Thailand is perfectly placed to prosper as technology leader at the heart of a dynamic subregion, conference hears
WITH SO MANY trade and investment opportunity in the so-called CLMVT subregion, Thailand could take the leadership role within the bloc and build on its hub status, say industry experts.
The CLVMT subregion is composed of Cambodia, Laos, Vietnam, Myanmar and Thailand. With the region’s rapid economic growth, as seen in its rising gross domestic product, the combined 240-million population offers a nearby destination market and a chance for Thailand to leverage its strengths.
The Thai government last week hosted the CLMVT Forum 2018: CLMVT Taking-Off Through Technology, to strengthen economic ties in the CLMVT subregion. It also aimed to promote regional cooperation amid the current challenges in global trade and in the use of digital technology.
Trade and investment opportunity in the region dominated the forum discussions.
Paul Srivorakul, CEO of aCommerce Thailand, said geography is the great advantage held by the CLVMT subregion. Thailand is particularly well-situated, and that will only get better as its Eastern Economic Corridor (EEC) rolls out, providing access through nearby borders. Companies locating in Thailand could open up easy distribution channels to the remainder of the region. That opportunity positions Thailand to lead in shaping the CLMVT subregion.
Thailand on its own has a relatively small domestic market. But if Thailand strengthened its position as the regional hub, ensuring access to the emerging neighbouring markets for a combined 240 million people, the potential for Thailand’s economy would be much greater. Adding in the markets within the Asean group, and then including China and Indonesia, offers further potential for the Kingdom.
For aCommerce, the big opportunities in CLMVT are Thailand, Vietnam and Myanmar – less so for the consumer market as the B2B business market, which now provides around 30 per cent of business for aCommerce.
“For us as business, we look at the Southeast Asia region,” said Paul. “But from Thailand’s perspective, not just in e-commerce but in terms of businesses overall, how can Thailand get all the countries on board and build CLMVT as a subregion?” he asked. “Thailand has an advantages over the others.”
Singapore and Malaysia can be seen as one market, with a lot of trade between them, he noted. The Philippines and Indonesia are another such example. In terms of inter-trade these pairs already have their nearby trading partners. Singapore and Malaysia share investors who see their markets as similar, as do the Philippines and Indonesia. Thailand and CLMV members are similar, and that has led a lot of Thai companies to grab CLMVT as an opportunity, including Central Group, TCC, Big C, he said.
For digital services, there is infrastructure in place, telecom companies are already there, Google and Facebook are present, and companies can leverage the regional platforms to grow.
CLMVT is like a sub-set of Southeast Asia (SEA), almost like a second-tier city, he said. Digital and technology companies have the platforms to be able to reach those customers via Facebook or Google. It makes sense to go into CLMVT neighbours to capture the market, because the rest of SEA is becoming very competitive, billion-dollar unicorn companies are there now. If companies want to really capture the opportunities, they can go to the second-tier city –the CLMVT countries – to grab the market, said Paul. That is the big opportunity. And it is not limited only to digital technology, but rather can also include physical distribution. It does not mean only digital technology but it can be physical distribution.
James Z Dong, CEO, Lazada Thailand, said the company focused on two things – ecosystems and new retail – to address CLMVT opportunities in trade and investment through digital platforms in term of offline to online.
Ecosystems – including the platform, service provider, infrastructure and consumer – are important since e-commerce platform cannot do everything. For example, he said, China’s Alibaba has more than a million sellers, because it is difficult for one platform to serve everyone.
“We have service partners to fill in the gaps,” said Dong. “In neighbouring countries, we have companies like aCommerce, that are very innovative and embrace digital. They provide a lot of services that help the offline merchants do business online. They offer a full spectrum of services and the merchants can choose the service they want. They help these offline players to go online.”
Infrastructure, payment and logistic are important for e-commerce and other cross-border business, he noted. Once the platform, service provider and infrastructure are ready, consumer adoption of e-commerce and other businesses will be much faster.
