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C.P. Group’s retail portfolio re-organises – preparing for fast foreign expansion

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Aims to increase overseas retail and wholesale stores across region and drive online-offline business expansion

Charoen Pokphand Group (C.P. Group) Chief Executive Officer and Chairman of Siam Makro Public Company Limited, Mr. Suphachai Chearavanont, announced that C.P. Group aims to rapidly expand the number of its retail and wholesale stores in the region, including cash-and-carry stores operated by its subsidiary Siam Makro, as well as other formats within the C.P. Group.

C.P. Group retail and wholesale businesses are already present in China, Malaysia, India, Cambodia, and Myanmar under multiple brands and multiple formats with around 337 stores.

Mr. Chearavanont said, “Retailing is a global opportunity for Thailand and a sector where we can be successful on the international stage. It is a vision shared by our retail and wholesale businesses.”

Streamlining and Driving Efficiency

“Succeeding in complex global markets requires great speed in decision-making. To enhance our ability to move fast, several of our retail businesses have resolved to re-organise and reduce some layering within the group. A proposed re-organisation, pending various shareholder approvals, will cut layering down and result in Siam Makro becoming the parent company of C.P. Retail Development Co., Ltd.

“These changes will streamline decision-making and, among other benefits, give Siam Makro and Lotus’s the agility to succeed in the international arena,” he said.

Aims to Increase Public Participation

To support its international ambitions and other plans, in a Board Meeting held on Tuesday 31st August, the Directors of Siam Makro PLC resolved to propose to the company’s shareholders at an Extraordinary General Meeting in mid-October to approve the increase of Siam Makro’s registered capital from the current Bht 2.4 billion to THB 5,586 million baht. This would be realised by issuing up to 6,372,323,500 new ordinary shares with a par value of Bht 0.5 each, of which 1,362,000,000 would be allocated for a public offering.

Mrs. Suchada Ithijarukul, Group Chief Executive Officer, Siam Makro PLC, said, “We want to invite the public to join us in this exciting international growth journey and are offering a bigger part of the business for public participation. Siam Makro aims to double the percentage of its public ownership from the current 7% to be over 15%, while C.P. Group’s shareholding will be reduced from 93% to around 85%.”

The structural streamlining initiatives of the various companies do not affect the operations of Siam Makro or any other operating company.

“All staffing, management, day-to-day work, the business format, the positioning, target customers, and suppliers will remain and operate as before. There will be no personnel changes and also no changes to the controlling shareholders of the operating companies as a result of these actions that are still subject to shareholder and other approvals,” Mr. Chearavanont added.

‘Platforms of Opportunity’

According to Mr. Chearavanont, the various structural initiatives advancing the group’s international footprint will also support the recently announced ‘Platforms of Opportunity’ strategy to strengthen Thailand’s competitive position in the post-pandemic global economy by “building a stage on which other Thai companies and Thai products can maximise their potential.”

“We want our retail operations around the world to serve as a platform from which tens of thousands of Thai small-holder farmers, manufacturers, and SMEs can present their products in international markets.

“Creating more retail outlets for Thai products in global markets, especially for fresh foods and agricultural produce, is an essential part of realising Thailand’s dream of becoming a ‘Kitchen of the World’. Our stores will act as a pipeline through which many other smaller Thai enterprises can flow into new markets, together with their produce and products, growing their businesses, and adding resilience to ours,” he said.

Biggest Challenges

One of the big challenges faced by Thai growers and manufacturers in entering international markets is the difficulty of getting into another country’s distribution system. The systems, often, favour established brand names and produce from traditional suppliers, and there may also be many middlemen affecting Thailand’s competitiveness.

“We have to use our stores to enable consumers in overseas markets to be exposed to more Thai products. From there, it will be up to the products’ performance, pricing and marketing to nurture their ongoing presence.

“We can also assist Thai growers, SMEs and manufacturers in getting a fuller understanding of the complex local regulations in a foreign market that are difficult to navigate from here in Thailand, and this will help remove another obstacle for Thai brands and Thai suppliers,”

Mr. Chearavanont said.

Global Giants

Thailand has earned recognition in international retailing by winning top awards from respected global retail associations for innovations as well as owning landmark retail outlets in many countries, but its presence is still small when matched against the international giants of retailing.

“In retailing, having scale is one of the most important contributors to success. There are huge global retail corporations. The largest two retailers in the world each register more sales than the size of Thailand’s entire economy. For Thai retailers going up against these giants on the world stage, it is a tough challenge”

“By collaborating with many other Thai businesses, simplifying our organisation, and moving forward purposefully with sufficient financial resources, I am confident Thailand will have a relatively large and important overseas distribution network in the near future,” he said.

Mrs. Ithijarukul said, “Siam Makro has played an important part in supporting professional customers in Thailand, especially small-sized operators, mini-marts and the hotel, restaurant and catering sector, for more than 32 years. That relationship is based on our emphasis on high food quality and safety combined with the right assortment of great value packaged products and fresh produce. We are fully committed to supporting our professional customers even better in the years ahead as their trusted partner.”

“The accelerated international expansion of our business in the future will also provide our SME suppliers of fresh produce, packaged goods and other products with significant, new growth opportunities and we look forward to that prospect with excitement,” she said.

Published : September 01, 2021