Tucked behind idyllic 1960s baby-blue condominiums and terraces in leafy Sukhumvit Soi 46, Graphite Co exemplifies the struggles and successes of Thailand's much-needed creative enterprise.

Past the old man leisurely welding steel in his terrace workshop, stands a two-storey home-office. The quiet neighbourhood serves as a backdrop for the busy hub of the 15-strong design and marketing agency.

On the huge white table at the main entrance lies a mini-wall of small transparent buckets. Inside are T-shirts emblazoned with "Barcelona". The staff is busy working on the shipment to Catalonia. Meanwhile, a light-brown poodle barks relentlessly, struggling to escape its owner's arms to attack the approaching visitor.

Founded in 1996, the boutique operation specialises in designing brochures, leaflets, catalogues, company profiles, annual reports and point-of-purchase graphics.

Mokkha Sibunruang, co-founder and director, says the company earns about Bt1 million a month from its "design solutions" business, which accounts for 90 per cent of all of its commercial activities. His aim though is to increase this to Bt1.2 million in three years' time.

But first come the necessary organisational restructuring and strategic finessing.

In 1997, Graphite branched out into the intensely competitive and fickle gift market with greeting cards. Back then there were only Hallmark-style cards, and the Thai-language cards could be too traditional, says Mokkha. But through constant creative marshalling and perseverance, the operation has now expanded into full lines of T-shirts, tote bags, character designs, clocks, tree-shaped tissue boxes and other kinds of accessories and decorative items.

The pet project has also morphed into Graphite Plus, a separate unit.

To balance commercial work and the pet project, Mokkha has tapped his network from working in software companies to acquire business. Now Graphite counts blue-chip companies such as DTAC and True Corp as regulars.

The transition came at a time of general decline, as the market is clogged with supply. Narumol Jayanama, co-founder and managing director of Graphite Plus - whom Mokkha met while working for ML Tridhosyuth Devakul's international school project in Chiang Mai - says the company has been relying too much on orders from the Bangkok International Gift Fair and Bangkok International Houseware Fair. Sales from these two annual trade shows surpassed its domestic sales.

Spiralling production costs and overheads are the two main concerns.

Graphite Plus's products use an assortment of materials from soft PVC to cardboard - all of which require complicated manufacturing. It is difficult too to find the right factory that is willing to produce only 300 to 400 items.

To streamline the operation, Mokkha tries to mix these various materials into one product to minimise cost. Careful material planning, plus technological advancement, means that the design agency can stay ahead of the trend.

"Overheads walk on two legs," goes a common corporate-speak dictum. Graphite and Graphite Plus, in sharing staff and resources, also face such a brain-drain. One of the eight designers might be working on an invitation card for Channel 3 while designing a Z-Gang mobile strap.

The company's emphasis on monitoring the whole design and production process - which has won them many clients - can prove to be a double-edge sword.

As part of its organisational restructuring, the company's executives are planning to introduce key performance indicators and a balance scorecard to track and improve work and compensate creators.

But having to wear two hats - one working to briefs set by clients and another to one's creative intention - has its advantage.

Marketing-wise, Graphite Plus has been trying to escape the tightening noose of department stores, where it is not uncommon to see retailer-landlords taking a 55-per-cent cut from sales. In such circumstances, it is very difficult to meet its target of a 5-per-cent profit margin.

Unable to expand beyond what Mokkha terms "the BTS distribution line", or stores in the metropolis's main districts, and climb over the upcountry market's cultural wall - where design and English literacy are still relatively low - the solution now is to set up shops abroad.

Many of Graphite Plus's competitors have entered neighbouring countries. Recently, Human Touch, whose products are featured in the New York Times, opened a tiny flagship store on the second floor of Time Plus Shopping Centre in Hong Kong's Causeway Bay, in a joint venture with a local distributor.

Graphite Plus is on a marketing offensive, having been playing defence for too long. It has contacted a friend in Perth, and is now looking for stores to stock its products in Australia.

The founders are glad that their gift business is now stable and self-sustaining.

Yet, in a country where piracy is still rife, the small design shop was itself a victim of intellectual theft. Mokkha, a law graduate from Chulalongkorn University, recounts how he found Graphite's Z-gang characters printed on a high-street retailer's T-shirts. But the case was settled without having to go to court.

Still, Graphite Plus' products have been selling well. The greeting cards, which have been redesigned with great ingenuity - one, much like some complex Japanese origami, called "Animation Card", can be folded four ways, showing four different scenes of a story - continue to make up the lion's share of sales. Notebooks too are gaining in popularity. There is one with a pink, transparent, soft PVC cover.

Graphite's longevity is rare. But, if it manages its employees and production right, it is here to stay.

Ki Nan Tsui

The Nation