DKSH chief expresses long-term commitment
JOERG WOLLE, president and chief executive of DKSH Holding, has expressed his commitment to continue investing in Thailand and Asean, which show growth potential driven by a rising middle class and trade within the region.
He said the company believed in the strong future growth of Asean. Back in 2002, when DKSH was formed through the merger of Diethelm, Keller Services Asia, and Siber Hegner Holding, its focus strategy was on Asean.
“Of the 200 most important clients [manufacturers and suppliers] we represent, about 30 per cent are Asian clients, while another 30 per cent are in the US and 40 per cent in Europe. The [Asian clientele] is growing fast compared [with] 2012, when about 25 per cent of clients [were] from Asia,” Wolle said.
He added that the proportion of Asian clients would gradually increase year after year.
“Our growth rates in Asean are quite strong compared with those in Europe. The Asian middle class is expanding extremely fast, and the increasing inner intra-Asian trade is further supporting the growth trend,” said Wolle, who gave a media interview in Bangkok on Thursday.
“With the establishment of the AEC, companies will be better able to raise capital and employ people due to free movement of labour within the whole common market. Better connectivity and an improved transport infrastructure across borders will support business in the region, such as the development of professional road networks linking the Asean nations,” Wolle said.
He said that long before the conception of the Asean Economic Community, DKSH helped international companies such as Ovaltine develop their products in Southeast Asia.
“Earlier this week, we opened a new distribution centre in Phnom Penh, Cambodia, and another will be opened in Danang, Vietnam, at the beginning of next year. This shows that we strongly believe in future growth in the region,” Wolle said. “We are promoting AEC and Asean as an interesting growth market with a huge population of more than 600 million.”
He said that with the emergence of the AEC, the most important success factor for companies would be their connectivity, which is their ability to cross borders quickly and adjust to system and labour conditions.
He said DKSH adjusted its business plan every three years.
“Our strategy is very simple, which is ‘stick to your knitting’. This means to focus on what you do best. To be in line with our plan, we will totally focus on Asia with four business units, which are consumer goods, healthcare, performance materials, and technology,” he said.
Wolle said DKSH also believed in the potential of the Thai market and continued to grow strongly in Thailand.
“In addition to organic growth, we are looking for minor acquisition possibilities of mid-range, specialist and sophisticated distribution companies in Thailand and in the region.”
DKSH operates 12 distribution centres across Thailand. Including pre-merger entities, the company has been in the Kingdom for 110 years.
The company has initiated a new project with Tesco Lotus, by leasing space at its distribution centres in Khon Kaen and Surat Thani provinces. It says the collaboration with Tesco Lotus allows it to serve its customers and consumers in the provinces more efficiently.
Since May, DKSH has opened regional sales offices for the Business Unit Consumer Goods in Khon Kaen and Ubon Ratchathani. By the end of the year, the company will open additional offices in Phitsanulok and Chiang Mai. It says this will strengthen its growth platform in Thailand and get it closer to customers in the regions and at the same time help its clients increase their market shares.
“We have helped growing leading Thai brands, such as Ichitan, Tao Kae Noi, and Pantainorasingh, by supporting them with our expertise along the entire value chain,” Wolle said. “Another good example is Hi-Q Food Products. We provide marketing, sales and distribution services for Hi-Q’s products, such as the Roza @ Home cooking sauces in Vietnam, Cambodia, Laos and Myanmar.”
He said DKSH had helped about 1,000 outside manufacturers bring their products to Thailand.
“For Thailand, 2015 is not a good year for DKSH. Consumer confidence [has been at] the lowest point for a long time, and amid such a difficult period, they will usually cut spending and shop less on luxury brands. In my point of view, however, Thailand is bouncing back very strongly out of the crisis,” Wolle said.
He said this year’s difficult situation had been affected by two factors – the drought, especially in the North of Thailand, and the terrorist attack in Bangkok, which resulted in a declining number of inbound tourists to the country.
“Such challenges are not a reason to think about not investing in Thailand,” Wolle said.
He said DKSH had been in Thailand for 110 years and together with the Thai people, the company had overcome many challenges. In such a difficult situation, only the strongest players will survive and gain market share, while the weaker will disappear. Last year, DKSH generated net sales of about US$10 billion (Bt360 billion), of which 96 per cent were from the Asia-Pacific region with one-third of the total generated in Thailand.