Thailand: Blowups and Minor Tiffs

2001

Dr Anthony Diller

Prime Minister Thaksin Shinawatra must be breathing easier, now that the official investigation of his assets reporting is over. Reprieve by a single vote allows him to continue in politics. This near miss calls to mind another narrow escape earlier this year when a bomb went off on a plane shortly before Thaksin was to board it.

Bombs have also been exploding in some of Thailand's internationally-capitalised megastore outlets. What do these blasts and other acts of violence mean for Thailand's economic recovery?

When British giant Tesco joined up with a local Thai retailer to create Tesco-Lotus, now with 33 retail outlets, success was initially spectacular. The sprawling megastore chain however has suffered two in-store bombings, most recently with severe casualties. Thai papers point the finger at disgruntled security guards, many recruited through a Thai army downsizing scheme. Army-sourced guards were then summarily laid off, risking loss of military face and related patronage. Tesco-Lotus's multinational management had abruptly switched their security-guard contract to a competitor service. Thai papers have described this with common Thai-language explanations such as ‘khuu’ to threaten and ‘khaen’ to take revenge.

Whoever caused the blasts, the case will be followed closely by Thailand's other internationally-capitalised megastore chains such as Dutch Makro (20 outlets) and French Big-C (29 outlets).

Targeted also have been certain foreign financial consultants investigating failing or failed Thai firms. Readers may be aware that an Australian accountant who was about to reexamine the books of an upcountry sugar mill was shot dead in 1999 (‘khaen’?). Recent threats (‘khuu’) have been reported by some overseas consultants hired to restructure other industries facing bankruptcy.

But violence is exceptional in Thai business culture and generally indicates that an invisible line of accepted practice has been crossed. More common is regulation-free rough-and-tumble competition (‘khaeng-khan’). A recent pizza-parlour heat-up between Minor Food Group, Thailand, and Thai Fast Food International (TIFF) is illustrative. Minor, in fact a major player in Thai hospitality and fast food with links to Marriott International, recently lost the Pizza Hut franchise to TIFF. TIFF is controlled by Central Retail Corporation, the hoary dynastic conglomerate of the Chirathivat clan. The 200+ members of this retail and hospitality empire run department stores and Accor's Novotels and Sofitels in Thailand. They have gone on to open the Central Maritime Hotel in Dili, East Timor.

Tricon Restaurants, Pizza Hut 's (PH) American parent, gave PH to TIFF after Minor put fried chicken on the PH menu - a clever cultural strategy, given Thai eating habits. Note that Tricon also controls Kentucky Fried Chicken and has given much of KFC to the Chirathivat's TIFF as well. Minor has retaliated by rebadging its shops as ‘The Pizza Company’, flaunting the poultry option, while Chirathivat/TIFF is attempting to win market share with free toppings and other promotions.

On the cooler side, Minor's hundred or so Dairy Queens are about to face competition from 'the Colonel's' red-and-white ice-cream kiosks. Meltdown for DQ is unlikely but expect whipped-up marketing as Minor and the Chirathivats vie to fill the after-school cones.

WATCHPOINT: As post-crisis foreign interests encounter local Thai business practice, will vengeance (‘khaen’) and violent threats (‘khuu’) turn investors elsewhere, or will Thai-style competition (‘khaeng-khan’) secure overseas capital, bringing prospects of general recovery and generating profits for those with cross-cultural savvy?

 

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