CP Group Is Planning Sale Of Auto Ventures in China
By PICHAYAPORN UTUMPORN
Staff Reporter of THE WALL STREET JOURNAL, June 28, 1999
Copyright The Wall Street Journal Online Edition
BANGKOK, Thailand -- Charoen Pokphand Group is planning to sell its automobile ventures in China as part of a restructuring program designed to help it cope with the economic crisis at home, its top executive said.
The exit also reflects the desire of CP Group, the world's second-largest poultry producer and Thailand's largest agricultural conglomerate, to avoid intensifying competition in an industry in which it hasn't excelled. Several big names in the global auto industry have entered China recently, making it difficult for a small player such as CP to maintain its market share, said Dhanin Chearavanont, chairman and chief executive officer of CP, in an interview Friday.
"If we wanted to compete with them, we would have to invest a lot more money and energy" into upgrading products, Mr. Dhanin said. "But we're not [an expert] in this business, so maybe we should get out of it."
Like many large companies in Thailand, CP Group expanded aggressively during the economic boom. But the past two years have forced the company to streamline its businesses through the sale of parts or all of its stakes in noncore, unprofitable ventures.
In China, CP has sold its stakes in Shanghai-Ek Chor Motorcycle and a brewery it set up with Heineken NV of the Netherlands. In Thailand, the group has sold its entire stake in Sunny Supermarkets, a 24-hour grocery store chain; 75% of Lotus Distribution, which runs a discount-store chain; and a small stake in CP 7-Eleven, which runs a 24-hour convenience store franchise.
Mr. Dhanin said CP is in negotiations with "several interested parties" for the sale of at least two automobile-parts ventures in Shanghai: a plant producing air compressors for vehicles, and a plant producing dashboards and instrument panels. However, he didn't name any companies, nor did he provide a timetable for when the talks will end.
In addition to the auto ventures, CP owns breweries, cosmetics makers and house-paint makers. Some Chinese media reports have speculated that, by selling some of its assets in China, CP is moving to pull out of the country entirely. But Mr. Dhanin denied that speculation, saying that 20 years after his group entered China, the country's markets still offer great opportunities. "When I first arrived in China, the country had nothing" in terms of infrastructure development, he added. "Now it's got a lot more than it did then. Why should I get out of it?" |
