Exchange-Traded Funds (ETFs) in Southeast Asia : Yet to Grow

There were 81 Exchange-Traded Funds (ETFs) available in Southeast Asia markets with market capitalization of USD 2.5 billion, which was 0.1% of total ASEAN exchanges market capitalization of USD 1.95 trillion (as of 4th April 2016).  ETF is listed on stock exchange which investors are able to trade them like individual stocks.  There are plenty of advantages for investing in ETF over mutual funds:

  • No sales charge or application fee
  • Passive investment of tracking index performance
  • Exposure and diversification of markets and asset classes
  • Lower overall cost
  • Flexibility and liquidity through intraday trading
  • Transparency

Which ASEAN exchange has the largest amount of ETF?

Unsurprisingly Singapore topped the ETF league table in Southeast Asia for having biggest ETF market capitalization of USD 1.8 billion and 41 ETFs. Outside Singapore, Malaysia championed in market capitalization (USD 444 million from 8 ETF) while Thailand championed in number of ETFs (20 ETFs with USD 136 million market capitalization).

Exchange Number of ETF Total ETF Market Cap (USD mil)
Indonesia

7

109

Malaysia

8

444

Philippines

1

22

Singapore

41

1,798

Thailand

20

136

Vietnam

2

19

Who are the biggest ETF providers in Southeast Asia?

Top 10 largest ETF providers handle more than 85% of global ETF assets, but not all of them are presence on the ASEAN exchanges probably due to the size of the markets are too small. However global players such as Blackrock and Deutsche are no stranger to the ETF markets in the region.

Top 5 ETF providers by number of ETFs:

  1. Deutsche Asset Management – 17
  2. Lyxor International Asset Management – 15
  3. Krung Thai Asset Management Co Ltd – 9
  4. Indopremier Investment Management – 8
  5. CIMB-Principal Asset Management – 4

Top 5 ETF providers by market capitalization of ETFs:

  1. BlackRock Singapore Ltd – USD 576 million
  2. Nikko Asset Management Asia Limited – USD 532 million
  3. AmInvestment Services Berhad – USD 353 million
  4. State Street Global Advisors – USD 348 million
  5. Deutsche Asset Management – USD 150 million

As you can see, number of ETFs listed does not determine the size of assets managed by each ETF provider.

What types of ETFs are available in Southeast Asia?

ETF-in-southeast-asia-exchanges-number-and-mandate

Most of ETFs available on the ASEAN exchanges are geographic focus. There are only 9 out of 81 ETFs focus on commodities, which more than half of it invests in gold (all listed on Thailand Stock Exchange).  The other commodities ETF listed in Singapore have more diverse commodities investment, which includes energy, precious metals, base metals, agriculture and livestock.

ETF-in-southeast-asia-exchanges-geography

The two pie charts above are showing the breakdown of number and market capitalization of ETFs with geography mandate (excludes the commodities ETFs). Taking a closer look, nearly half (47%) of these funds have ASEAN region/country focus.  Indonesia and Thailand have the highest number of specific country mandated funds, whereas Singapore has the highest amount of investment.

Are you buying what you want to buy?

The concept of ETF investment may sound simple, but it is not as straight forward as it seems. Just like any investment (regardless of commodities, stocks, bonds, or unit trusts), purchasing of ETFs also requires thorough understanding of the investment decision.

Major Underlying Assets Number of ETF Total ETF Market Cap (USD mil)
Bond 6 943
Commodities 5 19
Equities 55 1,470
ETF 6 10
Gold 4 31
Money Market 5 54

The following six ETFs provided by Krung Thai Asset Management and Maybank Asset Management Thailand may seem like a good exposure to China, Emerging Markets, Europe, Hong Kong, Japan and USA, but the sole investment of the ETFs are other ETFs in other countries:

  • KTAM Hong Kong ETF Tracker (HK TB)
  • Maybank Emerging ETF (MEM TB)
  • Maybank Euro ETF (MEU TB)
  • Maybank Japan ETF (MJP TB)
  • Maybank US ETF (MUS TB)
  • W.I.S.E. KTAM CSI 300 China Tracker (CHINA TB)

Even some of the ETFs with China mandate do not actually invest directly in China. For examples:

  1. CIMB FTSE China 50 ETF (CIMBC25 MK) invest in H-Shares, Red Chips and P Chips;
  2. Lyxor UCITS ETF China Enterprise HSCEI – USD (ASI SP) only invests in H-Shares; and
  3. United SSE 50 China ETF (USSE50 SP) invests to China stocks via P-notes; and
  4. W.I.S.E. KTAM CSI 300 China Tracker (CHINA TB) invests in BOCI-Prudential’s ETF domiciled in Hong Kong which has investment in A-share and derivative instrument linked to A-shares.

Are mutual funds in ASEAN the walking dead?

ETFs are gaining traction in Asian countries such as Taiwan, Hong Kong, Japan and Korea. However the S.E. Asia countries’ investors have not adopted the passive investment strategies.  In 2012, mutual fund assets under management (AUM) reached USD 265 billion.  The AUM is significantly larger than USD 2.5 billion ETFs’ assets.  However there is major growth opportunity for Southeast Asian ETF business with introduction of more investment strategies and greater adoption.

