winning with technology

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AW Cover Technology.ai 10/7/11 3:44:29 PMAW Cover Technology.ai 10/7/11 3:44:29 PM

Winning with Technology.ISBN 978-974-7560-69-5

Banja Junhasavasdikul, Ph.D.

Edition No. 1 Octorber 2011

Published by :

Innovation Group (Thailand) Co., Ltd.

Address :

18 Soi Ramkhamheang 30 (Ban Rao),

Huamark, Bangkapi, Bangkok 10240, Thailand.

Tel : 02 375 5197 Fax : 02 732 1778

Printing :

JST Publishing (Thailand) Co., Ltd.

Address :

199/88 Ladphrao-Wanghin Road, Ladphrao, Bangkok

10230, Thailand.

Tel : 02 931 6898 Fax: 02 931 6968

Introduction

I always told my children that I am a lucky person.

I always have good friends and excellent friends. But

In 12 years working with Shell (Thailand) and Du Pont, I

had bad bosses, good bosses and very, very good boss.

Therefore, when I have hundreds persons work under

me, I promise myself to be a “Good but Tough Coacher”.

When you are small company, you work under dog of big

competitors. Thai people always say that this because we

do not have technology. 17 years ago, JSR who was our joint

venture partner in rubber compounding. In the joint venture

business, JSR controlled the technology, manufacturing

and marketing to Japanese customers. One day, JSR told

me that they decided to set their own rubber compounding

plant in Thailand. And within one year, after their plant started

up, they would take away all Japanese customers from us.

But 15 years late, we are a world-class rubber compounder

and we never see JSR comes close to us. Why?

“Thinking of people” this is the causes of personal

behavior and his life style. Why Thai SMEs wait for help from

the government in protecting their businesses. They are waiting

for the technology assistance to fight against imports.

“Build our own technology” and doing the “Best” in

business we are doing. Technology is around us. If we are

seeking technology, we can master the technology in one

day. Build your business from “inside-out”, if we like to be

competitive, build your core competencies from inside the

organization. Offer your strong technology to service to

customers, industries and academic sectors. The more you

contribute, the more challenging requests will come back

to you. Then you can build new innovative products and

technology from market insights. “Outside-in”

This book was written from my 40 years of working

experience. It was parts to my papers which were submitted

to Rushmore University to qualify my Ph.D. program. I would

like to thank you Dr. Donald Mitchell to give me advices and

Ms. Laurel Barkley in editing my paper.

Most of all, I thank you my dear wife, Ms Somsri, who

always encourage me in my work and life forward. It is very

challenge for the new generation of Innovation Group Innovation

to sustain the growth of Innovation Group in global market.


Dear Reader,

I have been honored to serve as Dr.Banja Junhasavasdikul’s

advisor during his Ph.D. studies at Rushmore University. Drawing

on my very interesting work with him, I am delighted to have

this opportunity to write a brief foreword for this volume that

commemorates the opening of the Innovation Group of

Companies’ new plant in Rayong, Thailand.

Over my four decades of working with successful

CEOs, I have often been struck by how little many such

leaders understand about how to lead their organizations

during times of change. Thus, new circumstances often

become stumbling blocks that lead to major problems as

inappropriate strategies and tactics are applied. Such is not

the case for Dr. Junhasavasdikul.

In this volume, Dr. Junhasavasdikul has included

portions of papers written for his doctoral studies that

provide timeless descriptions of the rubber industry,

challenges and opportunities concerning globalization,

how to conduct industrial marketing, developing an

organization’s internal competencies, and applying

nanotechnology to create a new generation of products. Each

Appreciation

paper embodies and applies the best of Peter Drucker’s

thinking about innovation and entrepreneurship.

While many organizations simply seek to copy others

at lower cost and with lower prices, progress occurs

primarily through accomplishing new tasks that bring

breakthroughs in effectiveness for customers, end users,

and other beneficiaries. These five papers provide tangible

examples of blueprints for industry leaders to accomplish

such important new tasks, expressed in terms of the

Innovation Group of Companies.

I encourage you to read, to reread, to study, and

to apply the principles in these papers to accelerate

improvements in what you do. You’ll be glad that you did!

Sincerely,

Donald W. Mitchell

Professor

Rushmore University

Weston, Massachusetts, USA

October 2011

World of Rubber 11Rubber and economic recovery in Asia 13Natural rubber and synthetic rubber 15Japanese synthetic rubber in year 1940-2000 18

Corporate Competency 31Creating Internal Competencies 33Create innovative Product 34Develop Innovators 37Innovation Group and Internal Competencies 40

Marketing Industrial Products in 51the Global Market

Modern Marketing Concepts 53Successful Industrial Product Company 57Grow Innovation Group in the global market 78

Developed Nanotechnology 85

Globalization 105Global economic movements 107Free Trade Agreement (FTA) 114The 4th wave of globalization 116Thailand under AEC and FTA 117Creative Economy 119Thailand must take advantage from FTA 121

INDEX

“ Their Japanese determined spirit helped them survive when they were facing crisis. They gained experience from effi ciency improvement, energy saving measurements. Japanese hard working spirit and never give up “Fukutsu no seikin” were built up in Japanese working style.”

“Human being has to balance between wealth and green environment to live happily between human and nature.”

World of Rubber

01

12Winning with Technology

World of Rubber

It’s crazy world. In the fourth quarter of 2010, prices

of natural rubber jumped up from below $2 per kilo to $6

per kilo. It stayed at $6 for 5 months and returned to $3 in a

week. Now, the price is staying around $5 per kilo. It is very

difficult to explain if the price fluctuation of natural rubber

happened because of real demand and supply or because

of the speculation in price. Price fluctuations in natural

rubber created many uncontrollable factors for the final

rubber product producers. Not only because of cost, supply

of raw material is also fluctuating all the time.

Thailand is the largest natural rubber producer with 3.1

million metric ton in annum production. Seventy percent of

the production is exported. Natural rubber plantations were

mainly in southern and eastern parts of Thailand. And now

the plantations spread into every part of the country. Natural

rubber is one of the main polymers using in tire. Therefore,

Thailand becomes one of the largest tire producers because

of the abundant of natural rubber. With the prices increased to

$6 per kilo, owner of rubber plantation became rich overnight.

13Banja Junhasavasdikul, Ph.D.

Labors returned home to work in rubber plantation. Labor

which was tight in other industry became very tight. In the

early of 2011, prices of natural rubber dropped down from

$6 per kilo to $3 in a week time. Then price of natural rubber

returned to around $5. Most of the rubber factories found that

they had very difficult to control their production cost. Prices

and supply of synthetic SBR which is also mainly used in tire

industry follow the prices and supply of natural rubber, swung

in wide range. Why?

Rubber and economic recovery in Asia

Let’s look back to the past three years, after the

economic recession in 2008-2009, most of the countries

in Asia recovered from the recession within 10-12 months,

leaded by China and followed by countries in Southeast Asia

and newly industrialized countries, like Korea and Taiwan.

These countries recovered from the recession within a year

because of economic stimulation programs of the governments.

Economic stimulation programs of these countries were aiming

in creating domestic demands as well as fiscal policy to


have more liquidity of money with low interest rates. In

2010, almost countries in Asia had very high GDP growth

rates. Many countries took that opportunity to improve

their infrastructures. Because of better infrastructure and

higher income of people and better infrastructure in these

countries, especially in China and India, these countries need

large quantity of raw material for their manufacturing. Prices

of raw material (as well as crude oil) returned to the prices

before the economic crisis of year 2008. Tire was one of the

products that had very high demand because of the big

increase in car production in China, India and countries

in South East Asia. By nature, 60 percent of natural rubber

production is consumed in tire industry. There was no doubt

that prices of nature rubber increased from $2 to $6 per

kilo in the short period follow with the prices of synthetic

rubber. People in rubber industry worried about natural

rubber price would further increase up to $8 per kilo. China

kept high inventory of natural rubber. In the mid of March,

2011, most of the factories in China had very high inventory

of natural rubber. They stopped to import natural rubber.

Then the prices of natural rubber dropped down to $3 in


a week, followed with the prices of synthetic rubber.

After that it moved up to $5 per kilo and stays there.

Out of 30 million tons of rubber consumed in worldwide,

natural rubber shares one third of this quantity. Because

of good mechanical properties and good tack properties,

natural rubber is widely used in tire and glove. Natural rubber

had its origin from countries in Latin America. In 1493,

Christopher Columbus brought this product to Europe.

Natural rubber found its commercial value after Mr. Charles

Goodyear discovered the method to cured natural rubber

from thermoplastic to thermosetted rubber by using sulfur

in 1839. In 1976, Henry Wickman brought natural rubber to

plant in Cylon (Sri Lanka), Malaysia, Singapore and Indonesia.

Now-a-day, Thailand, Indonesia and Malaysia are three

largest natural rubber producers with two third of natural

rubber production.

Natural rubber and synthetic rubber

Since World War I, rubber had become a strategic

material indispensable to war operations. US and Japanese


armies tried to seize control major production areas of natural

rubber in Southeast Asia. Meanwhile, Germany and US

governments accelerated their research and production of

synthetic rubber in order to encounter the serious supply of

natural rubber from forecast.

In year of 1930s, from the research of laboratory of

Du Pont, Dr. Walter H Carothers and his researched team

discovered chloroprene rubber (Neoprene). Meanwhile,

Dr. Boch and Dr.Tschuku from IG Farben industries in Germany

discovered butadiene – styrene copolymer (Buna S) and

butadiene – acrylonitrile (Buna N). Before the World War

2, Nazi German took the lead to build synthetic rubber

plants. Four synthetic rubber plants were built based on

technology of Buna S and Buna N with capacity of 120,000

ton. Meanwhile, in the United Stated of America, President

Franklin D Roosvelt had designated rubber as national

strategic material. The US government allocated $700 million

to build 15 synthetic rubber plants in USA with total capacity

of 700,000 tons.


After The World War II, the US government transferred

synthetic rubber facilities to private sector. The transfer

stimulated rapid technological advancement and increased

production capacity of synthetic rubber in USA.

During 1950-1952, because of Korean War, natural

rubber prices soared up, European countries and US

rekindled campaigns to increase production of synthetic

rubber. After San Francisco Peace Treat in April 1952, US

government released it’s tighten policy to countries that lost

the war. Bayer in Germany started to build synthetic rubber

based on technology of Buna S and Buna N. At that year,

Japanese government sent 12 technicians to visit USA to

initiate synthetic rubber transferred to Japan.

