Thai tableware maker upbeat on ASEAN free trade agreement (Feature)

By Peter Janssen Oct 20, 2009, 6:12 GMT

   Bangkok - When the founder of Thai tableware-maker Srithai Superware Company tried to find a logo for his product line four decades ago, he discovered that all the popular Asian animals had already been snapped up.

   He had to settle for a penguin, not a species one would immediately associate with tropical Thailand.

   Despite the incongruous logo, the company is now one of Thailand's better-known brand names, with its products exported to 100 countries.

   Srithai Superware, the world's leading manufacturer of tableware made of 100 per cent melamine - a thermosetting hard plastic - has also invested in factories in Vietnam, Indonesia, China and most recently, India.

   The company, which is listed on the Stock Exchange of Thailand (SET), expects sales of 5 billion baht (152 million dollars) this year, up 3 per cent over 2008, despite the global recession.

   Superware's high-grade melamine tableware and kitchenware (an innovation that was popular in the US and Britain in the 1950s-60s before its tendency to strain and crack checked its advance over chinaware) is popular at Asian food stalls, restaurants, airlines, supermarkets, and even accompanied China's first astronaut in space.

   For company president Sanan Angubolkul, the South-East Asian market is an integral part of the company's future growth plans.

   'We have set ourselves a challenge to double our sales over the next five years from 5 billion baht to 10 billion,' he said. 'This is our target and we can make it because we are not talking about 65 million people in Thailand but 600 million people in the whole South-East Asian region.'

   Next year, the Association of South-East Asian Nations (ASEAN) Free Trade Area (AFTA) will theoretically come into full force for the six main economies - Brunei, Indonesia, Malaysia, Singapore, the Philippines and Thailand.

   Newcomers to the regional bloc - Cambodia, Laos, Myanmar and Vietnam - have until 2015 to reduce their tariffs to 0-5 per cent on imports from within the area states under AFTA commitments.

   While Srithai Superware has been exporting to the region for three decades, and has invested in factories and marketing operations in growing markets such as Indonesia and Vietnam, a full-fledged AFTA will allow it to streamline its operations.

   'Next year, we will export some products from Thailand to Vietnam and then some products we make in Vietnam to Thailand,' Sanan told the German Press Agency, dpa.

    'For example, chopsticks need a lot of labour to finish, so we will import them from Vietnam where wages are one-third what they are in Thailand,' he said.

   The Srithai Superware success story is interesting because it is as rare as penguins in South-East Asia.

   The ASEAN Free Trade Area has been in place since 1993, slashing tariffs to 0-5 per cent on the vast majority of goods exported to the region, and yet few ASEAN brands have blossomed over the past 16 years.

   There are some exceptions - Malaysia's Pensonic electrical appliances, Indonesia's Kalbe pharmaceuticals, Singapore's Breadtalk fast food chain - but the region's well-known brand names pale in comparison with Japan, South Korea and Taiwan.

   Part of the failure is historical.

   South-East Asia's recent industrial history took off in the colonial era. When the colonialists moved out, local trader entrepreneurs, many of them overseas Chinese, moved in, but their business focus was first on imports, then import-substitution industries and local monopolies.

   South-East Asia's export-led growth kicked off in the mid-1980s when Japan and other East Asian 'tigers' were forced to appreciate their currencies against the dollar, then shifted their manufacturing to the region to enjoy its low wages and currencies tied to the dollar.

   The Asian financial crisis of 1997, if anything, inspired South-East Asian economies to focus even more on exports, taking advantage of their dramatically depreciated currencies.

   The majority of Thai exports over the past two-three decades have been made OEM - original equipment manufacturer - meaning produced under a foreign brand name.

   Trade pacts such as AFTA are forcing a mind-shift.

   'In the past, Thai companies didn't pay too much attention to brands, but if your own brand isn't strong once the market opens up, the brands from the Philippines and Indonesia can come in and possibly kill us,' said Dusit Nontanakorn, chairman of the Thai Chamber of Commerce.

   'Once the market opens you have to think more seriously about your own brand, that's the name of the game,' he said.