List of ETFs on S.E. Asia exchanges as of 4th April 2016 (click to enlarge):

ETF-in-southeast-asia-exchanges

References:

  1. Data were extracted from Bloomberg as of 4th April, 2016.
  2. LifeHealthPro – Mutual fund assets in S.E. Asia hit $265.1 billion in
  3. PwC – ETF 2020 : Preparing for a new horizon

What is ASEAN Minus X (ASEAN-X)?

The Association of South-East Asian Nations (ASEAN) was established in 1967 with the vision to form an ASEAN community by 2015, covering three areas namely political-security, economic, and socio-cultural.  However it is challenging for the 10 members to all come to agreement to form a European Union-style common market.

Framework is just a guideline

asean-xDue to different phase of development in financial and socio-economic, not all countries of the ASEAN bloc is expected to adopt all the agreed framework immediately.  The concept of “ASEAN Minus X” was developed in 1992 to provide such flexibility for members who are ready to proceed first.  ASEAN-X is a sub-group of ASEAN which will ensure orderly change according to each country’s national policy objectives and level of development.

The advantages of ASEAN Minus X

The ASEAN Minus X mechanism will work well for the bloc due to lack of strong central mechanism to coordinate and survey on all the issues faced by each country.  ASEAN requires consensus agreement on any decision making and institution of credible enforcement mechanism.  Having a consensus for each issue is time consuming and unrealistic.  The subgroup of ASEAN will be allowed to implement with an economic policy first without waiting for all the members to be ready, under the condition that all members are in agreement.  For those who are unable or unwilling to proceed, they need to set their own timeframes.

The disadvantages of ASEAN Minus X

ASEAN-X is a true reflection of ASEAN as an economic bloc, which not all countries are equal.  Despite critics on slow integration, member countries deem this dual speed formula as slow but steady, which is the “ASEAN Way”.  “Rubber time” is definitely a good term to describe this economic bloc that exports rubber and self-set timeframe.  Other concern is such formula will undermine ASEAN’s goal to achieve single market if it is used as a crutch.

 

Roti Sai Mai : Thai Sweet Crepe

Layout of ancient temple (Wat).

Layout of ancient temple (Wat).

When I was looking for restaurants in Ayutthaya, the ancient capital of Thailand, I noticed many street stalls are selling bags of colourful items.  Going around with an English illiterate tuk-tuk (auto rickshaw which is a three-wheeler taxi popular for moving around in Thailand) driver did not help much in knowing what are those coloured products.  I ended up buying a bag green noodle with a few pieces of pita bread like flat bread with my barely qualified sign language.

Bringing them back to Bangkok that night, I showed it to a local friend and she told me it is “Roti Sai Mai”, which is a popular local dessert in Ayutthaya.

What is Roti Sai Mai?

Roti Sai Mai is a dessert made of cotton candy wrapped with flat bread.  Roti (means bread in Sanskrit word) is a flat bread originated in Indian region.  The Indian subcontinent flat bread usually made of wheat flour is popular in Indonesia, Malaysia and Singapore.  People may often confuse with these breads eaten with curries when they visit different Southeast Asia countries due to name difference.  It is known as Roti Maryam/Roti Cane/Roti Konte in Indonesia, Roti Canai in Malaysia and Roti Prata in Singapore.  There are various roti recipes available in the ASEAN region which includes both savoury and sweet ingredients, such as banana, egg, condensed milk, or sugar.

A roti sai mai stall sells candy floss for wrapping in transparent plastic bags.

A roti sai mai stall sells candy floss for wrapping in transparent plastic bags. (picture credit)

However Roti Sai Mai is one of its kind which can only be found in the ancient capital of Thailand.  Although roti is originated from India and Ayutthaya is heavily influenced by Hinduism, the dessert actually got popular after Portuguese traders and missionaries introduced eggs and flours to the Thai people during the 16th century.  The dessert may have some Islamic influence as they are mainly sold by Muslim vendors.

Roti sai mai is available in various colour of bread and candy floss.

Roti sai mai is available in various colour of bread and candy floss. (picture credit)

The candy floss are actually not in the form of fluffy candy, but thin silk strands like hair.  They come in various colours, including green (pandan flavour), white, pink, and purple.  You may be guessing Sai Mai means “candy floss” in Thai, and it is definitely wrong.  Due to its appearance, the candy floss of Roti Sai Mai is known as Sai Mai, which literally means “silky threads”.

How to buy and eat Roti Sai Mai?

First time buyer may be confused and feels cheated when buying the dessert.  Unlike other parts of the world which sell roti by individual pieces, the street vendors here will sell you a bag of candy floss and a bag of warm roti.  Chances are you will not be able to consume the novelty dessert at the stall.  Just bring them back to the hotel or any restaurant, grab one handful of candy floss and put them on a piece of non-sweet flat bread.  Roll it like spring roll and send it straight to your mouth.  You will be greeted with a taste of soft, sweet, chewing and melt-in-your mouth joy.

Netflix Singapore: Any Impact to Starhub/Singtel/M1?

Telecommunication in Singapore – The 1% Club

The telecommunication space in space in Singapore is a controlled space. As table below shown, there are only several service providers of cellular phone network, internet services, and radio and television stations.

singapore-telecommunication-industry-competition-landscape-comparison-table

Being the internet service providers (ISPs), all three major ISPs (Starhub, Singtel, M1) have an edge in providing Internet Protocol television (IPTV) to keep its 6 million customers entertained on top of those channels provided by the Singapore government. The three biggest telecommunication companies are only worrying about who gets the broadcast license for the popular football leagues.

