.

 

[JayBangkok]

If only they understood stock control. Often in Cenrtral I order something, the salesperson disappears and comes back 10 minutes later to say "mai mee"

[Eric Loh]

2 hours ago, bowerboy said:

 

Actually about Chinese determination and hard work. These are Chinese Immgrants and the Grandfather barely spoke Thai.

Grandfather Cheng was an immigrant from Hainan Island fleeing China internal strife and poverty with only his shirt on his back in 1927. Thrifty, hardworking and discipline brought his family to where it is now. Truly an admirable background to this success story. 

[greeneking]

1 hour ago, bowerboy said:

 

If you had enough power and influence and had the ear of the people that control the Thai Baht then you could keep it artificially high so that everything you import to sell becomes cheaper.

 

Also helps if you have a near monopoly of your market.

'Several shell corporations registered under Chirathivat's name in Nevada were exposed as part of the Panama Papers document dump in April 2016' Wikipedia

These are not the good guys.  Thailand's unfairness and inequality starts with companies like this.

Pay your taxes and allow the poor to improve their health, their children's education and their lives.

[pegman]

23 hours ago, canuckamuck said:

It's hard to give much credibility to a report that says 1974 was 72 years ago.

They have done well for themselves though. Ensuring that you can only find the same products in the same stores in every mall in Thailand. And if you don't feel like Japanese inspired fast food, You are left with Pizza Company, Sizzler, KFC and MacDonald's. Good luck finding Thai food outside the food court.  It works for the Thais, but I would love to see some variety.

No worries, Timmies is on it's way to Thailand. All the double-doubles you can handle.

 

https://www.newswire.ca/news-releases/tim-hortons-r-announces-agreement-to-launch-in-thailand-883732727.html

[canuckamuck]

1 hour ago, pegman said:

No worries, Timmies is on it's way to Thailand. All the double-doubles you can handle.

 

https://www.newswire.ca/news-releases/tim-hortons-r-announces-agreement-to-launch-in-thailand-883732727.html

Well that's something I guess. Although the glory days of Tim's are behind them I hear. In my town folks would line up down the street Idling their one ton diesels in a blizzard, in the drive thru. Just to get another cup and maybe win a free one on roll up the rim. It was better than waiting in line inside though. There was never a seat, and the doors kept opening letting in a snowy draft as you stood in a slushy line waiting to order. It was even worse in the winter.

Edited August 5, 2019 by canuckamuck

[Fex Bluse]

21 hours ago, phkauf said:

The secret to success is "somehow" getting politicians to erect barriers to competition. With competitive retailers like Walmart or Costco unable to enter the market unless they have a useless Thai partner, it's easy to build a conglomerate that dominates the market at the expense of most Thai people.

 

Exactly. Impressive what they have done but only in the context of an entirely noncompetitive Thai market. They could not compete fairly with big western or even other big East Asian retailers.

 

Thailand is easy

[CelticBhoy]

Nothing like blowing your own trumpet.

Smart business minded family, but hopeless

at naming their sons. "Tos" for goodness sake!

[lkv]

20 hours ago, greeneking said:

Several shell corporations registered under Chirathivat's name in Nevada were exposed as part of the Panama Papers document dump in April 2016' Wikipedia

These are not the good guys.  Thailand's unfairness and inequality starts with companies like this.

No large company on this planet pays what the general population feels they should pay in tax.

 

I'm structuring my own affairs in a tax efficient way, and I am a small fish. Never mind the conglomerates.

 

 

[pegman]

On August 5, 2019 at 5:21 PM, canuckamuck said:

Well that's something I guess. Although the glory days of Tim's are behind them I hear. In my town folks would line up down the street Idling their one ton diesels in a blizzard, in the drive thru. Just to get another cup and maybe win a free one on roll up the rim. It was better than waiting in line inside though. There was never a seat, and the doors kept opening letting in a snowy draft as you stood in a slushy line waiting to order. It was even worse in the winter.

What town is that, Tuktoyaktuk?