Now-a day, over 30 kinds of synthetic rubber are

produced at the quantity of 23 million metric tons per year

to serve many industries. Automotive and tire industries

consume more than half of the rubber consumption,

follow with construction, oil and gas, electric applicants and

electronic industries.


Japanese synthetic rubber in year 1940-2000

When we talk about rubber, It is quite interested to study

how Japanese synthetic rubber being developed in the past

40 years. Before the World War 2, same as the United Stated

and Germany, who considered rubber, was a strategic material

for war operation, Japanese government mapped out plans

to produce synthetic rubber. Japanese army seized control

natural rubber production areas in South East Asia. In 1942,

Imperial Japanese Army advanced into Indonesia, and

took over Goodyear Tire and Rubber Company in Java and

renamed it as Nippon Tire Co. Encouraged by the government,

Mr. Shojiro Ishibashi launched a project to study and develop

synthetic rubber of his own. In the same time Furukawa Electric

Co., Nippon Kasei Chemical and few Japanese companies

started to do research in synthetic rubber. In 1941, Ishibashi’s

laboratory succeeded at the pilot plant to produce small

quantity of chloroprene rubber. In 1943, Ishibashi planned to

produce more chloroprene rubber in Manchuria, north part

of China. Unfortunately, the plant was not complete before

Japan lost the Second World War.


After the war, Japan was called to down size its

industrial capacity to the level that allowed it to satisfy only

its own domestic demand. In April 1952, USA lift the past

war treaty to Japanese industries. Japanese rubber industry,

leaded by Shojiro Ishibashi, dispatched 12-member to

the United States and Europe to study synthetic rubber

technology and production

In 1952, it was Japanese government plans, leaded

by the Ministry of Internal Trade and Industry (MITI) to

envisage an annual production of synthetic rubber at least

45,000 tons. In 1953, Goodyear reached an agreement

Shojiro Ishibashi to transfer technology of synthetic

production to Bridgestone, while BF Goodrich had

technology tie-up with Yokohama Rubber. This was the

beginning of Japanese synthetic rubber industry.

Japanese synthetic rubber started production in 1960

to replace 60,000 tons of imported synthetic rubber. To the

favor of this industry, demand from tire manufacturers was

rising steeply, reflecting the rise of the domestic automobile

industry. Thanks to the ambitions high-growth fiscal policies


of Prime Minister Hayato Ikeda in 1960-1964, domestic

automotive industry was in the period of robust growth which

helped to all its supplies chain. During 1961 to 1973 (before

the first oil crisis) synthetic rubber consumption grew on the

average of 14 percent per year. Japan Synthetic Rubber

(subsidiary company of Bridgestone) Nippon Zeon and

Asahi Kasei were three major synthetic rubber producers

in SBR and BR supplying to tire industry.

During the late 1960s, US synthetic rubber which was

the major export of 300,000 tons a year to European markets.

It was encounter with the shortage of butadiene which is the

raw material to produce SBR and BR. Manufacturers were

discouraged to supply synthetic rubber to oversea markets.

Major tire producers, such as Goodyear Tire & Rubber,

Firestone Tire and Rubber, BF Goodrich who had their plants

in Europe, had to turned their raw material supplies from near

by countries in Europe. But the synthetic rubber producers

in Europe had not been keen in increasing their synthetic

rubber production capacity. That gave good opportunities

for Japanese synthetic rubber producers to export to Europe.


In the 1970s, Japanese petrochemical industry grew very

fast and able to catch up with petrochemical industry in US.

Synthetic rubber from Japan exported to many countries in

Asia, Europe and USA.

In August 15,1971, because of suffering from double

deficits, President Richard Nixon announced in broken away

from Bretton Woods system which tighten the convertible

rate of US$ to gold. which referred as Fixed Rate System.

Countries like, Japan, UK, France, Germany, had to shifted

to floating exchange rates. Meanwhile, President Nixon

imposed an import duty surcharge of 10 percent to

discourage the imports to US. President Nixon had targeted

on Japan. Japanese yen were under pressured to appreciate

its value versus US dollar, in order to reduce trade deficits

between US and Japan. Japanese yen which was kept at

360 yens per one $US since 1944 till 1971, had to increased

to $280 yens per one $US and to 200 yens per one $US

in 1978. All these were under US government policies to

counter Japanese competition to US trades.


In October 6, 1973, ten days after the Yom Kipper War

in Middle East, the organization of the Petroleum Exporting

Countries (OPEC) decided to decrease crude oil production

by 10 percent. Price of crude oil increased from $3 per

barrel to $12. Petrochemical industry of Japan who imported

99.7 percent of crude oil was much panicked because of

increasing in prices of crude oil as well as short of supply.

Japanese government imposed restrictions on the use of

electricity and fuel.

From the dollar shock in 1971 through the oil crisis

in 1973, Japanese economy was in turmoil. Japanese

government had to improve their efficiency of Japanese

industry and energy saving measurement to survive from

the crisis. Their Japanese determined spirit helped them

survive when they were facing crisis. They gained

experience from efficiency improvement, energy saving

measurements. Japanese hard working spirit and never

give up “Fukutsu no seikin” were built up in Japanese

working style. Therefore the second crude oil shock in 1978,

when OPEC decided to carry out a four-stage price hike,


petrochemical industry in Japan was less vulnerable to the

new crude oil shock.

In 1980, after the Iranian Revolution, Saudi Arabia

decided to sharply increase crude oil production Crude oil

price continued to decrease from $40 per barrel to below

$20. Japanese petrochemicals came to the forefront of petro

industry in the world.

The years of 1980s, Japanese trade surplus with the

world amount $44 billion. In 1985, Trade deficit with the

United States kept increased year after year from $7 billion

in 1985 to $56 billion in 1986. Trade imbalances with Japan

accounted for 30-40 percent of overall US trade deficit.

Therefore, on September 22, 1985, Finance Ministers and

central bank governors of Five Industrialized Countries (USA,

Japan, British, France, and Germany) reached so-call Plaza

Accord to allowed US$ to depreciate against Japanese

yen and the German mark by 10-12 percent. One day after

the Accord, US currency plummeted from one US$ to 320

yens to 234 yens. It weakened to 200 yens in 4 months and

reached 150 yens in a year after the Plaza Accord.


Because of Plaza Accord, Japanese government

worried the appreciation of yen would result in a recession and

would adversely affect to Japanese industries. Japanese

government resorted to easy monetary policy and

expansionary fiscal policy. Bank of Japan lowered its

discount rate to only 2.5%. Meanwhile, the government

implemented an emergency economy-boosting program,

including public works spending and income tax cut.

Consequently, Japanese money supply grew by 11-12

percent year-by year in 1987-1988. Financial capability

improved drastically. Financial resources which rose by

business corporations were injected into stock and real

estate markets. This caused a chain reaction of upward price

spiral on both markets. During 1987-1990, Japan had very

high economic growth versus the strengthening of Japanese

currency. This bubble economy of Japan lasted until the

Bank of Japan moved to tighten their gap on national

economy in spring of 1990.

Even with the strong pressure from the United States,

petrochemical industry and synthetic rubber in Japan were


growing strongly because of rapid growth of Japanese

automakers. In the 1980s, Japanese automakers increased

their production at home town as well as constructed their

plants in the United States. Major brands of Japanese

automobiles set up their production in United States

because they were afraid of trade protectionism on import

passenger cars to the US. Follow the Japanese automotive,

Bridgestone who was the largest tire producer in Japan

expanded their productions in Japan and other countries

where the Japanese automotive went. Japanese automakers

and tire makers used mainly synthetic rubber from Japanese

makers. During 1980-1997, it was golden years of Japanese

automakers and tire makers. This was also the best years for

most of the Japanese petrochemicals and synthetic rubber.

From the history, Japanese petrochemicals and

synthetic rubber started from 1964 by receiving technology

transfer from US. “Copy and Develop” was a concept using by

these industries in Japan. They invested in R&D to gained

forefront technologies. Their determined spirit and hard

working helped them survived from crisis and became


very strong. Japanese industries grew very fast during

1975-1990 With the government economic stimulation

programs and their effort in research and technology

development. Japanese Automotives, electronic and electric

industries grew very strongly and exported to worldwide.

Most of the manufacturing of Japanese automotive has

been moving to overseas because of logistic and cost

reasons. But the situation was different in petrochemical and

synthetic rubber. Years after 1990, Petrochemical and

synthetic rubber plants which were difficult to relocate

and could not follow other Japanese industries to move to

other countries became not competitive. Their raw materials

(crude oil) still needed to import from middle east at high

cost. Meanwhile, demand in the country decrease year

by year. Many of them slowed down their research and

development. Their old technologies became not competitive,

New technologies come to replace technology that

Japanese has.

Currently, number of automobile produces in

Japan is decreasing. They move their production to other


countries. Chinese automotive industry is becoming the

largest automotive production. Petrochemical and synthetic

rubber follow are following the automotive industry to China.

Now a day, China becomes the largest consumer and

producer in petrochemical and synthetic rubber.

In Thailand, price of natural rubber remains high.

People invade into the forestry land to plant more natural

rubber trees. When monsoon comes, it causes land slide

that kill a lot of people.

Human being has to balance between wealth and green

environment to live happily between human and nature.

“ The successful innovative company must have a long-term vision and research on the megatrends of the industry that it serves. The company bring in the future requirements of industry into the organization’s development cycle. To commercialize product discovered from the research, the business development team must be able to sell the value-innovation to meet customers’ demands.”

CorporateCompetency

02


Corporate Competency

How can we sustain our growth in this competitive

market?

We must create technology and innovation to sustain

our competitive advantage, but how?

Innovation has become a popular word in business, industry,

academic institutes and even government organizations.

Innovation is the way to create innovative product to keep us

being competitive. Some people understood that innovation

could be generated by thinking differently. Therefore they

started their innovation process by running workshops and

asked their members to give as many ideas as possible.

They believed that thinking outside the box could create

innovation, but after hundred of ideas had been generated,

few of them had been implemented or had created anything

innovative. To create innovation, we need to start in developing

corporate competencies from inside the organization. Building

corporate competency is a never-ending task because

opportunities and competition are changing, and building

corporate competencies initially means increasing capability


of staff numbers. Capable employees bring better valuable

knowledge and creativity that can help the organization to

make faster progress.

