THAILAND’S retail sector has been moving fast with major players announcing deals and plans in order to stay at the top as the country is gearing towards its 4.0 digital economic development phase.
Among them are the CP and Central groups with the former making a big stir and causing a bit of worry not only on the retail market but also on the banking sector’s so-called FinTech subsector as well.
One of Thailand’s leading conglomerates, CP Group, which is overwhelmed with its CPALL’s 7-11 convenience store success, having almost 10,000 stores nationwide at the moment, has just announced a deal with Jack Ma’s Alibaba Group Holding Ltd.’s affiliate.
Zhejiang Ant Small & Micro Financial Services Group, known as Ant Financial is planning to purchase a 20 percent stake (with an option to increase to 30 percent in two years) in CP’s Ascend Money, parent of True Money and Ascend Nano, in a bid to become a key financial services player in Southeast Asia.
The Ascend Nano unit is a micro-finance and personal loans provider to staff throughout Southeast Asia. Their goal is to spread e-commerce and e-payments services to places where many users lack bank accounts such as Myanmar and Indonesia.
True Money provides cash cards and electronic wallets, and holds financial-service licenses in key Southeast Asian markets. Ascend Group plans to spend 6 billion baht ($170 million) on expansion this year, most of which will be spent outside of Thailand.
Just a few months earlier before this key deal, both of them made a strategic move. Alibaba bought a controlling stake in Southeast Asian online retailer Lazada Group for about $1 billion while True Money entered into a deal with a digital finance firm, Group Lease Finance (GLF) in Cambodia to provide loans and financial services over there. GLF is subsidiary of Group Lease Public Company Limited (GL), a listed company on the Thai stock market.
The joint venture will build on True Money’s 5,000-strong network of agents nationwide and could push GLF loan applications for motorcycles, Kubota farm machinery and solar panels up by 50 per cent in the fourth quarter of this year, and double them next year.
The CP-Alibaba deal has obviously raised concerns in Thailand as to whether that would lead to a situation close to a monopoly on the Thai online and e-payment businesses leaving no space for the country’s new start-ups. This concern was raised by former Finance Minister Korn Chatikavanich, chairman of the Thai FinTech Club, who urged that the Thai authorities should do something to avoid such phenomenon. However, Bank of Thailand governor Veerathai Santiprapbob came out to say that the authorities have measures in place to keep the overall picture in order and they are not just looking at any specific deal in particular.
Meanwhile another retail giant, Central Pattana Public Company Limited (CPN), a listed company on the Stock Exchange of Thailand (SET), has undergone major changes in a bid to stay on top amidst strong competition in the industry as well significant changes in the consumer behavior to move quickly online.
The company just recently undertook a major management shakeup hiring professionals to replace some of those from the Chirathivat family, the owner.
No sooner than the arrival of new professionals was a concrete plan to prop up the offensive business strategy announced.
CPN has announced the launch and renovation of 10 of its shopping centers which required a hefty 60 billion baht investment. At present, over 90 percent of its revenue comes from rental fees from its 30 shopping centers and five office buildings.
The expansion of shopping centers this time will be in key provinces upcountry rather than in Bangkok as the government is investing a huge budget in building infrastructure mostly covering railways and highways linking all parts of the country and neighboring countries.
Five new shopping centers to be launched are Central i-City Malaysia, Central Plaza Nakhon Si Thammarat, Central Plaza Mahachai, Central Plaza Nakhon Ratchasima and Central Phuket.
In line to be renovated are Central Pinklao, Central Plaza Bangna, Central Plaza Pattaya, Central Rama 3 and Central World.
Top: True Money’s cash cards and electronic wallets are well-known here.
Inset: An artist’s rendering of Central i-City Malaysia which CPN is launching.
By Kowit Sanandang