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SMEs eye Asean market amid global slowdown
Publication Date : 03-09-2012
Two small and medium-sized enterprises (SMEs) aim to penetrate markets in Asean countries, focusing on emerging economies like Indonesia, Myanmar, and Cambodia, to ensure sustainable growth amidst difficulties in other markets.
Both companies are also trying to reduce exchange rate risk due to the global economic uncertainty by trading in baht terms.
The SMEs see the move towards the Asean Economic Community as not only offering greater opportunity for exports, but also serving as a new production base and a source of raw materials for manufacturing in Thailand.
Pakinee Jiwattanapaiboon, marketing manager of Xongdur Thai Organic Food Co, a PM's Award winner in 2009, said sluggish export growth in traditional markets and the rising cost of labour and goods prices in the local market had encouraged the company to focus more on exports, especially to Asean.
"The company is targeting 20 per cent sales revenue growth this year, from 35 million baht (US$1.1 million) last year. Asean markets will strongly boost our sales, of which exports account for 17 per cent," Pakinee said.
She expected Asean to become a major new export destination for the company in 2015, with exports accounting for 25 per cent of total sales.
To achieve the goal, Xongdur will strengthen its brand recognition in both the local and overseas markets. It has registered organic certification in Thailand and in many countries in Asia to win the acceptance of consumers about the quality of its products.
Although such registration was costly for SMEs, it would be valuable in the long run, as it would open the opportunity for accessing each target market, she said.
Registration of organic certification costs 150,000 baht for 2-3 years.
Pakinee said that rising awareness of health had boosted the company's sales. Her family has a 20-rai plantation area, plus the firm has contract farming with almost 100 cereal farmers supplying raw material to the firm.
The firm now hires 50 employees. It exports to several countries, including Singapore, Malaysia, China, Nigeria, Cambodia, Saudi Arabia, Chile, and United Arab Emirates. The firm is now looking at selling its products in Laos, Myanmar, Cambodia, Canada, and the United States, and Japan.
Although production costs have risen in line with rising labour and fuel prices, the company would try to reduce costs by developing efficient machinery and reducing damaged goods.
She said the company usually developed new products and new designs in a bid to expand its customer base.
"It's a matter of always coming up with new ideas and effective management, in order to make a business successful. So far, the firm has tried to innovate new products to serve a variety of demands from consumers."
Meanwhile, Prokchon Promgungwahn, managing director of Promgungwahn - an organic longan producer and exporter - said that his firm also aims to penetrate Asean and other emerging Asian countries because of their stronger purchasing power.
He said the prices of organic products had doubled, sometimes even tripled.
Promgunwahn longan now covers a 300 rai of contract farmland in Chiang Mai. It plans to expand the production area in the future to serve the expanding market size under the AEC.
The firm achieved sales of 10 million baht last year, with a growth rate of 10 per cent a year.
To ensure sustainable income, the firm is quoting the price in baht as the fluctuating global situation is affecting the value of the US dollar and the euro.
US$1 = 31.2 baht