Creating Internal Competencies

To create internal competencies requires a clear

corporate vision and long-term strategies from corporate top

management. Good corporate strategies come from the right

balance between the resources and business. There is no

one right strategy for all companies because every company

starts at a different point, operates in a different context and

has a different kind of environment. The organization must

figure out how to leverage those resources into the business

strategies and create synergy between business units to

capture the value of individual units’ achievements. Internally

consistent corporate strategies must be tailored to fit the firm’s

resources and opportunities. When a company’s technical

resources are critical to the success of its business, building

technology competence and product innovation are

competitive advantages that enable the company to make

faster progress.


In the highly global competition, an organization must

create innovative, high-quality products at a competitive

price, a strong market position in attractive industries, and

an effective administrative organization before them rushing

out to the market.

Create innovative Product

Innovation never comes by luck. Just generating

different ideas can not create an innovative product. Good

productive ideas have to come from industrial demands.

An innovative organization brings customers’ need and

industrial future requirements into the development cycle,

which requires strong knowledge and technology in that

area. Research facilities are needed to develop the industrial

requirement into an innovative product to offer to the market.

Sometimes, new material was also found in the research lab.

They have to find out the value-in-use of the new material to

offer to customers an innovative product.

Consistently pursuing its vision of technological

creativity will push a technology the company to the forefront


of its industry. For example, Sharp specializes in optoelectronic

technology that contributes to its competitive advantage. Its

most successful technology had been in liquid crystal display

(LCD), which brought Sharp success in video recorders. Sharp

continually invested in technology that was at the core

competitive edge, thereby maintaining its position as the leader

in video recorders for a decade. However, demand changes,

technology changes, a hi-tech company has to pursue new

technology to sustain its position in the industry.

Market insightsCustomers’ requirement Industrial mega trends

Innovative productsInside-out:Develop new business from inside-discovery

Business Success

Outside-in

Industrial Requirement

Research & Development

Facilities

Knowledge and

Technology

Incubative Center

Create Innovative Product from“Outside-In and Inside-Out”


The successful innovative company must have a

long-term vision and research on the megatrends of the

industry that it serves. The company bring in the future

requirements of industry into the organization’s development

cycle. The organization’s staff members must have strong

knowledge and technology in that industry they serve. The

organization needs to build research and development (R&D)

facilities to do research in new technology and products. Du

Pont is a good example of this life cycle of innovation. After

hundred years as the leader in the chemical industry, Du

Pont realized that it could not sustain its growth for the next

decades by relying on raw materials from crude oil. Du Pont

brought the megatrends of future demands in food, the green

industry, and renewable energy into its strategic planning

and decided to go for biotechnology and renewal energy. It

built research and development facilities with ten thousand

of chemists and engineers involved in the research and

development of those new fields. In order to shorten time in

research, Du Pont acquired many biotechnology companies.

But still, many new bio-products have been discovered in

Du Pont R&D Center. Du Pont also realizes that prototype


products from R&D; still needs a strong business and product

development team to commercialize those innovative

products. To commercialize product discovered from the

research, the business development team must be able to

market the value-innovation products by meeting customers’

demands. Usually the period of business development will be

longer than the research cycle in R&D. It needs strong effort

and commitment from the management and development

team to accelerate the programme and make it an innovative

product and business success.

Develop Innovators

Innovators are not born to be, but they can be

developed. Innovators have unique sense in generating

breakthrough business ideas. Innovators have creative

intelligence, which differs from other types of intelligence

and enables them to make discoveries. The more diverse

our experience and knowledge, the more connections

we develop in creativity thinking, Innovators are able to

connect unrelated questions, problems and ideas from


different fields. New discovery will lead to creative new

ideas. Innovators have the ability to generate ideas after

ideas that can be recombined in new ways. The more

people studied and learned, they can store more knowledge

and their brains, with a rich reservoir for them to combine

associations and create breakthrough thinking.

In the book “Opposable Mind”, Dr. Roger Martin

wrote that “Innovative thinkers have the capacity to hold two

diametrically opposing ideas in their heads. Without panicking

or simply settling for one alternative or the other, they are able to

produce a synthesis that is superior to either opposing idea.”

- Dr.Roger Martin in “Opposable mind” -

To build an innovative organization, the management

of Innovation Group has a long-term vision and commitment

to build the knowledge and technology base, which is

the fundamental factor in developing innovators in the

organization. We are providing research facilities to try

out new ideas, creating prototypes and launching pilot

products.


Many people said that “The world is our library and

laboratory.” Some of the powerful experiments that innovators

can engage in are working in new surroundings, physically

tinkering, and intellectual exploration. Working and living in

different environment and culture, the executive to become

an innovative leader. Innovators build connection and

net-working. They meet people to extend their own knowledge

domains. They engage with customers, industrial experts, trade

associations and others to identify future opportunities.

Innovators are great observers. Discovery-driven

leaders produce uncommon business ideas. Innovators

carefully, intentionally and consistently look out for small

behavioural details in the activities of customers, suppliers

and other companies in order to gain insights about new

ways of doing business.

Sir Isaac Newton observed that apples in the garden

dropped down from the tree to the ground. He created the

“Law of Gravitational Force”. Raton Tata got the inspiration

that led to building the world’s cheapest car by observing

an Indian family of four packed onto a single motorized


scooter. In 2009 the Tata group launched the $2,500 “Nano”

to displace the automobile in India.

To build the capability for breakthrough, the innovators

must engage in three distinct career paths.

Exploration - Innovators must be able to explore market

insight to reflecting whether the organization’s technological

capabilities and the market’s needs are a good fit, and

represent a worthwhile opportunity.

Evaluation - Innovators must be able to evaluate market

insight opportunities to fit corporate core-competency and

engage in experimenting in design a viable model for a

new business.

Implementation - Innovators must be able to implement

according to plans until project can stand on its own.

Innovation Group and Internal Competencies

“Knowledge does not automatically lead to technology.

We have to change knowledge into technology that is

suitable to the industrial needs. This will enable us to create.


“Innovation” accordingly holds our technology competence

in the long term.”


20-Year Anniversary of Innovation Group

We have journeyed along the road of polymer

technology since 1983. It took many years to build

Innovation Group’s technology centre to serve customers’

demands and create its own technology capability, but

we have learned that in this competitive global market we

need not only technological competence but also long-term

vision and strategies that balance resources and business

opportunities. Innovation Group must build competitive

competencies that can sustain the group’s competency in

the long term. It can create the value-creation zones from

three competitive advantages that have to be continuously

rebuilt.


Three completive advantages that we create

1) Technology capability

Technology will not come by chance. Sustainable tech-

nology must be built from inside the organization. To build

its technology competence, Innovation Group has to build

a strong “Knowledge Based Organization”. Only from good

knowledge in serving the industry can Innovation Group build a

strong technical organization with a technologicall competitive

TechnologyCapability

Organization’sculture & System

MarketingPosition

1 3

4

2

Value Creation

Zones


edge. This requires strong commitment from the management

of Innovation Group in Focusing on long-term business.

A Research Centre is necessary to build technological

competence for the organization. Therefore, we built a small

rubber research lab with three chemists to do application

research to confirm formulations to serve customers in

footwear. It was quite a financial burden for a small trading

firm to set up a research lab, but we have believed in

“Inspiration of Technology” from its inception. This small

research lab became a technical training centre for new

technical employees. We employed new technical graduates

and train them in the research lab before putting them

into marketing as Technical Sales Representatives. In the

market, we train these technical sales representatives

to be excellent investigators, innovators and integrators.

They bring in market and competitive information into the

organization. They translate industrial demands into research

and development programmes, and they bring researched

products to market and develop them as innovations.


An effective research and development centre needs

not only knowledgeable chemists and suitable research

equipment but also attention and commitment from top

management. The research lab must be run as a separate

strategic business unit of the organization. It is costly to set

up a good technical research centre and it needs managerial

attention and an autonomous system to run it as a separate

profit-centre. The effective technical centre contributes to the

organization by generating new businesses. It gives strong

technological competency and sustains the long-term growth of

the organization. Many companies look for technology and

innovation but they do not dare to invest in a research lab.

Many don’t know how to start. Some do not know where to

find the researchers. Some set up a very expensive research

lab turns into nothing but a show-room for the company.

Nowadays, we have two research centres which link

with the universities to co-research on some projects. These

researchers are encouraged to share technical knowledge

and information in the discussions every morning. They share

problems and technical information in group discussions.


Monthly technical presentations and seminars are arranged

among R&D staff members and marketing members. These

researchers work closely with the marketing members to gain

marketing experience and to gain knowledge of industrial

requirements. Team members have opportunities to travel

overseas to visit customers and attend technical seminars

or to be trained at suppliers’ sites. These ventures have

made these researchers able to transfer to marketing or

production if they are requested to do so. We train up these

researchers to have good technical capability to serve the

new wave of expansion in the business.

2) Organization’s culture and system

To be success, a company must have strong business

cultures emphasizing on good corporate governance and

building employees’ competence. Management develops

effective systems to control and measure the achievements.

This has to start with development in employees’ knowledge,

technology, and attitude? By nature, Thai people are

self-satisfied and narrow-minded. They spend very little time

in reading. It is necessary to change their behaviour and


attitude to become self-determined and spend more time

in learning and experiencing things around them.

With capable employees, empowerment is easier

to build in the organization. Empowerment creates self

motivation. But we must have a good controlling system to

measure the performance and achievements. Combining

empowerment and measurable performance, we create an

effective organization.

3) Marketing Position

We must set our market position based on vision and

business objectives that we like to be portrayed and serve

in the market. In Innovation Group, we position ourselves

as a technology leader in the polymer industry. We shall

serve the industries with a wide range of products, technology

and service. Innovation Group was built on what we do

best: We tried to build world-class polymer processing

factories and research centres. We shall serve the global

polymer market with wide range of products, technology, and

service. Innovation Group will serve industries not only

hi-tech industrial products but also commodity polymers to


cover the whole range of rubber products into the industries.

In serving the whole range of rubber, the marketing

team has to be more dynamic in mass retailers as well as

maintaining its core-competence in the niche market, which

requires intensive technical service. The good marketers

have to be good negotiators, good investigators, good

innovators, and good implementers. They also have to be

able to have strong net-working.

If we continue to building the three corporate advantages

in figure 2, we will create four high-value creation zones.

Value-creation zone 1: building the strong technology

capability will reinforce the marketing position in the technical

market. The company can make faster progress with creating

innovative products and technology to serve customers.

Value-creation zone 2: with the right corporate

cultures and system supported by people development and

a controlling system, we will provide products of consistent

quality and competitive price to the industry.


Value-creation 3: with strong people development, a

controlling system and by building a technology and

world-class polymer manufacturing and research centre,

Innovation Group will further build its good reputation as a

reliable technical product supplier.