Here comes Netflix…

netflix-logoOn 7th January 2016, Netflix which started as a mail-order DVD service to current internet TV service for 70 million subscribers announced its expansion globally expanded globally to 130 countries (except China). Netflix Singapore offers monthly basic plan of S$10.98 with the first month free (S$16.98 for premium package) to lure subscribers in this saturated entertainment space. Can it penetrate the local TV market?

Shot term: a complementary product to the Singapore telcos

For the three telcos, they do not see Netflix as a threat at all. On the contrary, they would see Netflix as a complementary product to theirs which require broadband connection as well as providing additional contents which are not already in the IPTV package.

Competitors of Netflix

1. Netflix itself

Despite new to the Singapore market, it is not new to the targeted subscribers in this tiny island. Singaporean who are already familiar with Netflix already has a Netflix USA account which only costs them US$7.99. There are hundreds of websites online teaching the Singaporean how to access Netflix USA via VPN.

It also does not have Asian contents such as Chinese, Korean and Japanese programs; it filters a big majority of the subscribers. Even if it is only targeting English speaking market, with limited US programs will not likely helps it to capture much market share. Nacros is more popular than Game of Thrones? People still want to watch Game of Thrones. Even Netflix’s own Orange is the New Black and House of Cards is not aired in Singapore. Why pay more for less? Netflix is also moving towards blocking proxy access from other countries to its US library which will upset its original subscribers.

2. Starhub / Singtel / M1

Unfortunately, the TV series not found in Netflix Singapore are found in the IPTV channels provided by the three big boys. The telecommunication companies also provide live content which is nowhere to be found in Netflix.

3. Android TV Box and online streaming

There is one big competitor Netflix is unable to beat without the help of the three telcos, which are Android TV box and online streaming websites. In Singapore, the streaming devices can be easily purchased and installed with numerous applications to stream movies and TV series online (without monthly cost). At a small scarification of clicking away advertisement popups, the broadband users in the country can also access to new movies and series from the online streaming website for free.

Netflix’s penetration plan: be complementary

Since Netflix’s debut in Singapore, the search interest of “Netflix” surged but this has not been translated to subscription yet.  The television industry is still observing its impact to the local television landscape.  However two of the Singapore telcos are not taking Netflix’s entrance lightly.

2016-01-19 14_22_40-Google Trends - Web Search interest_ netflix - Singapore, Past 12 months

Google Trends’ last 12 months interest on “Netflix” term.

Instead of fighting head to head with the IPTV providers, Netflix Singapore adopted a different strategy by working together with the local telcos. A week after Netflix’s debut in Singapore, Singtel announced its “exclusive partnership” with Netflix to provide Singtel’s new customers (including re-contracting) of up to nine months complimentary subscriptions starting from April 2016.

However Singtel’s exclusive deal may not be so exclusive after all. Starhub also joined Netflix’s Open Connect programme to provide its Fibre TV customers access to Netflix content during the same period. Taking a step further, Starhub also offers its customers to pay Netflix subscriptions via Starhub’s existing services bills.

Streaming of Netflix on Open Connect programme will not affect the ISPs’ bandwidth usage as the streaming will use Netflix’s own content delivery network. It may be in line with Netflix’s strategy to compete against its home country’s rivals (e.g. Amazon and Hulu) to push its original content to the world. It will not be a surprise Netflix will gradually increases its library content with more original films and same-time release of series.  For now, let’s watch Nacros and Daredevil on Netflix only.

It seems Netflix, Singtel and Starhub all get something out from the change of television landscape. M1, the usual latecomer, seems to be left out from IPTV party.

Dhanin Chearavanont: The Man Who Feeds China

dhanin-chearavanont

Dhanin Chearavanont is one of the Asian godfathers who built his fortune on chicken, pig and shrimp farming. His business ventures spanned globally into automotive, convenience stores, telecommunications, biopharmaceuticals, and financial services.

Profile

Date of Birth: 28 Jan, 1939
Nationality: Thailand
Race: Chinese
Marital Status: Married to Mrs. Khunying Tewee Chearavanont
Children: 2 daughters and 3 sons

  • Mrs. Varnnee Chearavanont Ross
  • Mr. Soopakji Chearavanont
  • Mr. Narong Chearavanont
  • Mr. Supachai Chearavanont
  • Mrs. Tipaporn Chearavanont
Education :
  • Primary school: Sarasit Wittaya School, Ratchaburi Province, Thialand
  • Secondary School: Shantou, China
  • College: Hong Kong; Degree from National Defence College of Thailand
  • Certificate: Director Accreditation Program (DAP) from Thai Institute of Directors Association (IOD)

Being the richest man in Thailand, other countries in Southeast Asia may not be familiar with the name Dhanin Chearavanont. Thai-born Dhanin Chearavanont is not only Thailand’s richest man, but also Southeast Asia richest and probably one of the richest overseas Chinese person. The Thai Tycoon is the Chairman and CEO of the Charoen Pokhant Group (CP Group).

