Production hub on back of Afta

Sanyo Universal Electric is taking advantage of Asean Free Trade Area (Afta) incentives to make Thailand its regional manufacturing hub for commercial products.

Frank Tokunaga, vice president of Sanyo (Thailand), said yesterday that Sanyo's headquarters in Japan had invested Bt466 million in Sanyo Commercial Solutions Thailand last year.

The company's plant in Chachoengsao produces chest freezers, beverage coolers, open showcases and modern coolers for hotels, hospitals, restaurants, coffee shops, supermarkets, convenience stores, catering groups and retail businesses.

"Headquarters will further allocate basic investment of US$5 million [Bt170 million] to $6 million over three years to install new manufacturing facilities at the Chachoengsao plant, particularly for new, high-potential products such as beverage coolers and freezer showcases," he said.

Sanyo Universal Electric in April last year sold a major stake in its refrigerator factory in Prachin Buri's Kabin Buri district to Haier Group, China's leading maker of electrical appliances.

The move followed Sanyo's decision to focus on higher-margin products, including IT systems and commercial products like freezers, beverage coolers and open showcases.

Since last year, Sanyo Commercial Solutions Thailand has exported 20 per cent of the output from its Chachoengsao plant to many markets, but particularly Afta members including Indonesia, Vietnam, the Philippines, Malaysia and Singapore, as well as Hong Kong and Japan.

"We plan to increase the export ratio at our Chachoengsao plant to about 50 per cent within three years. Great new markets will be India, Indonesia, Vietnam, Australia and New Zealand," Tokunaga said.

The company will soon start exporting its commercial products such as commercial showcases to India to enjoy the reduction of import duties from 7 per cent to zero under the Thai-India free trade agreement.

"We are considering future expansion of production facilities for our commercial products in Thailand, which can be either expanding the existing plant in Chachoengsao or setting up a new factory," he said.

Sanyo aims for pole position in the domestic commercial product market worth about Bt3 billion and growing 13 per cent per year, he said.

"We want to increase our market share in the commercial product market from 30 per cent to 50 per cent and be the No-1 player in a few years," he said.

Sanyo's major Japanese rival Sanden currently leads the market with a 45-per-cent share, he said.

Even though the increasing cost of raw materials would hurt the business, the potential of these commercial products would be better in the future, he said.

"With higher living standards, people are looking for better-quality products. The government, however, should have incentive packages such as tax breaks for energy reduction to assist producers in coping with burdensome production costs," he added.