Malaysia key to Tesco Lotus' export strategy

Corporate July 08, 2014 00:00

By Kwanchai Rungfapaisarn
The Na

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Giant retailer targets 15 per cent rise this year after success in UK, Europe, Asia

Tesco, a UK-based leading retail operator in Thailand, is to target a 15-per-cent increase in export of Thai products by the company’s sourcing team this year.
Corporate affairs director Salinla Seehaphan said the multinational’s Thai unit, Tesco Lotus, exported about Bt3.2 billion worth of products last year.
Tesco has been part of the Thai economy for 20 years. It is promoting Thai exports in growing markets such as Malaysia, after the success in exporting Thai products through more than 6,500 Tesco stores in Britain, Central Europe and Asia.
“As the leading retailer in Thailand, we use our scale to benefit the Thai economy and local businesses. We are delighted to provide further support to promoting Thai exports. This year our focus is to promote Thai exports to emerging markets including Malaysia,” Salinla said. 
She said Tesco Lotus had exported many types of Thai products to Tesco stores in 12 countries around the world over the past several years. These include seasonal fruit, seafood, canned food and pet food as well as toys and stationery, with a total export value of around Bt3.2 billion last year.
“This year we are working to increase exports of Thai seasonal fruit to Malaysia, as Thai food is very popular among Malaysians. Tesco is a major retailer in Malaysia, so its stores are great channels to promote and distribute Thai products,” she said.
This year, Tesco Lotus plans to increase total export value by around 15 per cent from 2013. 
“Apart from exporting fresh food, Tesco Lotus is working closely with Thai manufacturers to develop high-quality products for export. Some projects in the pipeline include stationery such as copy paper and pencils, as well as air-freshener for cars. As one of the world’s leading retailers, we hope to use our expertise to help Thai businesses successfully enter the global market,” Salinla said. 
Vichada Pabunjertkit, minister counsellor (commercial) at the Office of Commercial Affairs in the Thai Embassy in Kuala Lumpur, said the embassy had been promoting Thailand’s exports to Malaysia.
She said Malaysia was the fourth-largest importer of Thai products, and the largest importer in Asean. Major products include cars, auto parts and accessories, computers and accessories, and tyres.
The total trade (both import and export) between Thailand and Malaysia is worth US$26 billion (Bt842 billion). Thailand’s exports to Malaysia posted growth of 4.7 per cent to about $13 billion last year.
“Malaysia is a [high] potential market for Thailand’s exports, thanks to its economic growth. The country targets GDP growth at not less than 5 per cent this year, and inflation of 3.2-4 per cent,” Vichada said.
She said the Malaysian government has laid down a clear strategy and direction for the country. Its policy has been conducted continuously with strong political stability. Foreign direct investment to Malaysia increased by double digits last year.
Azlam Shah Alias, director for government and corporate affairs at Tesco Stores (Malaysia), said there were currently no Tesco Express stores in Malaysia. Convenience-store chain 7-Eleven operates up to 1,600 stores in the country. The three major convenience-store players, 7-Eleven, Speed Mart and KK, each open about 100 new stores per year.
So far more than 1,400 Tesco Express stores have opened in Thailand. The company also operates 200 large-scale stores, of which 130 are hypermarkets.
Tesco Stores (Malaysia) opened in 2001 under a partnership between Tesco UK and SimeDarby, one of the largest companies in Malaysia dealing in palm oil.
Tesco Stores (Malaysia) currently operates 49 stores, both hypermarkets and superstores. Major competitor Aeon has also opened 30 large-scale stores in the country, followed by Mydin with another 30, Econsave with 40, and Giant with 100 stores.
Alias said the Malaysian government had allowed the opening of large-scale hypermarkets and superstores subject to equity, operational and environmental conditions.
He said Tesco hypermarkets in Malaysia occupied about 9,300 square metres of retail space on average, with more than 50,000 different products from 1,700 suppliers.
He said that under Malaysia’s distributive trade guidelines, about 70 per cent of equity can be foreign-owned and the rest by a local investor. 
“We launched our online shopping business at Tesco Stores about two years ago, which is the same time as Thailand. The online shopping business currently accounts for only a single-digit [percentage] of our total sales, as Malaysian people are not fully aware [of it] and online shopping is quite new for them. The online shopping, however, has grown by 200 per cent from the first day we started,” Alias said. 

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