Value-creation 4: this is the highest value-creation zone,

resulting from creating three cooperate advantages. This will

sustain the growth of Innovation Group in the global market.

These Value-Creation Zones can sustain the growth

of Innovation Group in the global competitive market.

Innovation Group’s business plans for 2012 onward will

continue to emphasize people development, enhancing

technology competency, expanding its world-class polymer

manufacturing and strong positioning in the market.

“A successful industrial product company must be able to build networks - good relationship with suppliers, customers and related persons - along the total supply chain.”“A successful international industrial company always stays close to customers”

Marketing Industrial Products in the Global Market

03


Marketing Industrial Products in the Global Market

Nowadays, with globalization, customers demand

new products with better quality, better performance but

at cheaper price. The way of doing business has changed.

Modern marketing is to translate what we know about

customers’ demands and our technology into the next growth

ideas and create innovative products to offer back to the

market places with competitive price and good service.

There are many tools for promoting consumer

products. The internet and television commercials are

effective media in promoting products. News releases to

TV and other media preceded the launch of the iPhone 4

and iPad 2, which became hot products selling in many

countries.

Personal selling is an expensive marketing method

when we consider the marketing expense per customer. But

in personal selling, the marketer is the person who adapts the

value of the product to fit the individual customer’s demand.


Personal selling is an effective marketing tool for industrial

products. A good industrial marketer must be very good

in customer focus and able to communicate customers’

demands along the organization’s internal supply chain to

produce the products and services that fit the customers’

requirements.

Modern Marketing Concepts

Many successful companies grew their businesses

from small enterprises into large companies. Some of them

become very successful multinational companies. Toyota

grew from Mr. Toyoda, who made textile spinning mills. Du

Pont grew from Mr. E. I. Du Pont, who established a black

powder (gun powder) plant in Delaware 250 years ago.

Bridgestone, which is the largest tire manufacturer, grew

its business from Mr. Ishibashi, who made rubber shoes for

farmers before World War II. These successful business-

men grew their businesses by being hard working and

dedicated to their work. The one thing they had in common

was that they grew their businesses by adding new ideas to

generate differentiation of their products from others. They


brought industrial demands into their organization to develop

better products to offer to the market places. In Thailand, there

are many successful Thai businessmen who also grew their

businesses from small firms into large enterprises. Mr.Tiam

Chokwattana of Sahapatanapibuln Group is an example. He

started his business from a very small shop in Chinatown. He

represented powder detergent from Lion Fat & Oil (Japan) in

Thailand. A few years later, he formed a joint venture with Lion

Fat & Oil to manufacture detergents and household products

in Thailand. Now the second generation of Sahapatanapibuln

is the largest consumer product company in Thailand, with

hundred of factories, and has a very strong supply chain

around the country. This group is very strong in business

diversification, always seeking better processing technology

to gain competitive edges in the market.

Customers in today’s global market demand more new

products that can offer better performance and at a cheaper

price. The way of doing business has changed. Besides the

better product performance and innovative values to users,

effective marketing is becoming very important for modern


business success. News releases on the iPhone 4 and iPad

2 created demand before the products were launched on

the market, and they quickly became hot selling products.

Steve Job was an excellent presenter of Apple’s products

before they were launched on the market.

Building a “Brand Image” is another marketing

tool. Mercedes Benz promotes its image as the best

driving-performance car of the successful businessman.

Mercedes Benz has become the image of successful

businessmen in Asia. BMW promotes its image as the

best in engine performance and targets young successful

executives who love driving high-speed cars.

Toyota Lexus built the image of Lexus as a

high-quality luxury car that is comfortable to drive, cheaper

in price than other luxury cars but excellent in after-sales

services. Toyota Lexus became a very popular car in the US

and Asian countries. Unfortunately, the accidents caused

by the braking system were not handled well or in time by

Toyota’s top management, and Toyota lost its share in the

US to Ford and GM. In marketing, consumers value the


product not only for the technology and value-in-use but

also for the after-sales service and customer relationship,

which are also important in building the brand image and

maintaining customer satisfaction.

Building your business from the outside-in is another

modern business marketing strategy. Besides focusing on

developing core-competency from inside the companies,

many companies collaborate with customer to gain market

insight and build strong relationships. Many companies

collaborate with their customers in the development of new

products. They build value-partnerships along the value

chain. Du Pont, for example, set up innovation centers in

many countries to offer technical consultants and work

closely with customers. Du Pont gains market insight and

knows about customer requirements from its business

consultation with customers.


Successful Industrial Product Company

I would like to share my experience from 40 years

of working in industrial marketing. I have found that, to be

successful in growing industrial products in a global market,

the company must develop its competitive edge over the

competitors in eight areas.

1. Build strong core-competency in three areas,

Strong technology in the industry that we serve.

Employees’ abilities, control systems, and

culture.

A strong technical marketing organization.

2. Build a strong partnership in the total value chain.

3. Have the ability to ensure congruence between its

internal competency and external position.

4. Develop great corporate strategies to stay in front

of the competition.

5. Build great marketers.

6. Build a strong corporate image.

7. Build business network along the value chain.

8. Develop a strong marketing channel of distribution.


1) Build core competency in three areas

Bu i ld core competency to bu i ld in te rna l

competencies requires a clear corporate vision and

long-term strategies from corporate top management. Good

corporate strategies come from the right balance between

the resources and business objectives. There is no one

right strategy for all companies because every company

starts at a different point, operates in a different context

and has a different kind of environment. The organization

must figure out how to leverage those resources into the

business strategies and create synergy between business

units to capture the value of individual units’ achievements.

Internally consistent corporate strategies must be tailored

to fit the firm’s resources and opportunities.

In the highly competition market, an organization

must be able to offer innovative products of consistent

quality at competitive prices. The company must build a

strong market position in the industries it serves. Inside the

organization, it must have a business culture that enhances

the internal core values. In Innovation Group’s cultures, we


emphasize the development of employees’ abilities and good

corporate governance. We build an effective administrative

management system to control the operations of business

units and the system to measure the achievement and

performance of individual and business units.

If you produce a technical industrial product, technology

is a key factor in building the company’s internal competencies.

A leading industrial product company always looks for

breakthrough technology to create value innovation as the

principal source of differentiation and competitive advantage

to the organization in the long term. Breakthrough technology

can put a company on the competitive map in creating

value in the products. To create breakthrough technology

and value innovation is hard work, requiring the building

of employees’ abilities, as well as a sound knowledge of

basic polymer science, and the intention and commitment

to understand customers and the market. Value innovation

is not the invention of a lone genius but needs a team-based

approach to innovation. It needs discipline, sensibility and

accountability of the team to design a method to match the


needs of both current customers and the wider requirements

for innovation in current and potential markets. The expected

results of value innovation must be continually communicated

along the total supply chain.

2) Building strong partnerships along the value chain

To be competitive in the global market, the

company has to start building internal core competencies.

But if a company puts too much emphasis on internal

core-competencies, it will be lured into concentrating

too much on internal benefits, e.g. lowering the cost of

production. The company will lose sight of the market

and opportunities, and that leads to poor results over

the long term. We must know what customers want, gain

market insight into changing needs, and monitor what new

competitors are anticipating and how they are meeting these

needs, etc.

To create breakthrough technology in a technical

company, the company must be able to look beyond the

business lines to determine what technology is feasible and

what viable business strategies can convert that sense of


needs into profitable business. They must focus on what

must be done or changed. Five years ago, Innovation

Group looked for a new technology to sustain its growth

in polymer processing and selected Nanotechnology.

From the beginning, Innovation Group has created viable

business strategies in developing this breakthrough

technology started by forming a technology working group to

study the feasible technologies by comparing Nanotechnology

with biotechnology and the technology of renewable

energy. After the working group decided that Nanotechnology

was its most feasible technology, Innovation Group set

strategies to develop this technology by co-researching with

the university. Innovation Group provided research funds to the

university and invested in the necessary research equipment.

Twelve months after the project started, Dr. Sanong Akasit of

Chulalongkorn University discovered Silver Nano and its

biocide property. Innovation Group invited Mr. Boonyarith

Mahamontri of Lion Corporation to Innovation Group’s

research center to discuss the value of Silver Nano in

powder detergent. Eight months after that, Silver Nano in

“Pao” powder detergent was successfully commercialized.


Developing a breakthrough technology is a long process.

It needs a clear corporate business vision and strategies

right from the beginning, in setting up a technology working

group to study beyond the business lines to determine what

technology is feasible for Innovation Group. Then the viable

business strategies are set up to cover the requirements of

this Nanotechnology development. It needs a breakthrough

thinking process and the development of viable business

strategies for this new breakthrough technology. It needs

strong commitment from top management and a good

business controlling system to evaluate deviation from

planned outputs until it succeeds.

Many technology-led companies, like Du Pont,

collaborate with customers in order to build value and

partnerships to sustain their growth. Du Pont has been

setting up many Du Pont Innovation Centers in many

countries to which it invites potential customers to discuss

technology support or co-project development. In the

innovation centers, customers and Du Pont marketers can

have teleconferences with Du Pont Research Centers where

Du Pont’s technical experts are located. By doing this, Du


Pont can develop its collaboration with customers, which in

turn leads to new product developments and new markets. Du

Pont builds value and partnerships along the supply chain.

We connect to customers to gain market insight.

3) Have ability to ensure congruence between its internal

competency and its external marketing position

A company that has aligned its differentiating internal

competency with the right external position will stay in the

forefront of competition. A successful company is customer

focused and looks beyond present needs to the market

trend, ensuring that the internal competency to meet the

external demand. The company must stay in the industry

that is the best match with its technology and capability. The

company provides suitable technology, products and

services to its customers in the chosen industry, creating

value that customers acknowledge. This will keep the

company ahead of its competitors.

Innovation Group builds technology in polymers and

develops products tailored to the requirement of customers.


Our customers value our technological ability to provide

products that meet their requirements. Many customers have

visited Innovation Group’s research centers and manufacturing

plants. After their visits, many of them asked to form joint

development programs for the new materials they needed and

that led to many innovative products being developed. Teflon

in ABS as non-dipping ABS is a good example of a product

that Innovation Group co-researched with IRPC. This product

was being sold very successfully to many countries after a

year of joint research.

4) Visionary organization with strong strategic planning

A great company needs a clear business vision

and great corporate strategies to stay in the forefront of

competition. Every company has its unique business cultures

that operate in the different environments. Good corporate

vision and strategies must be able to leverage from the

corporate cultures, matching the business objectives to the

market or industry trends. The company must build its internal

competency according to its corporate vision and strategies.

