Brand building crucial for success in Asean: SCG chief

With only two years and 10 months left before the Asean Economic Community (AEC) comes into effect, most Thai companies do not seem to be ready for the market integration while SCG has a clear target to become a sustainable business leader in Asean. Kan shared his views during the Asean Business Forum 2012, held by the Thailand Management Association (TMA) last week.
He said that the three pillars on which SCG put more emphasis were branding, technology and green communities. Each pillar involves many minor details that SCG has to fulfil. Regarding the brand building and technology development, it is the next step for SCG after its policy to spend on research and development (R&D) to create high value-added (HVA) products proved a success.
SCG’s R&D spending in 2011 was US$1.11 billion (Bt33.5 billion), an increase of 2,677 per cent from $40 million in 2004. Because of the heavy spending on R&D, the company’s sales from HVA has also skyrocketed from $200 million in 2004 to $3.8 billion in 2011. The sales contribution from HVA products last year was 32 per cent of total sales, compared with 4 per cent in 2004.
Reflecting SCG’s strong policy on this matter, the company has expanded its R&D and production-design team from 364 people in 2004 to 932 in 2011.
Kan said human resources are another aspect that SCG is willing to spend money on to have good-quality manpower and facilitate their work.
“I’m confident that SCG is the corporation that dares to invest in its employees, and not many companies can do it as we do,” he said.
In 2011, SCG spent Bt1.2 billion on development programmes for employees, middle managers, and high-ranking executives, as well as master’s degree and doctoral degree scholarships. The training programmes are divided into operator level, supervisor level, manager level and executive level. The company’s employees are sent to a number of famous universities such as Wharton University of Pennsylvania and Kellogg School of Management in Illinois.
SCG has given scholarships since 1973. More than 400 scholarships have been awarded to its employees. The spending is likely to be higher every year.
Kan said SCG encourages its employees and middle managers to have experiences overseas. Each year, the company asks about their employees’ willingness to work at overseas operations. In previous years, few employees and managers volunteered for these jobs as they did not want to live far away from home. But things have changed as the Southeast Asian countries are becoming a single market. The experience of working overseas with international practice is necessary for a company like SCG, which wants to grow abroad.
He said one of the perquisites for SCG employees working outside Thailand was eight trips home per year, which is totally different from other companies that offer only two trips per year on average. The allowance for cost of living in those countries where they have to work is another incentive.
Kan added that the mindset of SCG employees to do good for the communities where the company had businesses was another key factor for its success. To do business nowadays, companies should not only think about how to maximise profit for their shareholders, but also how to make businesses beneficial to all stakeholders.
“The top priority for SCG is its clients, followed by employees and all other stakeholders. If we think of maximising profit for shareholders, we will ignore community development. This is not fair.”
“SCG has many acquisition deals in this region, and we will continue to acquire new assets. I will be happy if my subordinates come to me and say that the deal is fair for all stakeholders, but I will not be happy if they just say that the deal is good. This is the mindset that we’ve already changed,” he said.