The Influence of Dhanin Chearavanont

CP Group is not just the largest agricultural company in Thailand. Its business influence extends into 17 countries including Thailand. Below is a simple chart drawn by me based on my understanding and research (there are many businesses not included):

Dhanin Chearavanont Business Empire

Click to see larger picture

CP Group has business achievements are greatest in Thailand and China. In Thailand, Dhanin owns the largest internet service provider True Corp (a subsidiary of CP Group). He is also the sole owner of 7-Eleven Thailand via CP All (a subsidiary of CP Foods). Globally, CP Foods (a subsidiary of CP Group) is the world’s largest chicken and pork producers. People often mistakenly interpret CP as “Chicken and Pork”. Another subsidiary of CP Foods also has remarkable achievement as the world’s largest producers of feed – CP Pokphand.

Beyond Thailand, Dhanin’s CP Pokphand is also China’s largest poultry exporters and one of the largest feed producers in China. Dhanin Chearavanont’s financial influence is not limited to pig, poultry and feed. The company also operates retail operators in the country through CP Lotus and biopharmaceutical through Sino Pharmaceutical Limited. CP Group is also the largest shareholder of a Chinese second largest life insurance company Ping An Insurance. Ping An Insurance has business operations in bank, securities, asset management and real estate. Dhanin Chearavanont is also related to recent hottest tech billionaires indirectly. Both Alibaba and Tencent are also shareholders of Ping An Insurance. Alibaba, Tencent and Ping An even rolled out a joint venture online insurance company, which is first of its kind in China.

Dhanin Chearavanont’s financial involvement in China does not stop at Ping An. CP Group is also the second largest shareholder of Itochu Corp (Japan) which is one of Japan’s oldest trading house and largest trading house by net profit. Both CP Group and Itochu Corp teamed up and acquired 20% of CITIC Limited which has operations in bank, securities, resources and energy, manufacturing, engineering contracting, real estate and infrastructure, telco and many other businesses. CLSA is also a subsidiary of CITIC Securities which is a subsidiary of CITIC Ltd and also the largest brokerage house in China.

The China Connection

cp-group-danin-chearavanont-and-deng-xiao-ping-shake-handsIn many occasions, there were evidences showing that Dhanin Chearavanont was an important figure to the one-party country. In China, he was known as Xie Guomin and was frequently spotted standing beside Chinese President Xi Jinping in many photographs.

How did Dhanin Chearavanont become so influential and successful in China? The richest Chinese foreign investor in China benefited from first mover advantage. Either Dhanin Chearavanont has a good nose for money or loyalty towards ancestry country, CP Group Chairman Dhanin Chearavanont was the first batch of companies to invest in China when China opened up to the world in December 1978 by supreme leader Deng Xiaoping. CP Group is known as Chia Tai in China, which has the corporate registration number of “0001”. It is also a preferred partner company of international brands such as Honda, Walmart and Tesco to operate in China in 1980s. In China’s internationalization plan, Dhanin’s shadow can also be seen. Chinese state-owned telco and also the world’s largest telco with 800 million subscribers also owned 18% shares of True Corporation.

Dhanin Chearavanont’s aggressiveness in befriending with the Chinese counterparts was definitely crucial in his China’s success. However his father Chia Ek Chor also helped to open some doors back in the 1920s. In 1920s, Chia Ek Chor and his brother Chia Seow Hui left Shantou, China for Bangkok. At that time, chemicals and seeds (of cabbage, turnips, radishes and cauliflower) are rare. Chia Ek Chor went to China and other countries to source for products to sell in Bangkok. This had helped the Chearavanont family to build business connections in the early years.

Is Dhanin Chearavanont the richest man in Southeast Asia?

In Forbes’ The World’s Billionaires 2015 ranking, Dhanin Chearavanont from Thailand is ranked number 81 billionaires with the net worth of $13.6b, surpassed Charoen Sirivadhanabhakdi (Thailand, ranked #87) and Robert Kuok (Malaysia, #110). Although his crown as the richest man in Southeast Asia was taken by Henry Dy from Philippines, his real-time net worth tracked by Forbes is already higher than his Southeast Asian billionaires peers (net worth of $18.6b as of 4 Jan 2016).

[pic][pic]

How Did Jim Thompson Change Thailand?

If you have been to Bangkok, Jim Thompson is definitely a name that you come across. Jim Thompson is an established fashion apparel brand in Thailand, Malaysia and Singapore. Jim Thompson even has a house in Bangkok, Thailand as a museum to showcase his house’s architecture and arts collection. The big question is “who is Jim Thompson?”

Who is Jim Thompson?

jim-thompsonJames Harrison Wilson Thompson (21 March 1906 – disappeared on 26 March 1967) is a man of mysteries with remarkable career and sudden disappearance. Jim Thompson was born in Greenville, Delaware in 1906 of a prominent Delaware family. He served the Office of Strategic Services (OSS) and Central Intelligence Agency (CIA) during the Second World War. When the World War II ended abruptly in 1945, Jim Thompson was en route to Bangkok together with other OSS men. Later he setup the Bangkok OSS office, and was discharged from the military in late 1946. Since then, he stayed in Thailand for 25 years became a self-made American entrepreneur who popularized Thai Silk to the world, and crowned the title of “Thai Silk King”. Many believe that he was an American spy due to his OSS and CIA background.

