Wednesday, July 15, 2009

Thailand's CP sees continuing sales in China

CP sees continuing sales in China

Industrial product outlook sunny

Published: 15/07/2009 at 12:00 AM
Newspaper section: Business

Charoen Pokphand Group (CP), the country's biggest agro-industrial conglomerate, expects its business in China, particularly for industrial products, to see no impact from the global recession.

CP's industrial operations - mainly producing automotive and motorcycle parts and dealing in Caterpillar heavy equipment - are expected to grow 10% this year from 15 billion baht last year.

The company's retail and agriculture businesses are also set for continued sales growth and little effect from the world's economic crisis.

The market's growth is being driven mainly by China's 4-trillion-yuan economic stimulus measures, which were initiated in the fourth quarter of last year and will continue until the end of 2010.

CP was the first foreign company to start operations in China 30 years ago. Today it is among the country's largest investors and derives most of its global revenue from China.

Last year, the group reported revenue of US$19 billion and 40% of this came from overseas operations, mainly in China.

Motorcycle sales are expected to top 1.6 million units this year, up from 1.5 million last year, said Thanakorn Seriburi, vice-chairman of CP Group and chairman and CEO for automotive industrial products.

Of CP's global motorcycle sales only 250,000 units were sold outside of China last year. The group is currently ranked No.7 in China's motorcycle market, based on its production capacity of about 2 million units per year.

CP motorcycles, which are marketed under the brands Dayang and Dayun, are ranked third by market share. The group is now considering taking over other brands to expand its motorcycle business in China, said Mr Thanakorn.

About 100 motorcycle factories currently operate in China but the figure is expected to shrink to about 20 with intensifying competition.

CP also plans to invest to open Caterpillar dealership offices in six more Chinese provinces, on top of its offices in Yunnan, Guizhou and Sichuan.

Caterpillar sales are expected to hit 3,000 units over the next three year, up from about 2,000 units at the end of this year.

The group's beer business is also doing well this year and is expected to make a profit for the first time after operating losses over the past five years, said Mr Thanakorn.

The group is committed to continuing to invest in existing core businesses including automotive, industrial, retail, agribusiness and food, he said.

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