“It was easy to switch from offline, to cash-on-delivery, to online almost overnight. It is very quick once consumers adapt to that,” said Dong.
E-commerce and e-consumer apps play different roles in the daily life of consumers. They started earlier in the US than in China. In the US, people spend less time on shopping apps, finding what they want with just a few clicks, and value simplicity and efficiency. The model in China is different. Consumers spend a lot of time on an app, they walk through the different pages, they see content and engage with it, and talk to the storeowner. For consumer in the emerging markets, the amount money they can spend, and the role of apps as a source of joy and entertainment, differs from consumers in the developed countries. In the emerging markets, an Internet company’s responsibility is to provide fun.
Alibaba has 50,000 employees worldwide. Its ecosystem has a few million merchants, and a few million customer-service staff who work part-time or full-time within Alibaba’s ecosystem. The giant claims to have created 34 million direct and indirect jobs in China.
“This is the power of the ecosystem. There is absolutely no chance that one company on its own could deliver the whole of digital transformation all of the world’s societies. But through the ecosystem, government and different types of the private sector working together, we can make it happen,” said Dong.
As a part of Alibaba Group, Lazada will learn and take the ecosystem model to Thailand and its neighbour countries, he said. Lazada now operates in six SEA countries.
The next big thing is “new retail” whose key feature is the lack of boundaries between online and offline business. The company provides a lot of data and tools to offline businesses so they can better analyse customers. It also provides online “touchpoints” to help them set up a store platform. And then it helps them create traffic from online to offline, and offline to online, so that everything is fully integrated.
“We have become a technology transformation partner to a lot of offline retailers and brands,” Dong said. “They can choose to have their own customer touchpoint or to leverage Alibaba's customer touchpoint. We reposition ourselves not as an e-commerce company, but as a technology company, a data company. We provide all the data and infrastructure to offline businesses, to drive offline business to online. In China, we started with food and grocery businesses, then financial and fashion, and so on.”
New retail is something the company wants to eventually bring to other parts of the world. It takes a little time, but will probably happen after the ecosystem is up and running and everything is going smoothly, he said.
David Jou, CEO, Pomelo Fashion in Thailand, said that the SEA market has many different things to offer the fashion industry. Thailand has the great design talents and a lot of expertise in textiles. Vietnam is great in technology talents, he said, while Singapore boasts amazing financial services and human capital, and Indonesia provides a very large consumer market. Meanwhile, Cambodia and Myanmar are growing faster than any other region in the world.
“There are many different elements coming together to make an amazing market,” said David. “We built our home in Bangkok to capitalise on all these different things. Pomelo is ‘DNVB’, short for ‘digitally native vertical brand’. We are DNA digital, do the vertically integrated. We do everything from design to manufacturing, to servicing the customers.”
Pomelo is a small but fast-growing company set up in Bangkok four-and-a-half year ago, he added. The company wants to build the first global fast-fashion brand for the digital world.
Chhuon Dara, secretary of state for Cambodia’s Ministry of Commerce, told CLVMT Forum 2018 that both policymakers and private sector players from the region needed to pay strict attention to the online platform. Online is playing a significant role as a driving force for digital economic development in today’s global economy, he said.
To utilise e-commerce and digital platforms, the private sector needed the support from governments to work safely and effectively, he said. However, although the opportunity and potential for doing online business and investment in CLMVT is huge, the commercial players are likely to face current barriers dealing with cross-border issues related to customs duties, taxes and logistics.
The government should play the key role in fostering digital platforms to support businesses.
For example, Cambodia’s Ministry of Commerce is implementing online business registration to reduce the length of business registration processes, cut down on in-person contact, and allow electronic payments and the synchronising of databases with other relevant government agencies.
Thaung Tin, senior vice president of Myanmar’s Federation of Chambers of Commerce and Industry (UMFCCI) said that there are many challenges in Myanmar as they aim to move from offline to online in order t