As a postwar legend, Jim Thompson earned the fame as the “Legendary American of Thailand” and was awarded the Order of the White Elephant by the Royal Thai government. At the height of his career and being one of the most famous Americans in Asia at the time, he was reported missing in Malaysia’s Cameron Highlands in 1967. His body was never found. Before that, other agents received “burn notice” from CIA warning them to stay away from him. As this article examines the contribution of Jim Thompson to Thailand, you can read more of the unresolved mystery from “Jim Thompson: The Unsolved Mystery” written by William Warren.

Jim Thompson was the Social Center of Bangkok

With a passion and background in architect and arts, Jim Thompson spent a year to construct his house in a Bangkok village with old houses from Ayutthaya, an old capital of Thailand which is 64km north from Bangkok. He dismantled the houses and moved them to the village by river. Upon the arrival of woodwork, Jim Thompson reassembled them to build six Thai dwellings combining authentic building structure (e.g. elevated one floor above the ground) and his own touches. He also collected beautiful things to decorate his house with antiques from Ayutthaya, Victorian chandeliers, and many other items from China, Belgium, Cambodia, Benjarong, Burma.

jim-thompson-dining-room

A Thai house with western architect and decoration, Jim Thompson’s house was the talk of the town and the center of Bangkok social and culture universe. It was never quiet at this house near the smelly but peaceful canals since Jim moved in. On the dining table used by King Rama V of Thailand collected by Jim, he was the toastmaster for Bangkok hosting parties and dinners for elites of Thai society and guests visiting Bangkok. His guests included Du Ponts and Truman Capote. Jim Thompson impressed his guests not only with elegant and sophisticated collections of rare Southeast Asian arts, but also great company and delicious Thai cuisine, particularly Thai-Muslim and Thai-Continental fusions. However, there is no evidence showing Mr. Thompson was performing intelligence work during his cocktails and dinners.

Although Jim Thompson only stayed there for short eight years, his house has become a landmark of Thailand, and it is now open for public to appreciate his incredible good taste in arts and architects.  It is currently managed by James H.W. Thompson Foundation which received permission from government ministries of the Kingdom of Thailand in 1976.

The Thai Silk Magnate

Jim Thompson Shop located at Centralworld Thailand

Jim Thompson Shop located at Centralworld Thailand

Jim Thompson did not start his Thailand career in Thai silk industry immediately. When he returned to Bangkok in 1946 after divorcing his wife, his interest was to restore The Oriental Hotel (now Mandarin Oriental) in Bangkok which was in a very bad condition. He bought The Oriental Hotel together with a group of investors, but he later gave up his shares due to conflicts with the other associates.

After being squeezed out from the hotel venture, Jim Thompson became interested in silk weaving. He saw opportunity in exporting Thai silk which was not commercialized and under shortage outside Thailand. His focus was never selling Thai silk in Thailand.  With great eye for colour, Jim designed his silk with strikingly contrasting and yet complementary colour. His vibrant colour and gut helped to turn Thai silk which was a dying craft to a world-class textile, making it popular again amongst the elite Thai. The talented textile colourist had become an authority in Thai silk industry (he was not the only one producing Thai silk) and brought the textile to cat walks in Paris, New York London and Milan. Time magazine said he “has almost singlehanded saved Thailand’s vital silk industry from extinction”. How did Jim do that?

Thai Silk Company Limited was founded by Jim Thompson and an American businessman George Barrie in 1948. Both of them own 18% of the company each believing that the controlling of the company should be held by Thai nationals. The remaining 51% were owned by Thai citizens, whilst 13% to foreign investors. Since then, Jim spent two decades in developing his Thai silk commercial empire.

As a non-Thai speaker, Jim Thompson worked remarkably well with the locals, particularly convincing the Thai Muslim who specialized in silk weaving to work for him.  The company hired local Thai-Muslim women to weave from home, which kept his overhead cost on space low. This also kept the disruption to the society to the minimum as women did not compromise on their household duties. Even though the company became instantly profitable, Jim did not exploit the cheap labours. Jim helped the people by giving out shares to them which helped thousands of the poor villagers out of poverty.

Jim Thompson’s silk used for costumes in The King and I. Photo Courtesy of Fox Media

Jim Thompson’s silk used for costumes in The King and I. Photo Courtesy of Fox Media

Charles Baskerville, a famous painter from New York, carried a large amount of silk produced by the Thai Silk Company with him to the States in 1949. Charles was well connected with prominent people, including international celebrities Diana Vreel. Jim also sent his silk samples directly to the designers from the fashion capitals of the worlds. Later the Thai silk first appeared on Broadway in Mike Todd’s Peepshow. However it was Irene Sharaff the costume designer who jump-started the trend of Thai silk fashion. She contacted Jim Thompson for samples of the fabric and pictures of local dress, and subsequently used them for the Rodgers and Hammerstein musical “The King and I” (1951). The silk found its way to various movies, hotels and even royal families. In the 1960s, the international acclaimed company developed a network of representatives in 35 countries worldwide. By 1967, the company’s turnover was approximately $1.5 million.

Today, Jim Thompson has retail outlets and restaurants in shopping malls and hotels around Thailand, Malaysia, Singapore, North America and Europe employing over 3,000 people.

Who runs Jim Thompson now?

