Thailand's biggest agricultural conglomerate, Charoen Pokphand Group, has persuaded China's biggest carmaker Shanghai Automotive Industry Corporation (SAIC) to set up a manufacturing base for right-hand-drive vehicles in Thailand as well as expand its motorcycle manufacturing to capitalise on the creation of the Asean Economic Community (AEC) in 2015.
SAIC is China's biggest auto-maker, with annual production capacity of 4 million units and sales of US$54 billion (Bt1.67 trillion). It is ranked as the world's seventh-biggest carmaker.
In addition, the group will expand its motorcycle production under the Dayang brand. A location is being sought in Thailand for the plant. However, that expansion plan will focus on the local Thai market. The group's motorcycle plant in Luoyang, in central China's Henan province, produced 1.6 million units last year, of which 25 per cent were exported and the remainder sold in the domestic market.
It is expected that details of the Thailand investment and location will be finalised by the third quarter of the year.
Thanakorn Seriburi, vice chairman of the CP Group, said yesterday that the two sides were negotiating business cooperation. SAIC sent a team to conduct a feasibility study on investment in Thailand while CP is considering its stake in this joint venture, planning to hold 30-40 per cent.
He added that SAIC planned to set up Thailand as its production base for the MG brand, focusing on right-hand-drive vehicles. The company took over this brand from a British carmaker. Initially, production capacity is set for 50,000 units per year with exports to Asean, Australia and New Zealand.
"The project has come after Prime Minister Yingluck Shinawatra's recent visit to China. The executives of 14 leading Chinese companies also met her on a one-to-one basis to learn more about trade and investment facilitation," Thanakorn said.
"SAIC is interested in forming a business partnership with CP. We are proud to be attracting foreign investors to the Kingdom."
In addition, the group is looking for a location to set up a manufacturing facility, where it plans to transfer technology from China.
Thanakorn said CP's motorcycle business hoped for 10 per cent of the total market of 2 million units. The retail price of its motorcycles will be Bt20,000-Bt30,000, which will be focused on the upcountry market.
CP Group's investment in China focuses on five businesses: integrated food from feed through processing food under its Chia Tai brand, agricultural community projects, retail business via CP-Lotus, dealership of Caterpillar heavy machines, and motorcycle manufacturing.
Recently, the group has been granted permission in Henan province to build the Chiatai International Plaza Civic Centre of Luoyang, a mega-project. Started last year, this five-year project comprises a government centre and business and shopping centre, with an investment of Bt20 billion (4 billion yuan). Inside the compound there will be four high-rise buildings 40-55 storeys tall, eight condominiums, a 170,000-square-metre shopping complex and 140,000sqm government office centre.
The group's agricultural community has been set up in three provinces in China - Beijing, Shandong and Guangdong - for pigs, chickens and a pork-processing plant. It also plans to expand to six or seven areas this year. However, lack of manpower has been a problem and has prompted the group to focus more on training people to serve the business, as each project covers 10,000 rai (1,600 hectares).
However, CP-Lotus will make aggressive moves this year after having suspended outlet expansion for four or five years because of its failure in small cities. The group currently manages 75 shops, of which 50 are in Shanghai and Guangdong.
"We are learning more about operating business in China. We will employ more local Chinese staff in the cities rather than getting staff from a big city to control the management," Thanakorn said.
In addition, the group's heavy-machinery dealership under the Caterpillar brand is growing well with sales set to reach Bt50 billion this year, up from Bt40 billion last year.
