Charoen has genuine interest in retail business: sources
Tycoon Charoen Sirivadhanabhakdi’s acquisition of Big C Supercenter has raised questions about his real attentions: whether he has a genuine wish to enter the retail business is merely interested in Big C’s assets.
The fact that Charoen is heavily into real estate has led some to believe that he was interested in the land currently housing Big C stores, rather than the retail business. One of his close aides also said he joined the bid for Carrefour in 2011 because of his land-acquisition interests.
However, a veteran retail businessman who asked not to be named noted that it is not the same situation with Big C. He said Charoen’s due diligence should have revealed that about 40 per cent of the land Big C stores occupy is on leasehold.
He said this explained why Big C, No 2 in the modern-trade segment after Tesco Lotus, was valued at less than Siam Makro. While the 59-per-cent stake in Big C is valued at 3.1 billion euros or about Bt123 billion, the 64-per-cent stake in Siam Makro bought up by CP All in 2013 was valued as high as Bt189 billion.
The source also said much of the land under Big C stores actually belonged to Central Group, including plots at Hua Mark, Wongsawang, and Rat Burana.
Human resources
"I believe that Khun Charoen’s motive is to have retail channels, which will benefit [other parts of] the business empire, both Berli Jucker and Thai Beverage, which manufacture consumer goods and beverage products," said the source.
Another source close to Big C said the retailer’s human resources were also a key reason, given that it takes time to develop personnel.
"The retail business, particularly when it involves large-scale stores, requires people who have extensive experience. It’s a challenge to train people from scratch," he said.
Founded by Central Group in 1993, Big C now employs 27,000 people.
Through Big C, Charoen bought himself easy access to the Thai retail market. The operator now operates about 50 outlets in Bangkok, some in prime locations. The acquisition took place at a time when the environment is tough for newcomers, because of very restrict regulations, such as city zoning, set by local authorities.
Still, market sentiment could be dulled by the economic slowdown and fierce competition from supermarkets and convenience stores that lure shoppers away from hypermarkets.
Kasikorn Research Centre anticipates that modern trade will grow by only 1.5-2 per cent this year, compared with 1.8 per cent last year. The growth rate has been declining since 2012. Before that, hypermarkets used to grow by an average of 9.2 per cent per year.
