In the News: 2004

Thai Union Frozen Products: Brands to go

Euromoney
March 2004

At first blush, Thai Union Frozen Products Public Company seems to be a poster child of the new Thai economy.

Thai Union, established in 1988, a world leader in one of Thailand's key exports, food processing, is one of the largest OEM seafood suppliers into the world market. Yet arguably, its achievements have come in spite of, rather than as a result of, Thaksinomics.
 
In 2000, Thai Union moved into the higher-value, branded products business by acquiring the established US brand Chicken of the Sea. It has since acquired Empress International, another US branded seafood business. For president of Thai Union, Thiraphong Chansiri, the problem was that as an exporter his company does not benefit from the strong Thai domestic economy.

"My business has nothing to do with the domestic economy," he says, "it's pretty much a dollar economy company: 95% of my business is export - 55% to the US. The strong domestic economy can hurt me: higher interest rates, higher costs - energy, construction, labour shortages, a strong currency."

He supports efforts to stimulate domestic demand rather than rely on export-led growth but believes that Thai domestic markets remain too small to develop the brands crucial to long-term economic prosperity. He had to buy not build one.

Thiraphong believes that the government should look at brand development in a different way. "The focus has been Thai Thai," he says. "They're promoting Thai restaurants around the world, for example. Why don't they look at it the other way? If the product we have is common in the west, [the government should ask] how could we build a Thai brand for western countries?"

Key exporters need support Like others in Thailand, Thiraphong draws on an example from Singapore as a possible answer to his rhetorical question.

"Look at Singapore, Temasek, GIC," he says, "you have venture capital funds that invest along with the private sector. You need to share risk with the private sector. Don't look at me as a large company," he pleads. "When I walk out of Thailand, I'm a super small company. I think some industries can be world leaders where we're competitive. Look at the top 10 exports: pick the ones we're good at and that are important for our economy."

His point is that with increasing pressure from the weaker dollar and the Thai baht creeping higher due to the success of Thaksin's domestic policies, the likes of Thai Union are being squeezed hard.

Increasing the branded content of their products reduces their commodity-like nature, handing pricing power back to Thai exporters. Coming from a small home market he had to buy a global brand: it's now a Thai brand because he owns it. Perhaps Thaksinomics could benefit from a more proactive export strategy after all.