I have been in business in Thailand for 12 years, with an annual revenue of more than 100 million, and I have encountered a "new" outlet

In 2011, Ford's new plant in Thailand went into operation, and Edward came to Thailand to engage in Ford's supporting logistics business. At that time, Edward never imagined that in a dozen years, Thailand would become the hottest country for China's new energy vehicle exports. According to the Federation of Thai Industry (FTI), from January to August this year, the total sales of new energy vehicles in Thailand have exceeded 40,000 units, of which Chinese brands account for more than 70%.

In the past ten years, Edward has established an auto parts supply chain company A plus in Thailand, through lawsuits, robberies, floods, coups, terrorist attacks, epidemics, and at the same time, in this decade, Chinese automobile brands SAIC, Foton, Great Wall, Chery have successively visited Thailand for investigation and research, some have landed to build factories, some have come and go, although those who remain have become the main players in the Thai auto market, but in general, it has been uneventful until 2022, China's new energy vehicle companies and OEMs led by BYD began to enter Thailand, and with the absolute product power of China's new energy vehicles, finally tearing the encirclement of Japanese cars in Thailand, and 42-year-old Edward became the most direct industry participant and observer.

With the steady growth of sales of new energy vehicles in Thailand, A plus has begun the charging and replenishment business of new energy vehicles, while laying out energy storage and power battery business. This year, Edward estimates that A plus's revenue will reach 150 million yuan.

"New energy vehicles are already surging in Thailand, and it will be a track with long slopes and heavy snow." Edward resolutely told Zhixiang to go to sea.

Thailand started a business, through robberies, floods, coups, terrorist attacks

Wisdom Elephant Goes to Sea: What year did you arrive in Thailand? Why did you choose to start a business in Thailand at that time?

Edward: I came to Thailand in 2011, and we were Ford's supporting logistics service provider in China. In 2011, Ford's new plant (OEM/OEM) in Thailand started production, so it was natural to follow the company, and in cooperation with Ford, we imported domestically produced parts from Chinese suppliers to Thailand and provided them to Ford Thailand for assembly, as well as after-sales service and channel management of these parts.

Zhixiang went to sea: Why did you decide to stay in Thailand and start a business?

Edward: Because Thailand is the automobile manufacturing center of the entire Southeast Asia, Toyota, Honda, Isuzu, Nissan, Mazda, etc., all Japanese automakers have OEMs (OEMs) in Thailand, Ford, GM in the United States, Volvo in Europe, Mercedes-Benz and BMW in Germany, and there are also automakers (OEMs) in Thailand, and later China's SAIC, Foton, etc. also came to Thailand, as long as they are doing automotive supply chain related business, such as parts manufacturing, logistics, spare parts, after-sales service, etc. There is more or less Thailand-related business, so coming to Thailand and staying here is a natural occurrence.

In 2011, it is difficult to predict the current new energy vehicle outlet. At that time, let alone new energy vehicles going to sea, it is unknown whether China's domestic new energy vehicles can become a climate. But I always thought the auto industry was a good one, so I chose to stay. In the past two decades, Thailand has attracted Japanese, American, European, and German OEMs (OEMs) to invest and build factories in Thailand, with the best automotive industry chain resources in Southeast Asia, a perfect supplier system, and a perfect parts supply chain system, which makes Thailand a Southeast Asian automobile manufacturing center, so it is very advantageous to engage in automobile-related industries in Thailand.

Smart Elephant Going to Sea: Is it Easy to Open a Company in Thailand? Have you stepped on any pits?

Edward: Thailand can accept wholly foreign-owned companies or foreign companies to set up sales offices in Thailand, both of which can be 100% controlled. Another way to open a company is to open a joint venture with a Thai person or Thai company, but the Thai side must own more than 51% of the shares.

To establish a wholly foreign-funded company, you need to obtain FBL (Foreign Business License), you can first establish a company, and then apply, but if the application cannot be made, it cannot operate normally. We spent a long time preparing these application materials, its approval process is very long, there will be communication, there will be interviews, if there are questions, even small problems, we have to go back and re-prepare the materials, it takes a lot of time. We applied for the e-commerce platform qualification last year, and now we are still running the process, a year younger, and we have not yet approved it.