With great corporate strategies, the company will be able


to build its marketing position in the industries to which the

company is attracted. The company’s available resources,

capabilities and business intention must be considered in

setting up corporate strategies.

Innovation Group’s corporate strategy is “Build on what

we do best.” We are using the strength of an excellent polymer

technology, market coverage, good connections and strong

customer relationships to grow our business in Thailand, SE

Asia and many other countries. We believe that Innovation

Group can grow 20% per year in the next five years and stay

the “Best” in what we do. However, to sustain the growth over

the next five years, Innovation Group has to differentiate its

marketing position from marketing only high-tech polymers and

have additional products of high volume commodity polymers

and chemicals in the product portfolio. Innovation Group has

to balance corporate resources and business intention for

long term growth. We cannot just wait only for new products

from Du Pont and Dow Chemical but we must be aggressive

in developing new products from our R&D and commercialize

new products more quickly. In trading, we have to be very


active in international polymer sourcing and marketing those

products in SE Asia and many other countries.

5) Develop great “Marketers”

We recognize that the marketer is the frontline soldier.

In technical industrial products, personal selling is one of the

most effective marketing tools. It is an expensive method of

marketing if we count the expense by the number of calls

or by the number of customers, but in personal selling the

marketer can explain to customers the value of products

tailored to meet each customer’s process and demand.

A successful marketer must play six roles. He has to be

customer focused, create the product’s value-in-use to fit the

customer’s process, be a good outside-in integrator, good

network builder, good negotiator, good communicator, and

good implementer.

A) Good customer focus

A good marketer must gain insight into the

customer’s needs. He has to focus on the nature

of the customer’s business, its behavioral detail,

processes, requirements and its technical and


business issues. A good marketer must be able

to tune-in to the customer’s mindset to discover

the specific preferences and requirements. Doing

this, the marketer can gain insight into new ways

of doing business with his customers to maximize

the satisfaction of each customer.

B) Create product’s value-in-use to fit to customer’s

process

Good product knowledge is a basic requirement

of an industrial marketer. He must be well versed

in the applications of products and how each

product is processed to maximize the value in the

customer’s process. He must know how to offer

the value of his product to customers to show that

it is a better product than the in-kind competitive

product. Product knowledge and applications

are basic training courses in industrial selling for

marketers, followed by courses in “Proposal Selling”

and “Value Selling.” A marketer has to learn his

knowledge of the customer’s processing

technology at the customer’s site.


C) Good outside-in integrator

A great marketer is a great observer: he must

have creative intelligence, which enables him

to discover market intelligence and transfer his

knowledge to those inside the organization

advocating on his customers’ behalf. He brings

customers’ technical requirements to the R&D

team to create innovative products to offer to the

customers. Finally, being the outside-in integrator he

must act as the communication channel, bringing

customer and market insight to those inside the

organization.

D) Good network builder

A good marketer must be able to build networks

- good relationships with suppliers, customers

and related persons - along the total supply chain.

Marketing is not the job of a “Lone Star Hero”:

a marketer must know how to communicate

customers’ requirements along the total

supply chain, from advising the internal

purchasing department on raw material supply


(in quality, quantity and delivery time) which matches

the customers’ requirements. He links R&D to

customers’ technical departments for product

specifications and creates development programs

etc. Sometimes he builds networks between

customers and suppliers to have good information

on specifications, demand and supply.

E) Good negotiator

A good marketer has to be a great negotiator to

gain win-win outcomes. Courses of “Negotiation”

and “How to handle objections” are the advanced

courses for most industrial marketers. A good

marketer must be able to handle tough bargaining

situations. Very often a marketer has to negotiate

an objection with a customer. A customer’s product

quality claim, an internal request to raise prices,

or a supply shortage are examples of the tough

situations that a good marketer must be able to

negotiate to gain acceptance from a customer

without losing business, and maintain a good

relationship with that customer.


F) Good implementer

The marketer stands in the middle of the total

value chain of the marketing cycle. The success

or failure of sales depends on the marketer’s

performance. As well as all the characteristics

mentioned above, the marketer must be able

to implement all roles in the total value chain of

marketing to close sales and maximize customers’

satisfaction.

G) Good communicator

A good marketer is a good communicator: he

must be able not only to transfer his recognition of

the value of the product he is selling to his customers

but also communicate effectively inside the

organization, informing CSR, supply chain personnel

and the R&D center of the customers’ requirements.

6) Build a strong corporate image

We build a strong brand image to enhance marketing

success. A company trading in consumer products relies

on mass media product campaigns to build a strong brand


image. Customers for industrial products value a company’s

corporate image in the value of its products, services,

behavior and the capability of the company’s front-line

personnel. The corporate image is also evaluated from the

company’s corporate responsible to the society and industry.

In building a brand image, a company has to start from

the value perspective that reflects the company. For example,

Nike creates the value of Nike shoes by promoting them as

high performance shoes. Nike creates a perception of Nike

Air as the best shoe for sport players. Michael Jordan was the

most popular model and top selling basketball shoe for more

than ten years. Nike continues to build its brand identity as

top performance sportswear products with excellent design.

Tiger Woods was Nike’s brand identity in golf sportswear and

shoes. Nike continues to build its brand identity by getting

involved with the famous players in most sports.

Innovation Group has a very clear vision and

perspective in positioning ourselves in the industries we serve

as a leader in polymer technology. Innovation Group has a social

responsible to provide customers with products that serve the


customers’ production needs. Innovation Group contributes

to the social, industrial and academic sectors in supporting

the country’s technology. We are sending clear messages to

customers, industry and universities that Innovation Group has

a strong polymer technology and are ready to support to them.

Innovation Group’s website also sends very clear messages

to target customers that Innovation Group is a technology-led

polymer supplier that can serve a wide range of polymers, rubber

and plastic compounds, and rubber parts to industry. Innovation

Group has a research center that can also provide technology

solutions to customers in many industries and countries.

Every month, our website is visited by hundreds of people

around the world. We have received many enquiries from new

customers from many countries. New customers visit our

Technology Centers and manufacturing plants every month.

In October 2011, Innovation Group will invite hundreds of

customers, suppliers, businessmen and professors from

universities to attend Innovation Group’s business seminar and

opening ceremony for our advanced rubber processing factory.

This is one of the ways to build a strong corporate image.


We connect to industries to build a strong image of

Innovation Group as a technology solution provider in the

rubber and plastic industries.

7) Build a business network along the value chain

A successful industrial product company must be able

to build networks - good relationship with suppliers, customers

and related persons - along the total supply chain.

The whole organization, not just the marketing team that

is responsible for direct service to the customers, must build

strong multilevel personal relationships within the customers’

organizations. Our marketers bring customers’ requirements

into the customer service department, the supply chain

department and the technology center. Researchers are

responsible for solving customers’ technical problems and

developing new product formulations and innovative products

to serve their needs. Joint research and development between

customers and our researchers is common; it builds strong

relationships with customers and also creates Innovation

Group’s brand image. CSR and supply chain personal are


responsible for ensuring delivery of supplies to customers: the

best quality product, at the right time and at the right price.

Innovation Group also treats its suppliers as strategic

business partners. Local suppliers benefit by supplying us

with only qualified products that meet our needs, at the right

time, and we audit supply capability and product quality

at each supplier’s site. We give them technical assistance

wherever necessary. We visit our overseas suppliers or

they visit us frequently to build personal relationship. We

have good communication with them on our requirements

for quality, quantity and delivery time of raw materials.

When there is a shortage of raw material, Innovation Group

is always in a better position than its competitors. We

receive full support from suppliers because of our excellent

relationship and good communication.

Every year, Innovation Group arranges a “Supplier

Award”. Prizes are given to the best three suppliers based on

three categories: Quality, and Delivery. In the Supplier Award,

suppliers are informed about their performance during the

past year and requested to improve for the next year.


We have to build a win-win network along

the supply chain.

8) Develop a strong distribution channel

A successful international industrial company must

stay close to customers. Different countries have different

business cultures, regulations, rules, laws, taxes and

the people in each country have different preferences.

Marketing industrial products depends on how you sell the

value of the products to meet customers’ requirements. This

involves advising them on product selection and processing

techniques. To maximize customers’ satisfaction, we have

to stay close to the market and customers.

There are two ways to market industrial products

in foreign markets. Either the company appoints a local

distributor to represent its products in that country, or the

company sets up its own organization to market its products.

Both have advantages and disadvantages. Setting up its own

distribution organization in another country is costly, but the

company gains first-hand information and has direct contact


with the customers. It is good for high-growth countries and

large market volume, but if the market is fragmented and /

or low growth, appointing a local distributor to represent the

company’s products is the better choice. Some companies

elect a combination of both methods.

In 1981, I chaired a marketing study of Du Pont. In early

1980s, Du Pont was new in Asian markets and established Du

Pont offices in many countries. Du Pont needed to study the

advantages and disadvantages of using local distributors to

handle its industrial products versus marketing the products

itself in various Asian countries. There were some interesting

conclusions from the study.

For the highly technical industrial products, direct

marketing was needed. Those products should

be marketed by the company’s marketing staff.

Although the marketing cost is high, technical

selling on the value of products is needed for

technical products. The technical values of these

products need to be translated into terms of the

customer’s value-in-use. Only the well trained


technical marketer does the job well. It is difficult

to train a local distributor to handle highly technical

products.

If a product becomes a commodity and there are

many competitors in the markets, competitors

offer in-kind or not-in-kind products in the market.

Price is very sensitive for commodity products and

the elasticity of volume versus price is very high.

A good local distributor is preferred because of

the local distributor’s lower cost of personal selling

(per head, or per sale). The local distributor also

knows local business cultures well, and can build

strong customer relationships, but the question is

how to find a good local distributor who has good

industrial product selling skill.

In a high-volume country, a combination of both

methods is preferable. To set up a marketing

organization in a high-growth or high-volume

country will give advantages in total cost of

marketing. The company can create more technical

value from the product offering to customers. Some


companies elect to go directly to large customers, but

let the local distributor handle small customers. This

gives the company very good market coverage.

Grow Innovation Group in the global market

Innovation Group has had very clear business

missions in growing in global market 1) building strong

internal competency in technology and people capability, 2)

Innovation Group has been developing strong and unique

cultures and internal systems in controlling and auditing the

operation, and 3) Innovation Group has been developing a

strong marketing position in many industries in Thailand as

a quality product supplier.

We shall sustain our growth in the high-growth

industries in Thailand.

Export our products from manufacturing to the USA,

Europe and many countries in Asia.

