SCG ‘must become global player’

Kan, who will stay on as an SCG board member, also hinted at a possible shake-up at the Bt500-billion chemicals, building materials and packaging group after the end of his 10-year tenure.

Speaking to The Nation, Kan said SCG, a flagship company of the Crown Property Bureau, has kept scouting for opportunities to expand into new businesses that could be based on "themes" such as "ageing" or "green" business propositions. They would gain from a combination of strengths from its different business units (BUs), rather than the current structure based on the industrial sector.

In moving to the flexible packaging business, where the materials could be plastic or paper, or a combination of both, for example, the group has already attempted to synergise its chemical and paper-packaging business units.

To achieve a global player status, Kan emphasised the need for SCG to further strengthen its technological and management capabilities to be on par with global players in its industries. This includes expanding beyond Asean to buy technologically intensive Japanese small and medium-sized enterprises or other firms in other developed countries, in a bid to acquire knowhow in areas such as polymer science, packaging, and smart materials.

Kan said his successor Roongrote would face more challenges in expanding the group into Asean markets compared to his term when SCG had the first-mover advantage. Many global players have realised the attractiveness of the region and are trying to make inroads.

"Today, a Japanese firm has already come to take over a Malaysian packaging company. Chinese cement companies have started coming to Cambodia and Indonesia where there is an oversupply. In Vietnam, where most cement manufacturers are state-owned enterprises, foreign firms have started to take their stakes.

"We’re also interested [to buy the stakes]," he said.

SCG considers itself already the No 1 player in Asean in building materials, corrugated paper and boxes, and in downstream petrochemicals. It is currently the No 3 cement producer in Asean since its first cement plant in Indonesia just commenced operations a few months ago, to be followed by Myanmar next year, and Laos in 2017.

"But in terms of branding, we have not yet achieved [a leadership status in Asean]. This is because we have just started and we have to compete against global players. That’s why we have recently set up the enterprise brand marketing team," he said.

Kan gave himself eight out of 10 marks for his achievements during his decade in charge in transforming the industrial conglomerate towards a more innovative culture and higher value-added products (HVAs), and a leading position in Asean markets.

Under his leadership, SCG has increased sales of HVA products from four per cent of total sales to 37 per cent last year. The group’s research and development budget has also risen more than a 100 fold – from Bt40 million to Bt4.8 billion during the period. SCG defines HVA products as goods on which it can get 5-10 per cent higher EBITDA (earnings before interest, tax, depreciation, and amortisation) margin than commodity products.

SCG sources told The Nation that Roongrote had made known his intention to allocate half of his time to overseas markets, an unprecedented high level of internationalisation by any SCG chief executive. Asked to confirm this, Roongrote said, "that’s possible, because we’re expanding more in Asean".

Kan, meanwhile, said SCG could have a Vietnamese person as its CEO in the next 20 years.

Next year, aside from SCG, Kan will also sit on the boards of Siam Commercial Bank and Advanced Info Service, as well as on the advisory boards of two Japanese firms - Kubota Corp and Nomura Holdings – in addition to 8-9 government committees on science and technology, innovations, competitiveness, and special economic zones.