Japanese retailer and financial services firm Aeon Group is applying its domestic business model to achieve growth in Indochina, including Thailand.
The Japanese model is to set up a shopping mall and provide financial services to meet the spending patterns of customers.
Aeon has already set up malls in mainland China, Hong Kong and Malaysia, where the strategy helped accelerate growth in the group's retail and financial services.
The current growth in consumer spending in Indochina is seen as ideal for expanding this model, especially in Thailand and Cambodia.
Retail expansion in Indochina will be invested in by Aeon Group, while investment in financial services will be done through Aeon Thana Sinsap (Thailand), the financial-services arm in Thailand.
Aeon Thana Sinsap (Thailand) has established wholly owned subsidiaries in four countries: in Vietnam in 2010, in Cambodia early this year, and in Laos and Myanmar last month. These companies operate hire-purchase business.
It has also had a representative office in Myanmar for a number of years. The office has helped the group consider the feasibility of expansion in that country.
Jun Suzuki, director of Aeon Thana Sinsap (Thailand), said yesterday that the Thai unit had been made the financial-service hub for the group's Indochina operations in support of its retail business.
Aeon Group is expanding its retail business in Indochina with a focus on capturing |middle-class consumers, he said.
In Thailand, the group has set up MaxValu supermarkets, for which Aeon Thana Sinsap will offer credit cards and cash cards for use at the stores.
The group plans a substantial investment to open the first Aeon Mall in Cambodia by 2014. Financial services will also be prepared for customers of the mall.
To ensure the business model was successfully implemented in Cambodia, Aeon Thana Sinsap set up a motorcycle and home-appliances instalment-loan business in the country 10 months ago.
"We are also studying the behaviour of Cambodians to ensure that our financial products actually respond to their needs. Cambodian demand is for instalment loans, so the business has showed impressive growth and the company expects to secure 10,000 billings by the end of this year," he added.
The high growth rate in Cambodia means the company has had to increase the registered capital of its subsidiary there.
Aeon Thana Sinsap last week received a syndicated loan of Bt5 billion from Japanese financial houses. The funds will be injected into its business in Cambodia as well.
Aeon Thana Sinsap was set up in Thailand 20 years ago. The group considers that the expertise and know-how gained here should reinforce its provision of financial services in Indochina, because consumer behaviour is not that different from country to country.
The company will start a instalment-loan business in Laos next year, and plans to run a similar operation in Myanmar once the necessary regulations are implemented.
Suzuki said the company expects three of its four units in Indochina to generate a profit for Aeon Thana Sinsap within three years. Cambodia is expected to do so within two years.
Aeon is the first foreign non-bank financial institution to venture into Indochina and compete with local banks.
As to the business direction in Thailand, Suzuki said the company would focus more on profitability by developing new products and seeking alliances with local banks for payment distribution and cash points.
The company's loan portfolio in the Kingdom stands at Bt46 billion, with growth in the fiscal year running through February expected to grow 10 per cent, due mainly to healthy domestic consumption, he said.
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Article source: http://www.thethailandlinks.com/2012/11/29/aeon-to-apply-home-model-in-indochina/
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