E-commerce partnership with JD.com to spur sales growth, China expansion for Thailand’s Central

Central Group Chairman Tos Chirathivat. Photographer: Brent Lewin/Bloomberg

The company with the biggest grip on Thailand’s brick-and-mortar retail market is expecting a partnership with China’s JD.com Inc. to help it do the same in online sales.

Central Group, which controls Thailand’s biggest operator of shopping malls and department stores, expects online sales to account for as much as 15 percent of its revenue in five years, from 2 percent now. The partnership with JD will help it compete in Southeast Asia’s booming e-commerce market and also open up businesses opportunities in China, Chief Executive Officer Tos Chirathivat said in an interview.

With an empire that also includes hotels, supermarkets and restaurants, Central Group is counting on online growth to help drive sales. The company first announced its $500 million joint venture with JD in September, teaming up with China’s second-largest e-commerce operator. Tos estimates that online retail in Thailand could rise fivefold to 10 percent of the market as the country of nearly 70 million develops and access to the web spreads through smartphones.

“We obviously want to be the leading player in the 10 percent so it doesn’t really matter what kind of percent of the group it is,” Tos said in the Jan. 3 interview at his Bangkok office. “The important thing is to be the leader in the market itself.”

Central Group and JD are competing in an increasingly crowded market, with Alibaba Group Holding Ltd. expanding in Southeast Asia through Lazada while Amazon.com Inc. kicked off with a beachhead in Singapore last year.

Southeast Asia is home to more than 600 million people and the region’s internet economy, which includes e-commerce, online travel and ride-hailing, may grow fourfold by 2025 from an estimate of $50 billion in 2017, according to a joint research report by Google and Temasek Holdings Pte.

While Central Group is a privately-held investment arm of the Chirathivat family, the company controls a number of publicly traded businesses. Central Pattana Pcl is a mall developer, Central Plaza Hotel Pcl operates resorts and restaurants, Robinson Pcl has a chain of department stores and COL Pcl does office supplies.

All four gained in 2017, with Central Pattana surging 50 percent in 2017, Central Plaza jumping 47 percent and COL more than doubling, all outperforming Thailand’s benchmark SET Index.

Outside the country, Central Group owns Italian luxury department store La Rinascente, Danish retailer Illum and in 2016 acquired the Big C hypermarket chain in Vietnam.

Central Group is targeting annual revenue growth of 13 percent in 2018 based on the company’s five-year strategy plan, said Tos. That number may be higher with mergers and acquisitions, and the company could consider deals in the billions of dollars if the opportunity is right, he said.

Local sentiment is helping the company, with consumer spending in Thailand picking up after the October cremation of late King Bhumibol Adulyadej ended the nation’s yearlong mourning period.

“If the trend continues like this then this year should be good,” said Tos.

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Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.