Water-tank maker opts for output across borders
ADVANCED Stainless Steel decided to set up a manufacturing plant for stainless-steel water tanks in Laos five years ago, after finding that the products it had been supplying from Thailand were being pirated by a company from China.
Founder Kosilp Patarateeranond said that prior to 2011, the company had never thought of having a factory in Laos because it was successfully supply its products to the market via agents.
However, he was forced to rethink that strategy after witnessing a decline in sales and, on visiting Laos, discovering that his products were being copied and sold there by a Chinese company with a local presence.
Advanced Stainless Steel then decided to act to protect its position in the market, spending seven months establishing a manufacturing plant in Laos, after being granted privileges from the Lao Board of Investment.
“We used a Dok Champa [national flower of Laos] design as the contour on the polymer part of our [Laos-made] water tanks, which made them popular as Dok Champa won the hearts of consumers there. We started to sell 500 tanks per month, from less than 100 tanks monthly before building Dok Champa into our design,” he said.
Kosilp also registered the firm’s trademark in Laos to prevent it being copied.
Based on its learning curve in Laos, Advanced Stainless Steel was determined to grasp the opportunity presented by Asean integration, seeking to build its customer base beyond primarily the Thai market.
Given the size of the Myanmar market and with Thailand-Myanmar cross-border trade expanding, which supports the logistics of dispatching assembly parts for production in the neighbouring country, the company and a local partner set up a joint-venture business two years ago for the local production of water tanks.
However, Myanmar is a tougher proposition than Laos, he said, adding that his company had experienced unclear regulations and difficulties in communications with local staff.
These issues contributed to the joint venture making losses in each of its first two years, with the business faced by high operating costs – especially the cost of shipping parts from the Mae Sod border checkpoint to Yangon.
Kosilp hopes to generate a profit from the Myanmar operations over the next year, however.
Sales from Laos and Myanmar together account for 20 per cent-30 per cent of Advanced Stainless Steel’s overall sales.
Meanwhile, the company has recently been approached by an investor in Cambodia to form a joint venture in that country.
However, Kosilp said he required time to study the market because local production of stainless-steel water tanks was quite strong.
Back home, Advanced Stainless Steel plans to increase its capital from Bt50 million to Bt70 million to expand its manufacturing facilities in order to accommodate a new product line, he added.