But Thailand's tax system is fairly transparent and rarely surprised. Even if the company does not receive additional benefits, the amount of corporate income tax (generally 20%) and personal income tax (the maximum rate is 35%) is within reasonable limits.

Wisdom Elephant Going to Sea: What difficulties did you experience when A plus was first established?

Edward: Entrepreneurship is hard, and it's always been difficult. When I first came to Thailand, I was alone, and then I recruited two Chinese students who had just graduated and cooked for them while working (at that time, we rented a villa near the Ford factory, lived upstairs, an office downstairs, and the warehouse was next door, very remote, and couldn't find a suitable place to eat), and we had to train them from scratch.

In the first year of coming to Thailand, we encountered a big flood, and because we first arrived, many of the rules in the open and in the dark were not clarified, we were sued, robbed, and then the red shirts and yellow shirts rose again after two years, and then the coup, military control, military government, and then terrorist attacks, epidemics, etc., with twists and turns.

Zhixiang goes overseas: Since what year did the company basically have a prototype, and then the operation is also normal, and it can have some revenue?

Edward: It was 2014.

Zhixiang goes overseas: what is the company's development history?

Edward: A plus at the beginning for OEMs (OEMs) to do supporting logistics, mainly serving the front-end market, by around 2016, almost all OEMs in Thailand (OEMs) have become our customers, but the business is large and small, some OEMs (OEMs) use our logistics, some OEMs (OEMs) use our after-sales service, and some OEMs (OEMs) use our channel management. But the front-loading market is a market dominated by OEMs, especially supporting logistics, there are too many subsidiaries of OEMs doing, some of these subsidiaries have achieved a global scope, so we have not been doing much, so I considered at that time that since the front-loading market is limited, then try the after-loading market (aftermarket).

The aftermarket (aftermarket) is a trillion-scale market in China and the United States, and at the same time there are companies with large market capitalization in China and the United States to run out, the United States has Autozone, China has three heads and six arms, fast accuracy, etc., belongs to large water to raise big fish, in Thailand its market size is also hundreds of billions of levels, but limited by the aftermarket (aftermarket) is too complex (not to mention the wide range of business, from finance and insurance to beauty maintenance, just talking about the classification of parts in the market, all vehicle parts, wearing parts, modified parts, accessories, original parts, original sub-brand parts, Sub-factory brand parts, sub-factory white plate parts, copy parts, car dismantling parts, etc., plus car brands, models, and models, there are many practitioners who are still ignorant after five years), so there is no very good company to run out, there is still a chance, so we entered.

But the aftermarket (aftermarket) is a very localized market wherever it is, or to put it bluntly, it is a very quack-and-lake market, worship the dock, fight for territory, good and bad are part of the market, not a market suitable for foreign companies. But fortunately, because we have a relatively solid accumulation, we have been here for a long time, coupled with good management and stable supplier relationships, and we have gained a foothold in this market. Since 2017, our sales have increased by a large percentage every year.

A very good new opportunity

Zhixiang goes overseas: When will A plus start to lay out new energy vehicle related business?

Edward: Since 2021, although the pandemic has not yet ended, we have already received a lot of relevant news, and we have expanded our business and market for the second time.

Thailand, much like South Korea, is a country where family-based chaebol forces control everything. In Thailand, the existing industries that can become big are actually controlled by the big chaebols, such as retail, transportation, energy, real estate and so on. Therefore, A plus as a start-up company, has no background and resources, let alone touch with the big chaebol, that is, in the aftermarket, we also have to face many small families that have done three generations and four generations, and in the face of the accumulation of other people's three generations and four generations, our competitive pressure is great, so in order to become bigger and stronger in a shorter time, A Plus must have the courage to enter emerging industries and do new businesses.

New energy vehicles are such an opportunity.

SAIC has been promoting the development of electric vehicles in Thailand, as early as 2020, SAIC has pure electric vehicles on the market, but there has been no splash, until the beginning of 2022, BYD entered Thailand, when BYD's monthly sales can reach 2,000 units, I think this is the opportunity I am waiting for, A plus should all in new energy.

Closely related to new energy vehicles is the new energy vehicle charging and replenishment business, which is also the direction of our current business concentration, because when we were doing the aftermarket, we already had 55 passenger car service stations and 12 commercial vehicle service stations throughout Thailand, and we could easily use our existing personnel, facilities and management system to set up a charging installation and operation service covering the whole of Thailand.