Innovation Group cannot rely on technical

products from Du Pont and Dow Chemical.


Trading companies of Innovation Group must

be able to source various products from various

countries to market in SE Asia.

Overseas investment is necessary to grow in the

global market.

Innovation Group’s marketing strategies in rubber

compounding and rubber parts include the following.

Sustain our competitive edge with Japanese

customers.

Sustain our technology assistance to high-profit

customers.

Develop the Innovation Brand image as a

world-class rubber compounder and manufacturer

of rubber parts in the international market.

Use social media and participate in major

polymer trade shows to communicate to new

potential customers.

Emphasize our high-tech customers to create an

image in international markets.


Global sourcing and being a global polymer

supplier.

In the trading section, we have to be very active

in sourcing new products to add to the product

portfolio to sell in global markets. We developed

three major actions:

Stay close to the potential markets.

Build an excellent international marketing

organization.

Now, Innovation Group’s representative office in

Vietnam is very active. We have one Thai manager and

two Vietnamese sales ladies, who received very intensive

training in polymer technology and product applications in

the technology center. Marketing executives travel to Vietnam

every months to visit customer with the Vietnamese team. We

build strong partnerships with customers in Vietnam. Sales

revenue in Vietnam grows years after years since we set up

this office in 2009. We are looking for a location to set up our

trading office in Indonesia.


‘‘A successful international industrial company always

stays close to customers.”

In the two years since we started in sourcing

commodity products from many countries, we are using

Thailand as a gateway linking products between North and

South East Asia and from Asia to Europe and the USA. We

are adding a wider range of rubber and plastic products to

Innovation Group’s portfolio.

“We will become a strong Global Sourcing and Global

Polymer Supplier in the global market. Innovation Group

is building a gateway to various customers in Asia.”

“Technology wi l l not come by chance. We have to develop radical technology to sustain the growth of the organization.”

DevelopedNanotechnology

04

with ChulalongkornUniversity


Developed Nanotechnology

with Chulalongkorn University

1) Back Ground

Globalization creates not only business opportunities

but also greater challenges. To take advantage of

globalization, a company has to focus on those areas in

which the company has advantages (core competencies). The

company must emphasize efficiency in using resources,

productivity and the organization’s technological

competence. Technology and value innovation become

the keys of the core competencies that a company must

have to sustain its growth in the modern global business

environment.

From 1980 to 1990, the US and Europe looked at

the Asia Pacific region as the sources of raw materials,

places for their manufacturing, and markets for their exports.


Hong Kong, Singapore, Korea and Taiwan gained foreign

investments and gained technology from those foreign

investments. These four countries became the newly

industrialized countries through foreign investments.

Meanwhile, their governments emphasized the development

of technology to up-grade their industries. In twenty years,

these countries developed their industries to become newly

industrialized countries by using the strategy of “Copy and

Develop” to enhance their manufacturing capability. Korea

and Taiwan are good examples. They have grown their

industries by copying technology from the original product,

then developing better products to offer to the market. In

the past 20 years, China has been doing the same as Korea

and Taiwan in “Copy and Develop”. Now China is second

to the USA as the largest economic country.

How about Thailand?

T h a i l a n d h a s b e e n d e v e l o p e d f r o m a n

agricultural country to an industrial developing country.

Electric appliances, disc-drives, automobiles, auto-parts

and food processing are major exports. The Thai economy


is driven by exports, but if we look deeply into these

industries, the key players of these industries are the foreign

companies or joint venture companies with Thai companies.

Advance technologies are in still in the hands of the foreign

investors.

It is a common discussion among Thai SMEs,

which are 95% of registered Thai companies, that they

are facing stronger competition from the coming Free

Trade Agreements (FTA). They were hoping that the

government can help them to maintain high import duties

to keep their products competitive, but it is not possible.

Whether you like it or not, the FTA has to come. By 2015,

the trade agreements of the ASEAN Economic Community

(AEC) will be fully implemented. Import duty will be reduced

to three levels: 0-1% for raw materials, 5% for semi-raw

materials and 10% for finished products. Meanwhile the

AEC is discussing with many other countries outside of

the AEC on FTA, therefore many Thai SMEs are looking for

technology to sustain their businesses and they are hoping

that the Thai government will help them to develop advanced


processing technology to improve their product quality and

lower their processing cost. In response to requests, the

Thai government arranged many technological seminars,

hoping to help Thai SMEs to learn new technology. In some

cases, the government provided technical consultants for

Thai SMEs, but so far it hasn’t worked very well because the

government’s actions were inadequate. Technical seminars

did not answer the different problems that SMEs have and

the Thai government did not put enough effort or money into

meeting the technology requirement of Thai SMEs.

The Thai government sets up many technology

organizations and spends 0.2% of the country’s GDP on the

country’s technological research and development. Most of

the budget is allocated to these government organizations.

Thai government hopes that these technology organizations

will generate some advanced technologies that can help to

develop sustainable technologies for Thai industries, but

so far these technology institutions has not produced any

significant advanced technology that can help Thai

industries. They are not able to link their researchers to


the research that would serve industries’ requirements.

Instead, the Thai government requests the private sector

to invest more in R&D. So far, the government incentives

for private company to invest in R&D have not been very

attractive, therefore only a handful of large Thai companies

invest in R&D. Siam Cement Group (SCG) and PTT are

two of Thailand’s largest petrochemicals companies that

invest substantially in R&D in petrochemical products.

Chareoen Pokkaphan (CP), which began business in

poultry farming and the manufacture of animal feed stock,

has been successful in research and development in

poultry and fish farming technology. CP has been invited by

Chinese government to set up many poultry farms in China

that the Chinese government uses as demonstration farms

for their people. CP has now diversified its business to the

consumer retailing chain and telecommunication. Because of

technologies that they gain from the research, these three

companies have built strong internal competencies that

allow them to diversify their businesses. They are good

examples in developing technologies and building up

internal competencies to sustain their growth in the global


market. However, apart from a few large companies, many

Thai people still think that R&D is high investment and high

risk, therefore not worth investing in. Some companies

would like to invest in R&D, but they do not know how to

start. Some companies started their R&D by investing in

good research equipment, but they failed to manage the

research competently and could not gain the required value

from the investment. Researchers are also difficult to find,

as most of the good scientists and engineers prefer to work

as university researchers.

Let’s look at the academic sector, which is another

of the country’s sources of technology. Thailand has many

good science and engineering schools, with excellent

scientists and engineers who have had an excellent

education from good universities around the world. But after

graduation, besides teaching, they prefer to do research

that they like. They seldom get involved with the industry.

How can we link these excellent scientists and

engineers to industries so they can meet their technology

requirements?


2) Research and Development Center of Innovation

Group

As an organic chemist by background, I had been

worked for many years with Du Pont, one of the leaders

in technology. Du Pont has excellent research centers in

many countries. Having been exposed to Du Pont’s culture

for many years, I have a very strong belief that technology

is one of the key factors of business success. After I left

Du Pont in 1983, I was appointed as Du Pont’s polymer

distributor in Thailand. I believed that to be competitive,

I had to differentiate my company from other trading

companies. I have to be able to provide technology solutions

to the customers I serve, therefore a small research lab was

set up. Starting with three chemists and simple research

equipments, after three years we were able to develop new

products and provide technology solutions to the customers’

technical requests. From a small trading firm, we were able to

grow to become a large group of companies consisting of six

factories, two research centers and a strong international

trading organization as a consequence of the strong


technology capability that we developed within the

organization. Now these R&D are the centers in which many

innovative products are developed to offer to the markets.

We gained market share and customers’ confidence. We

were able to diversify Innovation Group from a polymer trading

company into a company that offered the whole range of

polymers, customized polymer compounds (rubber and

plastic) and rubber parts for automotive, shoe, electronic

and electric appliances. Two R&D centers give technical

service and a joint product development service to customers.

Innovation Group has become very strong in both the rubber

and polymer businesses and exports its products to various

countries. Besides service to customers, these two R&D

centers are Innovation Group’s technological knowledge

centers for training employees and university students.

In the past ten years, Innovat ion Group’s

Research Centre has been a polymer training centre for

Innovation Group staff members and university students.

We use the Research Centre to train new technical staff

before transferring them to the marketing, technical and


production departments. Every year, Innovation Group

provides a “6-week polymer technology summer camp”

for 25-30 senior students of 8 universities. This is a very

intensive polymer and manufacturing training program for

which 8 universities will select their top students. Room

and board are provided free of charge for these students,

who learn polymer technology in the classroom. They learn

polymer processing and testing in the lab for 3 weeks and

also visit Innovation Group’s processing plants. They have a

chance to do research of their own in the last two weeks.

Why has Innovat ion Group prov ided th is

Technology Summer Camp to the senior students since

2002? This is to answer my question, “How does the Group

link technology with the university?” We have to give

universities an educational benefit before they will start

coming to us. I also believe that development of the

technology to serve industries has to start from the

technological capability of the university students.

The third-year students should be trained in practical

technology as well as what they learn in the classroom.


They have to learn how the industrial working environment

functions before they graduate. This experience will help

them to be more creative. This was also the same period

that I was invited to teach in two of the best universities in

Thailand, therefore it was very easy for me to link these

science and engineering schools to the polymer industry.

I hope that by doing this, I can help to develop technological

competency for Thai industry.

3) A new technology to sustain the long term growth

of Innovation Group

I have always believed that technology is around us

all. It is a question of deciding to capture it or let it go, but

it needs a strong personal commitment in financial and

personal effort to capture.

In 2002, after 20 years in developing polymer

technology, I started to look for a new technology that could

be added to our polymer technology portfolio.


Three technologies were under consideration.

Biotechnology. Certainly, this is the advanced

technology for the next few decades. Du Pont is

now catching up this technology. Du Pont dropped

many products that are produced from petroleum

from their product portfolio and turned to products

produced by biotechnology, putting a lot of money

and effort into developing biotechnology products.

However, after an in-depth study into

biotechnology I believe that, because this

technology needs a lot of effort and investment,

it will take too long for Innovation Group to gain

any benefit from research in biotechnology and it

is beyond Innovation Group’s resources to fund

research in this biotechnology for the 10 years it

would take to reach the required standard.

Renewal energy. Solar energy, energy from wind

and wave, biogas from biomass etc., have been

widely discussed in industrial sectors. However,

having carefully reviewed the potential benefits

to Innovation Group and the chances of success,


we believe that renewable energy is not Innovation

Group’s field of business. We preferred to look at

Nanotechnology.

