The Central Group is preparing for a new milestone as it enters its seventh decade by establishing a presence in the region, with a deal in China expected to be closed by the end of this year.
Tos Chirathivat, chief executive of Central Retail Corporation, said the negotiations between CRC and prospective partners in China were about 90% complete. By year-end the company expects to choose a location from among Shanghai, Beijing, Nanjing or Guangzhou. Initially, it will lease space in a shopping complex now under construction.
The country's largest retail and department store group is preparing to invest about 10 billion baht in the Chinese market.
Central had earlier been looking at Southeast Asian markets including Indonesia but progress was slow.
''We have been studying the feasibility of establishing our retail presence in the Asean region for years and now our plan for the international market is one year behind our target,'' Mr Tos said.
He said the company was reluctant to offer more details about its China plans following the experience in Indonesia, where earlier negotiations collapsed at the last minute.
Despite its great promise, the Chinese retail market offers stiff challenges even to large, deep-pocketed companies.
C.P. Seven Eleven Plc, the CP Group affiliate that operates more than 3,000 7-Eleven convenience stores in Thailand, recently sold its Lotus superstore business in Shanghai to Chia Tai Enterprises International Ltd (CTEI), another CP affiliate, after struggling for several years.
''As of now, we are confident about competing in the Chinese market because the department store business in China is not good as other retail sectors and the competition is also lower than in the hypermarket business,'' Mr Tos said.
Vietnam is also in central's business pipeline.
''The retail market in Vietnam is zero now so it has huge potential for us. It will become a tough rival and could catch up to Thailand over the next 15 or 20 years,'' he said.Expansion in Vietnam is difficult, however, because the retail market is highly dependent on the property market, which in turn is dominated by the state. Central Group chairman Wanchai Chirathivat said the group would help partners in Hanoi run a shopping complex.
''Though we are moving to the overseas market, we have not stopped our investment in the domestic market,'' Mr Wanchai said. ''For the next 60 years, we want to see a stronger presence, having at least one business unit in every province in Thailand.''
Mr Tos added that the company was now looking for design firms for its new nine-rai plot, recently purchased from the UK government at the British Embassy site on Phloen Chit Road, and expected a result next month.
''We got this plot land to complement our flagship Chidlom outlet and make it completely perfect,'' he said.
Central this week is celebrating the 60th anniversary of a business that has grown from a family shophouse to a multi-faceted retail empire. In that time it has confronted its share of challenges though executives say the 1997 financial crisis was the worst.
''We had about 20 billion in debt from the crisis as we had relied on overseas loans. We felt desperate but we fought back and changed the crisis to an opportunity with a recovery in two years,'' Mr Tos said.
Now, Central has a stronger operation than in the past, particularly in terms of its cash management and balance sheet.
Mr Tos had his concerns though.
''The situation is worse than the 1997 financial crisis. If the situation continues, the country's growth will pause for ten years and allow competitors including Vietnam to catch up,'' he said.
Source: Bangkok Post
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