In China, energy storage this year is a very hot business, because Thailand is as oil-poor as China, and at the same time introduced many new energy vehicle main engine factories (vehicle factories) in China, I judge, about three or four years later, Thailand will closely follow China, when the energy storage market will soon mature, so in addition to charging and energy replenishment related business, we have begun to enter the power battery trade, power battery management, energy storage installation and operation and power battery recycling and other whole industry chain business.

Smart elephant goes overseas: do charging, energy storage and battery business, what are the advantages of A plus?

Edward: Because it is Chinese, and often run between China and Thailand, compared to competitors in Thailand, our understanding of this new industry is far ahead, and we have very good domestic resources (the domestic manufacturers we cooperate with are among the best manufacturers in China), we have our own logistics, warehouses, fleets, services and channels, and the accumulation of A Plus in the past ten years is here.

Smart elephant goes to sea: to do charging, energy storage and battery business, can A plus get subsidies from the Thai government?

Edward: As a startup, we're still too small, and basically Thailand's new energy policy has little to do with small companies. For example, a new energy vehicle can subsidize 120,000 baht for a car, but it has a prerequisite - it must build a factory in Thailand to build a car, which is an investment of hundreds of millions, and small companies cannot meet its conditions.

Take charging piles, for example, 120 kilowatts DC piles, the Thai government requires a quantity, you can enjoy some preferential policies, but 120 kilowatts of DC piles, about 200,000 yuan a unit (of course, there are very cheap, but no brand, no quality, no service products), the Thai government requires you to build 200 units, you need to invest 40 million yuan, and then you can get preferential policies.

At the same time, as I said before, Thailand is a country dominated by chaebols, even if new energy is a new industry, chaebol companies have already reached out (although there is no hand to cover the sky), even if you have the ability to invest 40 million at once, the best and largest traffic position on Thailand's main road has been booked and occupied by large chaebol companies.

Zhixiang goes overseas: If you choose this direction to expand your business, how do you think about future growth?

Edward: It is definitely to avoid it, chaebol companies want to eat the fattest and easiest meat in the market, but with the slow popularization of new energy vehicles in the Thai market, there will be a lot of very scattered, not easy to do edge market and sinking market, we are not afraid of hard work, willing to gnaw these hard bones.

Zhixiang Goes Sea: Are there other Chinese companies doing this business now?

Edward: Yes, there are many, in terms of charging piles, there are many small companies in China who see the opportunity to come to Thailand to do this market. Charging pile is now the price of cabbage in China, the entire market is already a sea of blood, and the technical threshold of charging pile is very low, so it is easy to find a foundry or get an agency in China, and then enter Thailand to do the market.

5 years ago China was also like this, whenever the outlet came, there would be many people rushing in, many companies would go to grab the market, install charging piles, but most of the charging piles because there was no follow-up maintenance, and finally became zombie piles, quickly broken, can not be charged at all. But we have excellent local service capabilities to avoid making the same mistakes.

Wisdom goes to sea: Isn't Thailand a family-based chaebol with strong power? Did you encounter any resistance when you moved down to the bottom business?

Edward: Yes, as I mentioned before, we simply can't compare with the big chaebols, the difference between mice and elephants, even if we meet a family that has been doing three generations and four generations, our competitive pressure will be directly full, because first of all they have accumulation, these accumulations must be smoothed out over time, there are no shortcuts, and they will definitely try their best to create trouble for you in addition to legitimate market competition, such as, I have local service employees who should be sent to the police station for some spurious reason, I have also been intimidated by letters, very suddenly but very strongly asked by the immigration department to report the situation, and even been leaved, there have been too many such things in the past ten years, but fortunately, we have always been law-abiding, down-to-earth, and kind to employees, so we can go all the way to the present.

Zhixiang goes overseas: Do you think the new energy dividend period is a great benefit for A plus? Or is it actually not very impactful?

Edward: I don't see it as a dividend period, just as an emerging industry, a new business, and I think that in this emerging industry, with our expertise, with our service capabilities and deep understanding of Thailand, we can try to make our market as big as possible.

Zhixiang goes overseas: How does the current company's revenue scale and team size compare with 10 years ago?

Edward: In 2011, it was a loss of money, and even the whole 2012 annual revenue was only 400,000 yuan, which was also a loss, and it has only slowly improved since 2014, but this year's A Plus revenue should reach 150 million yuan.