Nanotechnology. It is a technology related to very

small particles. Compared to the same weight of

micro sized particles, nano particles have a million

times more surface area. This means a comparable

increase in the reaction activity of nano particles

versus the micro sized particles. The quantum

energy generated from the nano particle gives

higher physical and chemical reactions to the nano

materials. There were many reports on the value of

nano composites in plastic and rubber. Developing

innovative nano composites in plastic and rubber

to offer to the market would be quite beneficial to

Innovation Group’s business.

4) How could we start?

The best way to learn nanotechnology is from

technical seminars and nanotechnology trade shows. I took


our technology group to visit the Tokyo Nanotechnology

Exhibit ion and Seminar in 2005 and the Taiwan

Nanotechnology Exhibition in early 2006. Although the Tokyo

Nanotechnology Exhibition was bigger than the exhibition

in Taiwan, we learned more from the Taiwan Nanotechnology

Exhibition. The Taiwanese government gave strong support

to the building of a national technology center and joins hand

with the private sector in developing industrial technology

that is suitable for industries. From the Taiwan Nanotechnology

Exhibition we saw more in application researches and many

end products from nanotechnology. Many applications of

nano materials gave us ideas on how we should start our

own nanotechnology research. After we came back from

these seminars, a special task force was set up to develop

this new technology. We learned from the nanotechnology

exhibitions that this technology has been widely developed

in many countries, but there were not many developments

in rubber composites. This gave us very good opportunities

to research nano composites. To be successful in this new

technology, Innovation Group should collaborate with a

technology institute.


We began by approach ing the Na t iona l

Nanotechnology Institute. We believed that this technology

centre would work like Taiwan Technology Centre and would

have good technology to support industries. But after five

months of discussions we decided that this was not the right

choice. We would be better to start from the beginning with

the university to develop this technology.

As a Distinguished Professor of Faculty of Science,

Chulalongkorn University, I discussed this idea with

Professor Dr. Supot Harnongbue, Dean of the Faculty of

Science, at Chulalongkorn University. Dr. Supot liked the

idea very much. He also liked the idea of linking his researchers

with industry and gave strong support to this project.

In November 2007, two senior searchers, Dr Sanong

Akasit and Dr. Varintorn Chavasiri (Departmental Head

of Chemistry Department) from the university, traveled

with Innovation Group researchers to the Nanotechnology

Exhibition in Korea. After our return from Korea, 1

researched a grant that had been given to Dr. Sanong

Akasit, who proposed to do his research in Silver Nano. One


graduate scholarship was given to his student, Mr. Chupan

Lertchirpabuln, to do research in Silver Nano. Two research

grants were given to Dr. Varintorn Chavasiri. The first

project was to generating nano particles from the

“down-sized method” of changing micro particles into

nano particles. These nano particles have to be treated

(surface treatment) so that they stay at nano size. The second

project was to find value from these nano particles in

practical applications of polymer composites. Following

the two research grants, two graduate scholarships were

given to Dr. Varintorn’s students, Mr. Adisak Chithani and

Mr. Boonchai Siratrkul, to do these two research projects.

Innovation Group invested US 1 million into buying a nano

grinder, ultrasonic blaster and nano particle analyzer for this

research.

5) Silver Nano

Six months after the program started, Dr. Sanong

discovered a method of generating Silver Nano from

silver nitrate. In theory, Silver Nano has a biocide effect;


in wet conditions it can stop the growth of bio-organisms.

We discussed the applications of the biocidal property of

Silver Nano and concluded that it’s the value of the biocidal

property would be in detergent.

Most Thai families wash their clothes by hand and dry

them under the sun, but these clothes not dry very well in

the raining season and they will have a strong acrid smell

because bacteria digest the organic substances on the

clothes and generate the smell. We believe that Silver Nano

in the detergent during the wash would kill the bacteria.

Therefore, clothes washed with detergent containing Silver

Nano would not have an acrid smell, even when the clothes

were not dried in the sun.

I invited Mr. Boonyarith Mahamontri, the Managing

Director of Lion Corporation that makes “Pao” detergent,

to visit our research lab. “Pao” has the largest market

share of the powder detergent market. After I demonstrate

the biocidal property of Silver Nano to him, Mr. Boonyarith

decided to join in this Silver Nano research. We spent

almost 10 months finding out the quantity of Silver Nano that


should be added to the powder detergent. We researched

the toxicity of Silver Nano when it contacts to human skin.

After ascertaining the quantity of Silver Nano required in dry

powder detergent, the fi nance, production and marketing

teams of Lion Corp. were invited to join the discussion for

commercializing the product. This team started a feasibility

study, product design, market study and how to launch the

products. Eight months after that, “Pao” with Silver Nano

became a popular powder detergent in the market.

Currently two students, Mr. Adisak and Mr. Boonchai,

are doing their research at Innovation Group’s Nano lab.

They discovered good UV shielding properties of Nano

zinc oxide and Nano titanium dioxide in rubber and plastic

composites. We are extending their researches into industrial

applications.

“Technology will not come by chance. We have to

develop radical technology to sustain the growth of the

organization.”

- Banja Junhasavasdikul, Ph.D. -

“ The export economy without adding value-added to exported products is very vulnerable to environmental changes. Thailand must emphasize economic growth through the “Creative Economy”, deve lop ing Tha i indust r ies by upgrading the country’s knowledge and technology base. Technology and value innovation will help Thai industries become less vulnerable to environmental changes and competition.”

Globalization

05


Globalization

Whether you like it or not, globalization has to come to

you. Globalization changes people’s lifestyle. With modern

communication, information from one place reaches many

places quickly. The economy of one country easily affects

other countries in a chain reaction as trade crosses from one

country to other countries without frontiers, and the product

lifecycle becomes shorter. People expect to buy better

products of better quality at a cheaper price. Globalization

creates not only greater business opportunities but also

greater challenges.

To take advantage of globalization, a company

has to focus on those areas in which the company has

advantages (core competencies). The company must

emphasize efficiency in using resource, productivity and the

organization’s technological competence. Technology and

value innovation become the keys of the core competencies

that a company must have to sustain its growth in the modern

global business.


“In 3 years, every product my company makes will

be obsolete. The only question is whether we make these

obsolete or someone else will.”

- Bill Gates, in “The Speed of Thought” -

Like many other great companies, Microsoft

emphasizes continuing development of technology and

value innovation in sustaining the growth of the company.

Global economic movements

If we study the history of trade, globalization can be

divided into four periods.

The 1st wave of globalization began with the increase

in trade between Europe, America and the Far East during

the 20th century.

The 2nd or post-protectionist wave was the period

1965-1980 during which the industrialized countries of

Europe, USA and Japan traded their products under GATS

(General Agreement on Trade and Service).


The 3rd wave, from 1980-2007, was the period that

the US and Europe turned to manufacturing products for

the Global Market in the Asia Pacific region.

The 4th wave, from 2008 until now, is the period since

the collapse of the US and European economies. Asia

Pacific has become the strongest economic zone. China is

the second largest economy after the US.

It ’s quite interesting to study the economic

movement in detail, starting after the World War II.

After the war, the world was separated into two camps:

capitalism and communism. The US was very rich after the

war, but spent much of its wealth on the Korean and Vietnam

wars to prevent the encroachment of China and the spread

of Communism. Meanwhile, twenty years after the war,

Japan and the European countries that had suffered from

the World War II developed their countries by tightening

their belts, and putting in hard work and dedication to

developing their industries. They became very strong

industrialized countries and their products replaced US

products in many countries, including the US market. They


developed their international market by emphasizing the

quality of their products. Products from Germany and Japan

were well received as high quality and trouble-free to use.

During the conflicts between Russia and the US in

the Gobachev and Kennedy era, the USSR felt its deposits

of US currency in New York were insecure and transferred

billions of dollars from its deposit in New York to Europe.

This was the beginning of the Euro-Dollar market. Since

then the US dollar has not been under the control of the US

government, and has been freely traded outside the US.

This market became very large because OPEC countries

became very rich after the oil crises in 1973 and 1978 and

deposited their money in Euro-Dollar currency. During the

1980s the high oil prices exacerbated the imbalance of

wealth between OPEC countries, industrialized countries

and under-developed countries. Money flew from Europe

and the US to the countries where the interest rates were

high. Countries in Latin America and Asia kept their interest

rates high for the inflow of money from overseas to develop

their countries. Many leaders in Latin America misused that


money. They spent a lot of money in less productive areas,

such as property speculation and luxury goods. That caused

economic crises in many Latin American countries, such as

Argentina, Brazil and Peru. It took six or seven years before

those countries could bring the very high inflation in their

countries back to normal.

From 1980 to 1990, the US and Europe looked at

the Asia Pacific region as the sources of raw materials,

places for their manufacturing, and markets for their exports.

Hong Kong, Singapore, Korea and Taiwan gained foreign

investments and the technology brought by the foreign

investors. These four countries became the newly

industrialized countries through foreign investments.

Meanwhile, their governments emphasized the development

of technology to upgrade their industries. In twenty years,

these countries developed their industries to become newly

industrialized countries by using the strategy of “Copy and

Develop” to enhance their manufacturing capability.

After World War II, most countries used the fixed

exchange rate with the US$ by following the Breton Woods


System in their international trading. Countries in Asia

and Latin America had small foreign reserves and their

governments kept tight control of foreign exchange. But

in the 1990s, in order to welcome the inflow of foreign

currencies into the countries, countries in Asia released

their tight control on foreign exchange. The US dollar flew

into these countries in terms of investment and loans.

The Asian countries developed their economics through

heavy borrowing. Parts of these loans were invested in

infrastructure and manufacturing, but many were spent on

unproductive areas, property speculation and the stock

markets. Prudential regulations to secure domestic

borrowing with collateral were weak and foreign exchange

risk was not covered. Those were the causes of the Asian

economic crisis in 1997. The financial crisis happened

in Thailand in April, 1997. The Thai currency (baht) was

devalued from 25 baht to US$1 to 60 baht per US$1 in a

month. The foreign banks felt insecure and pulled their

money out. The Thai financial institutions collapsed and

many businesses went bankrupt. The financial crisis quickly

spread to Taiwan, Korea, Hong Kong, Singapore, Malaysia


and the Philippines. Currencies of these countries were

devalued by half in a few months, and they had to pay more

than double for their foreign loans. Many businesses went

bankrupt. It took more than three years for these countries

to recover from the crisis.