Over 100 companies were competing for a share of the Thai Silk Company Limited after Jim Thompson’s disappearance in 1967.  At present, William (Bill) Booth, who was Jim Thompson’s assistant back then, is now the managing director of the $72 million revenue company.  William Booth is aided by his son Eric Booth, Head of International Marketing.  Although the company has enjoyed growth under the father and son team, it still faces problem penetrating overseas market, which is an obvious route for its growth strategy.  In 2005, the company closed down Dubai store after a short one-year operations.  The company has also expanded its product range, including non-silk and lower quality products to capture new markets and younger clientele.  We have yet to see the result of the company’s transition from a niche brand into brand for women’s clothing and house furnishings.

The Current Thai Silk Industry Landscape

The center of Thai silk today is no longer Bangkok. After Jim Thompson’s disappearance, the Thai Silk Company built facility in Khorat (a.k.a. Korat or Nakhon Ratchasima), and relocated weaving operations there in the early 1970s to ensure steady and reliable supply of raw materials for silk production.  Thai silk played its role to bring Thailand’s fabric to the world, but it is no longer the key player of Thailand’s garment industry which contributed 12.3% of GDP.

participants-in-the-silk-trade

In 2010, Thailand’s exports of silk and silk products were worth nearly $22 million, mainly to US ($6.7 million), Japan ($2.9 million) and UK ($1.8 million). It was reported Thai silk exports only accounted for 0.1% of global production, which most of them were consumed locally.  It is now competing with China, Japan and other countries for the pie of the world silk exports with total worth of $2.8 billion in 2014 (with a 5-year decline rate of 13.2%).  Thailand which exported only $13.1 million silk was not in the top 10 countries of silk exporters. It ranked number 7 in Asia, and far behind its neighbour country Vietnam ($62.4 million).

Thailand is also facing issues such as decreasing number of farmers due to conversion to the industrial sector or other more profitable crops. There are approximately 20,000 weaving families in Thailand. Thai Silk and its products have been a priority of the Thailand Ministry of Industry to enhance the quality for exports and regain the international status in 2017.  It is no longer an industry that can be revitalized by one man.

References:
1. Jim Thompson – The Thai Silk Company
2. Time – Business Abroad: The Silk King
3. Newsweek – Jim Thompson and Other Spooky U.S. Expats Around the World
4. The Jim Thompson House
5. Eastlit – Jim Thompson by John McMahon
6. Thai Embassy – Commerce Ministry Adjusts Image of Thai Silk to Meet Changing Taste of International Market
7. Bangkok Post – Silk Boom: Opportunity for Thailand
8. World’s Richest Countries – Top Silk Exporters
9. Exports of Silk from Thailand
10. YNFX – Min of Industry to develop manufacturing of Thai Silk and silk products
11. The Nation – Maintaining a Thai legend with tried and true technology
12. FT.com – Building on legacy
13. Asia’s Star Brands by Paul Temporal
14. Textile World – Thailand: Textile Industry Profile

The 7-Eleven Scene in Southeast Asia

7-11Although 7-Eleven is the world’s largest chain of convenience stores, the business model and operation differ in different countries. While the name 7-Eleven may suggests the convenience store’s opening hours is from 7am to 11pm, most of the stores in Southeast Asia countries actually have 24-hour operations. This article will look into the owner and licensee of 7-Eleven stores in respective Southeast Asian countries.

Summary of 7-Eleven scenes in Southeast Asia:
2015-12-16 19_34_24-The 7-Eleven Scene in Southeast Asia - Microsoft Word

Brunei

Residents in Brunei are missing out the opportunities to taste 7-Eleven’s Slurpee. Although in 2003 7-Evelen USA has granted exclusive rights to 7-Eleven Malaysia Sdn. Bhd. to operate and sub-franchise in Brunei, the company has not done anything in the country yet.

Cambodia, Laos, Myanmar, Vietnam

7-twentyIn the Greater Mekong region, many companies are competing for 7-Eleven franchise. In 2012, it was rumoured a major Burmese conglomerate Zaykabar Company Limited was interested in operating 7-Eleven in Myanmar. In 2013, CP All Plc, which operates 7-Eleven in Thailand and certain parts of China, announced it has submitted a proposal to 7-Eleven USA to open stores in these four underserved countries. Although 7-Eleven has not officially set foot in the region except Thailand, there are no lacks of 7-Eleven imitators such as this 7-Twenty in Siem Reap, Cambodia.

While most countries of the region is still sleeping, Vietnam (probably the last east Asia tiger) is progressing faster and getting more interesting especially with the penetration by McDonald’s, FamilyMart and other international brands. This year July, 7-Eleven, Inc. signed a master franchise agreement with Seven System Vietnam Co. Ltd. to open stores in Vietnam by 2017. The possible owner of Seven System Vietnam Co Ltd may be IFB Vietnam which also franchises Pizza Hut and the Coffee Bean & Tea Leaf in Vietnam. Just a side note, entrepreneur Henry Nguyen was the key person who brought McDonald’s to the country. He is also son-in-law of the Prime Minister, Nguyen Tan Dung, and was a director of IFB Vietnam.

Indonesia

The convenience stores in Indonesia are popular hangouts in the world’s most populous Muslim country, particularly at night which the air-conditioned stores provide Wi-Fi access and live bands. The convenience store chain is pretty new to the country as it was first opened in 2009 by PT Modern Putra (now known as PT Modern Sevel Indonesia), and the chain has since enjoys the benefits of increasing disposable income due to growing economy. Modern Sevel Indonesia is also the national distributor of Fujifilm.

