Thai Polyester Company: A case study

Résumé du document

Chimie du Sud was considering the opportunity to get involved in a joint-venture with Yipsoon of Thailand for setting up of a polyester fiber plant in Thailand because its textile division is facing serious difficulties in Europe due to competition from Japan and the third world countries. Chimie du Sud is one of the largest chemical groups in France, operating on various product lines. (Basic chemicals, fine chemical, pharmaceuticals, textiles, agro-chemical and fibers). The Yipsoon group. This group is one of the few textile magnates in Thailand. It is involved in weaving, spinning, knitting, dyeing and some other products. It controls approximately 40% of the Thai market and owns and controls more than 15 companies, some of them with foreign partners. This company is managed by various members of the family of Mr. Yipsson. Mr. Yipsoon can't speak English but has interesting relationship networks with the Chinese Diaspora and some PRC officials. The total Thai population is estimated to be 38 million, 2.5 million of whom are living in Bangkok. 3.3 million of these employees are working in the industry or industry-related jobs, generating outputs of 82 billion bahts.

Extraits

[...] Thailand's consumer price index closely follows rice prices. Thailand is in fact alternatively the largest or the second-largest rice exporter in the world. To control inflation, Thai government occasionally applied an embargo on the exports of rice, which releases an increased supply for domestic consumption and stabilizes prices. The Thai Textile Market Even though the Thai textile market is growing very fast, it is extremely price sensitive. That means that the joint venture will have to face this issue by observing carefully the independent thread and fabric merchants. [...]

[...] He controlled approximately 40% of the Thai market owned and controlled more than 15 companies, some of them with foreign partners. This company is managing through various members of the family of Mr. Yipsson. Yipsoon group can't speak English but has an interesting relationships network with the Chinese Diaspora and some PRC officials. The environment Thailand The total Thai population is estimated at 38 million million of whom are living in Bangkok. Among the 17 million Thai employees million are working in industry or industrially-related jobs, generating outputs of 82 billion baht. [...]

[...] It was difficult to pass the increase on to the customers. In fact the world domestic textile markets turned sour and the supply of textiles was far in excess compared to the demand. The polyester of Thai Polyester Company, added to those manufacturers by other producers, is expected to be far in excess of local demand and the company would have to depend very much on export. The delays Because the company location area was swamp, civil works needed reinforcement : costs went up, delays went on. [...]

[...] The fact that Yipsoon interfered and intervened in the work without any prior notice to the project manager was a real problem. In fact he should have talk with his partner before giving orders leading to differences of opinion between him and his partner. The loss of money (salaries, construction, ) During the entire period of delays, the company had to make endless payments of in settlement of its debts plus interests besides salaries to staff and other expenses. The repayment of loans plus interest and the payment on machinery-purchase had cost the company about 140 million baht a year.Added to this is the money the company had to pay to its 50 French technicians and the technical know- how fee which comes to a total of about 48 million baht a year or an average of 4 million baht a month. [...]

[...] So finally the Thai Polyester Company had to sell below cost just to stay in the market. The Thai Polyester Company hoped that the polyester demand will increase around 11% year so that local supply and demand would balance out in four years'time. The internal issues : The double game of Yipsoon The Thai partner holds 30%. The rest 22% is divided between the 3 banks of Bangkok. Moreover Mr Yipsoon was holding marketshares from the direct competitor, Taijen which provides for the local market needs. [...]