Asian countries gained experience from the

financial crisis in 1997, and were very conservative in both

borrowing and covering foreign exchange. Central Banks

and governments were in tight control of inflation, therefore

these countries were not much affected by the economic

crisis. I, along with many economists, were very surprised

to see the financial crisis occur in the US and spread to

Europe in 2007-2008 as these countries were renowned as

the experts in economics and finance, but they repeated

the mistakes of Asian countries in 1997. Latin America and

Asia suffered a financial crisis partly because they had

no experience and relied on the US$ in developing their

economies. But the subprime mortgage crisis in the US

happened because the Central Bank of America stimulated

the economy through the policy of low interest rates and high


liquidity, although the US economy had been very good for

a decade, because liquidation of money and low interest

rates led to property speculation. Properties in the US were

over-valued and that caused the “Subprime” crisis in which

Bear Stearns, Fannie Mae and Freddie Mac lost 290,000

million dollars. Lehman Brothers went bankrupt while AIG,

Goldman Sach, Merrill Lynch and Morgan Stanley lost tril-

lions of dollars.

The Subprime crisis spread quickly to Europe and

Asia. Every country came out with rescue plans. The US

Government spent about US$1.8-2.2 trillion to rescue its

economy. Other countries in Europe and Asia also spent

trillions of dollars on rescue plans. Business stood still for

over 6 months. However, the economy in Asia recovered

after 6 months and GDP growth rates were very high in

2010. Their economies will continue to grow at high rates for

few years through the trade and business cooperation

among the Asian countries. But many countries in Europe,

like Greece, Spain and Ireland are still in financial crisis

because of heavy borrowing over the past ten years.


Free Trade Agreement (FTA)

Globalization led to very strong competition in

international trade. Every country set trade regulations

to defend their local industries. International trading

became too complicated for the World Trade Organization

(WTO) to handle. The WTO is very ineffective in either

regulating or settling disputes in global trade. It was

easier for two countries to settle trade conflicts between

themselves through their bilateral agreements. Many

countries in the same geographic zone formed economic

communities to achieve economic and trade cooperation

between member countries. They tried to defend their

countries from competition by countries outside their zone.

Countries in Europe formed the European Union (EU). The

US, Canada and Mexico formed the North America Free

Trade Agreement (NAFTA). Six countries of South East

Asia (Thailand, Brunei, Malaysia, Indonesia, Singapore

and the Philippines) formed the ASEAN Free Trade Area

(AFTA) community to facilitate cooperate between the six

members. The objectives of AFTA were to liberalize trade,


service, investment and labor mobility by harmonizing

rules and regulations among ASEAN members. After 2000,

Vietnam, Laos, Cambodia and Myanmar joined the AFTA.

ASEAN was renamed the ASEAN Economic Community

(AEC) with a total of 10 member countries. AEC will have an

aggregate population of 580 million - more than the

population in the European Union - with a total GDP of

$US1.5 trillion. Looking at AEC as a product market with

high potential, in 2007 China, Japan and Korea joined AEC

to form ASEAN+3. By 2018, Australia, New Zealand and

India will also integrate into AEC to become ASEAN+6. This

will make ASEAN a very influential economic zone because

ASEAN+3 will have a population of 2 billion and ASEAN+6

will have a population of over 3 billion. These countries have

very high GDP growth rates. The AEC will result in greater

concentration of production in the region. Trade between

countries in Asia will increase and will counterbalance their

trading between the US and the EU.

The AEC involves the economic integration of 10

countries. It covers the liberalization of capital movement,


labor movement, the harmonization of customs regulations,

standards of product and economic cooperation among

ASEAN countries. But there is no plan for customs union

(charging the same tariff on imports from outside the

region). Restrictions on investment and labor will need more

negotiation before the AEC can become a true single market

like the EU.

The 4th wave of globalization

The 4th wave of globalization started after the

economic crisis in the US in 2008. In the past, the

economies of countries in Asia had been growing through

exports to the US and the EU. After the economic crisis

in US and Europe, these countries started to put more

emphasis on their trades among Asian countries. ASEAN+6

are a very large single market with a total population of over

3 billion, or half the world’s population. The aggregate of

investment and trade in Asian countries is quite substantial.

However, each country still has restrictions on business

and different imported tariffs to defend their own domestic


industries. China has the highest growth rate, followed

by India and countries in ASEAN. AEC and APEC (Asia

Pacific Economic Community) have become the world’s

largest economic communities. Their economies are

becoming less dependent in exporting to the US and EU.

However, companies in the US and the EU have become

more dependent on exports to and investments in Asia.

The more integration in the FTA, the greater the

market and trade opportunities and the more challenges.

Successful business has to focus on core competencies and

where the business is particularly distinctive. It is important

to identify specific opportunities under the FTA regulations

versus the company’s unique strengths. Production capacity,

product innovation, process technology, and manufacturing

management become crucial to create a company’s

competencies under the FTA.

Thailand under AEC and FTA

Thailand had been growing its economy from an

agricultural to an export economy. Electrical appliances,


disk-drives, food processing, automobile and auto parts are

five major Thai exports. The Thai automobile and auto part

industries benefits from the big production base due to the

infrastructure, investments from Japan, and labor skill that

has developed in that industry. Thailand will benefit from

another US$1 billion foreign investment in the Eco-car. This

will increase Thailand’s benefits in a larger ASEAN market.

But some of Thailand’s other exports are very vulnerable.

Thai rice is losing market share to Vietnam. Production of rice

depends on the weather (rain). Some years we have good

crops, but some years we have a small harvest. Exports

of sea food, processed meat, fruit etc. are facing tighter

control in food safety regulations from the countries that

import these products. Unfortunately, Thailand does not have

a very good international standardized food testing lab to

support food exports to the US and EU. Meanwhile, many

exports from Thailand are facing strong competition from

other Asian countries because of the strengthening of the

Thai currency against the US$. Thai currency appreciated 28%

against the US$ in 2010 while China, Hong Kong and Vietnam

kept their currencies low. Some competition came from the


larger economy scale of production in China and India.

Vietnam and Indonesia have an advantage over Thailand

because of cheaper labor costs. These make the exports

from Thailand more and more vulnerable.

Should we still emphasize the Export Economy without

adding value innovation into Thai industry?

Creative Economy

The export economy without adding value-added

to exported products is very vulnerable to environmental

changes. Thailand must emphasize economic growth through

the “Creative Economy”, developing Thai industries by

upgrading the country’s knowledge and technology base.

Technology and value innovation will help Thai industries

become less vulnerable to environmental changes and

competition. To change from an export economy to a

technology creative economy, the government must change

its policies to emphasize technological development,

starting with the education system and the government’s policy

to promote research and development in the private sector.


The Thai education system is considered very ineffective.

The government and schools put more emphasis on the

quantity rather than the quality of their graduate students.

Students learn from what teachers teach in the class and

become very narrow in their thinking. The Thai government

should start by upgrading the quality of teachers and the

method of education. The conventional “teaching” method

must change to a “learning” method. Activities outside the

classroom must add more to the education system. During the

industrial development stage, the availability of skilled labor

and qualified engineers will attract foreign investment into the

country. Thailand needs more qualified engineers. There are

many good engineering schools, but these universities must

link more with the industry to know what and how to serve the

requirements of the industry. These universities should be

able to provide qualified engineers that meet the industries’

requirements. They can also help to speed up the technology

capability of Thai industries by working closely with them.


Thailand must take advantage from FTA

Thai industries must take advantage of the greater

business opportunities brought by globalization.

Geographically, Thailand is located at the center of ASEAN

with a population of 580 million as one single market.

Thailand has many advantages in good infrastructures

and highly skilled labor, but Thai industries have to create

technological competence and innovative products to serve

this big market. Thailand was traditionally a food exporting

country. We were the largest exporters of rice, natural rubber,

fruit, vegetables, shrimps and canned sea food to the US, EU,

and countries in Asia. We can maintain the position in food

exports if the government helps these industries by setting up

Food Safety Standards for exports.

China and India are taking advantage of their larger

scale of production. Their commodity products are

cheap. Foreign investments in high technology industries

enable them to catch up quickly with changes their

products to better quality and higher technology products to

export. The growth of these two countries creates


bigger challenges for small countries in ASEAN, but in the

dark cloud there are always golden rays of opportunities.

The 2.4 million populations (China and India) give great

opportunities for Thailand to export its agricultural products

to feed this market. Besides food, India and China need large

quantities of natural rubber and rubber products for

their growing automotive and tire industries. It is a good

opportunity for Thailand to export natural rubber to

these countries, but instead of exporting raw materials,

the Thai rubber industry should export products that

have a higher added value. There are also investment

opportunities in these countries if we bring in the

competitive edge technology to invest in niche industry of

these countries. (CP invests poultry farm and poultry and

processing food in China). Besides exports and investment,

we should also consider buying products which are cheaper

from China to market in ASEAN. Trading products among

AFTA+3 is another good business opportunity under FTA.

The 3 billion population in Asia will provide great

business if we study the market potential in each country


carefully, but we must find out our competitive edge of

products and technology and link our technology to the

individual industry’s requirements. To create the competitive

edge in technology, the company must develop innovative

products to offer to this 3 billion population market.


Education Background

: BSc (Chemistry), Chulalongkorn University

: MA (Organic Chemistry), University of Texas

: MBA (Executive), Thammasart University

: Ph.D. Technology Management, Rushmore

University, USA.

Existing Business Position

: Chairman, Board of Directors

Honors & Awards

> QUALITY PERSONS OF THE YEAR 2011 from

Foundation of Science and Technology Council of

Thailand - Organization for Public Charity

> Nominated as a Distinguished Professor from

the Faculty of Science, Chemistry Department,

Chulalongkorn University in 2006 until present

DISTINGUISHED PROFESSOR

BANJA JUNHASAVASDIKUL


> International Professional of the Year 2005

“Innovation in Polymers” from International

Biographical Center, Cambridge, England

> Chosen as one of the distinguished person in the

magazine “Who’s Who in the World” 22nd edition,

2005

Social Activities

> Vice Chairman of The Federation of Thai Industries,

Rubber Based Industry Club

> Executive Director Committee of The Federation of

Thai Industries

> Committee of The Federation of Thai Industries in

FTA, NTB and Taxation

> Execut i ve Commi t tee o f Sc ien t i f i c and

Technology Research Equipment Center,

Chulalongkorn University


> Executive Committee of The Metallurgy and

Materials Science Research Institute, Chulalongkorn

University

> Honorable Advisor of Science Chemistry Alumni

Chulalongkorn University

> Special lecturer for the courses polymers and

lndustrial Chemistry, Chulalongkorn University

> Establish the program of “Technology Polymers

Summer Camp” to give training and knowledge in

polymers for university students

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