Malaysia

Malaysia’s 7-Eleven is pretty boring as it has no distinctive products and services which has more than 1,905 stores nationwide. It is operated by 7-Eleven Malaysia Sdn. Bhd. With its parent company 7-Eleven Malaysia Holdings Berhad listed on Bursa Stock Exchange in 2014. The company was listed and privatized several times in history. What is more interesting about the 7-Eleven in Malaysia will be the previous owner, Vincent Tan. Vincent Tan who brought 7-Eleven to Malaysia via its conglomerate company Berjaya Group, also brought in Starbucks, Kenny Rogers, Jollibean, Wendy’s, Papa John’s Pizza, and Krispy Kreme to spice up the F&B landscape in this Muslim country. Vincent Tan is also a controversial business figure in Malaysia as he also operates one of the three legalized lotteries in Malaysia.

2015-12-16 19_38_25-7-Eleven Malaysia Store Location - Internet Explorer

Philippines

Taiwanese firm President Chain Store Corporation (PCSC) is the hand behind close to 1,500 7-Eleven stores of the nation. When 7-Eleven was introduced to the country on 24 Feb, 1984 in Quezon City by Philippine Seven Corporation (PSC), it was a ground-breaking retail concept to the Filipino consumers. However PSC went through a period of money losing in 1984 and 1985. PSC was bought from Southland Corporation (now 7-Eleven, Inc.) in 1982, and it was subsequently listed in the Philippine Stock Exchange in 1998. PCSC acquired majority stake in PSC in 2000 with the effective of the Retail Trade Liberalization Act which allowed foreign entities to invest in existing retail companies.
PCSC also controls the operations of 7-Eleven in Taiwan. It is a subsidiary of the largest food production company in Taiwan, Uni-President Enterprises Corporation. Uni-President also runs Starbucks, Mister Donut and Carrefour in Taiwan.

Singapore

With 560 stores scattered throughout the red dot island, 7-Eleven is naturally crowned the largest chain of convenience stores in Singapore. The Singapore stores is also more advanced compare to other ASEAN countries as it provides services like bill payments and cash withdrawals. Unfortunately operation of 7-Eleven in Singapore is not an easy business due to weakening economy, tight labour market, high rentals, tobacco display ban and stringent liquor regulations. Most stores in Singapore operate 24-hour except those at:

  • Biopolis
  • Hospitals
  • MRT stations
  • Colleges and universities

The ownership of 7-Eleven franchise was originally belonged to Jardine Matheson from 1983. Several years later, the franchise license was sold to Cold Storage Singapore, a subsidiary of the Dairy Farm Group which also operates 7-Eleven in Hong Kong and Macao. Dairy Farm Group also operates Wellcome supermarkets, Giant hypermarkets, Jason Market Place (high end supermarkets), Guardian and IKEA in Hong Kong, Indonesia, Macao and Taiwan. Dairy Farm Group is actually a member of the Jardine Matheson Group.

Thailand

Since the opening of first store in 1990 on Patpong Road, Thailand has become a country with the third largest amount of 7-Eleven stores (8,618 stores as of 3Q15) after Japan and USA, which more than half locate in Bangkok. The company reported an average of 9.7 million customers nationwide per days spent money in the stores. CP All Public Company Limited is the sole operator of the international chain in Thailand. There are three types of 7-Eleven stores in Thailand, which are:

  1. Corporate stores : wholly-owned and managed by CP All
  2. Franchise stores : franchise sub-grant by CP All to any person (including employees) to operate under the franchise system with the help of CP All in management
  3. Sub-area license stores : 3rd parties at Phuket, Yala, Chiangmai and Ubon Ratchathani responsible for the management of the stores themselves

7-eleven-thailand

CP All was also approved to open 7-Eleven stores in China in 2013 and 2014. CP All is controlled by Thailand’s wealthiest man Dhanin Cheravanont who is the CEO and Chairman of Charoen Pokphand Group. CP Group also ventures in various business, including CP Foods (world’s third largest chicken and pork producers), True Corp (largest internet service provider in Thailand), CP Pokphand (world’s largest producers of feed). The group is the largest shareholder of a Chinese life insurance company Ping An Insurance, and second largest shareholder of Itochu Corp (Japan).

Do you know…

7-11 in Thailand was boycotted for five days from 7 to 11 May, 2015 for its unethical business practice. The boycott incident is known as Siam Banana case as the company was believed to trick an entrepreneur into revealing recipe and production secret of a banana-flavoured custard cake (Siam Banana), which CP All later produces its own product without crediting the entrepreneur.

References:

  1. 7-Eleven Malaysia Milestones
  2. Work Live Laos : 7-Eleven to Open Stores in Laos, Cambodia, Myanmar, Vietnam
  3. Flickr : No 7-11 in Cambodia but they have the second best thing… 7-20 – Siem Reap
  4. 7-Eleven, Inc. Signs Master Franchise Agreement With Seven System Vietnam Co. Ltd. to Operate 7-Eleven® Stores in Vietnam
  5. CP All Public Company Limited : Annual Report 2014
  6. Corporate History of Philippine Seven Corporation
  7. 7ELEVEN Indonesia : Modern Indonesia

Book recommendation:

the-success-of-7-eleven-japanTitle: The Success of 7-Eleven Japan

Author(s): Akira Ishikawa, Tai Nejo

Published date: October 1, 2002

About the book:

Although the book was published in 2002, it is still a good material to provide readers a glimpse into 7-Eleven Japan using “integrated information system” for its advanced and innovative management.  7-Eleven Japan’s vital success was a result of using Big Data to develop functional operations and strategies, including logistics, merchandising and store operations.

