Thai Polyester Company: A case study

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Thai Polyester Company: A case study

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Abstract

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.

Introduction
The companies
1. Chimie du sud
2. Yipsoon group
The environment
1. Thailand
2. The Thai textile market
3. The textile industry priority status
The project
Analysis
1. SWOT Analysis
2. The Five competitive forces
3. Actual competitors
4. New potential competitors
Substitution product
1. 'Chimie du Sud' point of view
2. 'Yipsoon' point of view
3. CDS' point of view
The external issues
1. The textile industry has dropped to its lowest level: The energy crisis
2. The delays
3. The Buddhist values
4. The competition
The internal issues
1. The 'double game' of Yipsoon
2. The problems of communication (language, misunderstanding)
3. The management
4. The loss of money (salaries, construction?)

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[...] - Meeting with a local Thai entrepreneur who was considering the possibility of entering into a joint venture with foreign partner to produce polyester fiber. Weakness - The presence of the group in Asia was not materialized by major investments and none of them were in textiles. - The textile division was facing serious difficulties in Europe due to serious competition coming from Japan and the third world. Opportunities - There was only one producer of polyester fiber in Thailand, taijena Japanese firm using the discontinuous process with a capacity of tons/years which covered only 70% of the market needs. [...]

[...] As the market was growing very fast, doubling every five years, Thai Polyester Company will be in a good position. The competition with the Teijin Company will not be very tough as both the companies own one part of the market. It isn't possible to really to know the intention of the other part. But one good thing is that there was equity in the share of the share with 49% for each one. The Yipsoon group will not be able to concede this part if they not really want to have a long life for “Thai Polyester Company”. [...]

[...] The Thai government is looking favorably at the non-Japanese investment and is ready to give a pioneer status which would imply a tax free position for the first five years. INTRODUCTION: When the promoters of Thai Polyester Fiber Co. Ltd decided to invest in a venture, to produce polyester to meet the demands of textile manufacturers and cotton mills here several years back, its promoters anticipated a very bright future for its products. The capital injected for the investment was over 1600 million Baht. [...]

[...] Because the Thai Polyester Company will be a 49/49 joint venture, the rest of the ownership being in the hands of Thai minority partners, the CDS won't be able to impose its rules and control. The decision will be taken on an equal level. The joint venture will represent a big competitive advantage for the Thai company. In fact, the CDS has developed a new process of polymerization, named the continuous process which offered the advantage over the discontinuous process of being less labor intensive and more productive in raw material consumption. [...]

[...] The competition As Thai Polyester Company was created, there was only one producer of polyester fiber in Thailand, Taijen a Japanese firm which was using the discontinuous process. But because of the delays, the company became very late so that a new competitor came on the market. Operating costs remain high at a time when the market for polyester products was extremely competitive. So finally the Thai Polyester Company had to sell below cost just to stay in the market. [...]

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