Asian strategy

            Label materials manufacturer Thai KK Industry’s acquisition by Eternal Group last year has allowed the company to expand its product line and open production facilities in Vietnam. Now it has set its sights on the rest of Asia, as James Quirk reports
            Thai KK Industry Co., Ltd, headquartered in Bangkok and with a production facility in Samutaprakarn in Thailand, is reaping the benefits from its acquisition by Eternal Group last year. Labels are now the company’s core business and the recent opening of a production facility in Vietnam, coupled with Thailand’s export tax breaks, have allowed the company to increase its influence in the region.
            Today, the company has 500 employees and is divided into three areas-tapes, labels, and melamine. Its label business is made up of four segments: paper-which make up around 50 percent of the label business-variable data, synthetics, release liners, and specialty. The company imports the majority of its material-Raflatac and Ahlstrom are just two of the European companies from which it sources – while a small amount also comes from local suppliers.

            The company’s 66,000 square meter facility in Samutprakarn is equipped with three coaters, two laminators and several slitters and sheeting machines. The latest coater-from German manufacturer Kroenert-is described by president Chawaeng Uvimolchai as a ‘regional scale machine’. The company’s slitters come from kampf, also from Germany. ‘We want our company to run with Western-standard equipment, ‘says Uvimolchai. ‘The new machine enables us to product high volume in specialty areas such as clear on clear – a fast-growing sector.’
            As well as investment in machinery, the company’s
            “If we are successful in Vietnam, we will move into China and the rest of Asia”
acquisition by Eternal Group has enabled the opening of a manufacturing facility in Vietnam. For Uvimolchai, this is the first step in the company ‘s expansion into rest of the region: ’Our job is to grow in the Asian region. If we are successful in Vietnam, we will move in to China and the rest of Asia.’

            ‘We believe that running the company well will give us a better chance of success, ‘he continues. ‘Oil and raw material cost have been rising and label prices stagnating in recent years, but we are able to survive. Investment in IT, machinery and training the younger generation of employees is a big part of our daily operation. Our investment in R&D, for example, allows us to tailor products to our customers‘needs.’
            Uvimolchai reports that the next step for the company is film production, to allow it to move into high volume label sectors such as beer. ‘We want to produce films, which at the moment  are really only coming from Europe,‘ he says. ‘They are imported with high tariffs. ‘Hot melt adhesive production is also in the pipeline.
            Uvimolchai believes that, while it is China currently receiving the most attention as the center of the Asian market, Thailand’s export tax breaks give it a competitive advantage. ‘China will be a key player in the market, but export tax breaks for several materials have now expired,’ he explains. ‘For example, export tax breaks for melamines ended on July 1, and prices rose by ten percent immediately. This also happened with paper last year. People are therefore moving to source from India and the rest of Asia But when you export from Thailand, VAT is zero.’
            ‘Freight, too, is twice as expensive as it used to be, ‘he continues,’ so in the future it may be difficult for china to compete with the rest of the region.’
            Thailand also has the advantage of being part of the ASEAN Free Trade Ares (AFTA), an agreement of the Association of Southeast Asian Nations which seeks to increase the region’s competitive edge as a production base in the world market through the elimination of trade tariffs. With a population of over 550 million, companies such as Thai KK can now exploit the opportunities presented by an integrated market of increasingly prosperous consumers.