How Does Indonesian Ethnic Chinese Celebrate Chinese New Year?

how-does-indonesian-ethnic-chinese-celebrate-chinese-new-year

The column above was created back in January 2012.

2013 is the Lunar year of snake.  In Indonesia, Lunar New Year is known as Imlek.  You can either greet people by saying “Selamat Tahun Baru Imlek” or “Selamat Tahun Baru Cina” in Indonesia for 15 days of Spring Festivals starting February 10, 2013.  “Selamat Tahun Baru Cina” is also used by Malaysian and Singaporean for Lunar New Year greeting.

Meaning:

Selamat = Happy / Safe

Tahun = Year

Baru = New

Cina = Chinese

The 32 years suppression of Chinese language and culture by President Suharto was so bad in Indonesia.  A renowned sociologist, Mely G. Tan, at the Indonesian Institute of Sciences once commended “out of the 12 signs of the Chinese zodiac, Chinese-Indonesians know only two of them, the cash cow and the black goat.”  Chinese-Indonesians are glad that former president Abdurrahman Wahid (Gus Dur) revoked discriminatory regulations imposed by his predecessor.  Imlek was also declared as a national holiday since 2004 by President Megawati.

Opening of Imlek celebration has positive economic impact to the nation.  The streets of Jakarta, especially Chinatown in Glodok area, are painted red for Imlek celebration.  Chinese-Indonesians across the archipelago celebrate the Imlek by feasting, playing firecrackers, as well as visiting friends and relatives.  Many businesses benefit by selling dance and music performance, food, fashion products, Chinese medicine, Imlek accessories and decorative ornaments, and fortune telling.  Some of them pray during the Lunar New Year celebration.

New Year Cake

kueh-lapis-legit-a

Chinese-Indonesians take New Year Cake during Imlek for a good metaphor of one level higher every year.  The cake is known as Kue Lapis Legit (layered cake) in Indonesian.  If you happen to transit Singapore Changi airport, you can get the cake from the shop Bengawan Solo.

The celebration of Imlek also attracted flows of visitors from China, Malaysia, Singapore, Taiwan, Thailand, Vietnam and America to the nation’s islands.  In the Jakarta city, visitors like to visit Glodok’s Vihara Dharma Bhakti Chinese Buddhist temple, which is believed to be the oldest temple in the area.  Bali is also an uprising getaway for Chinese all over the world.  Another popular island is Kemaro Island which is famous for the love story of a Chinese and a local girl.  The locals in Komera Island slaughter goats to celebrate Imlek (most Chinese in other parts of the world use pork) as the island also receives Muslim visitors.

Nevertheless, Chinese-Indonesians and tourists are advisable not to play firecrackers and fireworks in areas with significant non-Chinese population to avoid conflict.  We must always respect other cultures and races.  Some places have banned the sale of firecrackers, such as Bali.

Unilever Indonesia Helps Indonesians Create Perfect Home

unilever-indonesia-unvr-ij

This piece on Unilever Indonesia was released on 5th January 2012.

I vividly remember I was reading “Magnum ice cream and the Indonesian middle class” published by Jakarta Post.  The article discussed the phenomenal success of Magnum which was launched in Indonesia in 2009.  When Unilever Indonesia launched Magnum ice cream at $1 (premium ice cream price in Indonesia at that time), the premium product was well-received by the Indonesian middle-class.  Based on Euromonitor International’s report, ice cream sales in Indonesia was dominated by Unilever Indonesia with market share of 55%.

PT Unilever Indonesia, the nation’s biggest consumer goods company, also distributes 43 brands in Indonesia including personal care, food, and home care products.  It is said that 95% of Indonesians use at least one Unilever’s product.  Although consumer spending habits in Indonesia is rising, it is not easy to penetrate the consumer goods market as Indonesia geographical limitation causes distribution difficulties.  It is not easy for companies to expand outside Java, as there are lack of infrastructure.  Unilever Indonesia is successful as it has invested in distribution infrastructure.

Recent news on Unilever Indonesia entering new trademark license agreement (TMLA), technology license agreement (TLA), and new central services agreement (CSA) with its parent company, has sparked investors’ concerns on higher royalty fees that might affect the company’s profitability.  It is estimated that the new agreements will increase royalty fees from 3.5% of the company’s turnover to 5% with actual cost recovery of up to 3%.  Over the past few days, the stock price performance has been affected by this negative surprise.

Groupon Offers Discount on Groupon (78% Off)

Published on Spend Money Online.

I was checking Groupon’s 11 December 2012 closing price on Bloomberg, and it was down 78% from IPO price.  At the same time, I was browsing for Christmas discount items on Groupon.  That inspired me to create the above piece with Microsoft Powerpoint making fun of Groupon (I do not know how to use Adobe Photoshop).  I also added Facebook and Hutchison for fun.  The final product turned out well, and created laughter amongst colleagues.

I have been and will be making more PowerPoint pieces based on personal and stockbrokers’ research with two aims:-

  1. Self learning; and
  2. To convert long boring report into short and sweet one pager infographic.

I will publish some of my old works, and the information may change as time has passed.