Within the next five years, more than 20 per cent of the workforce of the Siam Cement Group (SCG) will live outside Thailand, as the giant Thai conglomerate is aggressively "going regional".

President Kan Trakulhoon yesterday said SCG had a vision of becoming the "Asean sustainable leader" - recognised as a regional leader in a market of 560 million people in the Asean region - by the year 2015.

"The implication of this is that one-quarter of our people will reside outside Thailand in 2015," he said.

"Today, out of 24,000 employees in our 80 subsidiaries, 2,700-2,800 people - or about 12 per cent - are foreign nationals. We also have more than 100 Thais working abroad.

"Within the next five years, more than 20 per cent of our employees will be foreign nationals or Thais residing overseas."

Reflecting a dramatic change at the top, Kan said that by 2015, at least half of SCG's top-level executives - presently totalling 150 people - would have living and work experience abroad.

"By 2011, we will have recruited 5,000 more people. Of this total, about 1,300 or 1,400 will be Thais, while the others will be Vietnamese, Cambodians, Indonesian and other foreign nationals."

The SCG boss was speaking at a seminar entitled "Visionary Leadership", organised by the Thai Management Association.

Other speakers included DTAC chief executive Sigve Brekke, Siam Commercial Bank executive chairman Vichit Suraphongchai and Cerebos (Thailand) CEO Lackana Leelayouthayothn.

Kan's announcements mark a dramatic shift in the business philosophy of the 94-year-old conglomerate, which has long been largely a manufacturing concern.

He said the group's vision encompassed two main strategies: "go regional" and "innovate for high value products and services".

Since changes to its corporate culture will be an important enabling factor, SCG has introduced a new set of principles to guide its staff. They are: have an open mind, think outside the box, be assertive, lead changes and support changes. The group has doubled its research and development spending in each of the past three years - from Bt100 million in 2004 to Bt170 million in 2005, Bt350 million last year and Bt700 million this year.

During the next four years, SCG will spend an average of about Bt1 billion per year on research and development and the yearly investment will rise to Bt1.4 billion by 2011, Kan said.

The new platforms for SCG's growth, stressing regional development and product innovation, have followed a slowing down in growth following the group's successful corporate restructuring after the 1997 financial crisis.

Kan said four factors had driven SCG to introduce its new strategies. The first is a limitation on expanding its market share in Thailand because it is already a dominant player in its industries; the second is a change in the competition platform, from domestic to regional or even global; third is its reliance on commodities or basic material products; and fourth is its reliance on the technologies of joint venture partners.

SCG now plans to increase the proportion of high-value products to at least half of its total sales by 2015, up from 10-13 per cent at present.

"This is a rather difficult goal," he admitted.

Asked to identify the most difficult thing about the changes, Kan said: "The change itself is the most difficult. First, just thinking that you will change is difficult [enough], but what's more difficult is implementing the changes."

People naturally resist change, therefore it is the duty of management to lead the changes and to create regular, small "senses of crisis", he said.

The SCG president said it was also important for leaders to have a "soft mind" approach.

"Last year, I travelled with the HR [human resources] executives to visit our staff around the country a dozen times. I walked past the factories. There were no factory visits. We sat down in a circle of about 60-70 people, and we talked about how we were going to move, our direction and so on. Communication is the big thing," he said.

In summary, he said that instead of being production-oriented, as in the past, SCG had shifted its strategy towards "market-oriented expansion in new territories".

SCG reported sales totalling Bt258 billion last year. The group has six core businesses including cement, chemicals, building materials, ceramics, paper and packaging and distribution.

Pichaya Changsorn

The Nation