We now have nearly 300 full-time employees across Thailand, with one-half around and east of Bangkok, one-third in the south, north and northeast, and relatively little in the west. Our team is highly local, with only 4 out of 300 employees being Chinese.

Smart Elephant Goes Overseas: Is it difficult to manage Thai employees?

Edward: Once the company started to grow slowly and move forward, my experience taught me that I had to select Thai managers to lead the Thai team.

Our current Chinese employees are mainly engaged in sales, but the entire company's operation and management are Thai employees. As for whether Thais are good at managing or not, if you understand them and use their way of thinking to understand things, they are easier to manage, but if you insist that Thais do it in a Chinese way, so that the difficulty of management will increase, the so-called internationalization, in fact, is localization to any place.

Many large Chinese companies in Thailand, such as Xiaomi, ByteDance, OPPO, vivo, Huawei, their localization is very good.

In addition, we do not emphasize that we are a Chinese company.

"New energy is a track with long slopes and thick snow"

Zhixiang goes overseas: As far as your front-line observation in Thailand is concerned, what kind of psychological position is the Chinese new energy vehicle brand for Thai users?

Edward: At present, Thai users still recognize and accept Chinese new energy vehicle brands, and now in the Thai new energy vehicle market, Chinese car brands occupy an absolute dominant position, and the rest of the brands, even Tesla, are a minority in Thailand.

But I personally believe that the big sale of Chinese new energy vehicles in Thailand is a conspiracy by the Thai government to maintain the competitiveness of its own auto industry, not simply due to the recognition and acceptance of Chinese new energy vehicle brands by Thai users.

After entering 2020, Thailand's Japanese, American, European, and German OEMs will no longer invest in Thailand (the landlord's family has no surplus food), and the Thai government needs to maintain Thailand's position as the center of Southeast Asian automobile manufacturing, and its only feasible solution is to attract Chinese car companies and OEMs (OEMs) to invest and build factories in Thailand, and what is the strongest of China's car companies and OEMs (OEMs)? New energy.

Thailand uses preferential policies for market, charging and energy storage infrastructure and automobile industry investment to attract China's new energy vehicle companies and OEMs (OEMs) to Thailand, continue to upgrade Thailand's automobile industry, and build a new energy vehicle production center in Southeast Asia, so as to maintain Thailand's advantages in Southeast Asia's automotive industry chain cluster, and ultimately maintain the automotive industry to continue to be Thailand's pillar industry (yes, Thailand's pillar industry is the automobile industry, not tourism, of course, tourism is not small).

Five years later, I think that new energy vehicles will account for at most 10%-15% of the entire new car sales in Thailand, that is, about 150,000 units a year. Because Japanese car companies such as Toyota and Honda (which have always been the hegemons in the entire Southeast Asian market, including Thailand) will not sit idly by and watch the new energy vehicles of Chinese car companies and OEMs (OEMs) grow infinitely here, Japanese automakers and OEMs (OEMs) have been deeply cultivated here for so long and spent so much money, they have a deeper influence on the Thai government (currently, Toyota's average monthly sales in Thailand are about 14,000 units, BYD's monthly sales are less than 2,000 units, and the Japanese department has no reason to officially start a war with China's new energy sources).

Zhixiang going overseas: If the sales ceiling of China's new energy vehicles in Thailand can already be predicted, then the relevant business imagination space you are doing is also very limited.

Edward: Well, at least in my judgment, the market is limited, and I mentioned before that the hands of the big Thai chaebol companies have also reached into this market, they will eat the best and easiest meat in the market, we are going to gnaw hard bones, but we still have to all in new energy, because as a startup from scratch, gnawing hard bones is our duty, there is no choice, but in an emerging industry, with our expertise, With our service capabilities and deep understanding of Thailand, we can try to make our market as big as possible, we can do 150 million this year, and in the next 5 years, we are confident to triple our performance to 400 million to 500 million.

Wisdom Elephant Goes to Sea: Have you ever thought about making A plus big? It can't always be a startup, right?

Edward: Of course, I thought about it, I hoped that I could make a really big and strong company, but after all, there is a world of difference between thinking and doing, or down-to-earth, persistently doing it, deeply cultivating an industry, and over time, the results will come naturally. We don't chase the wind, we just do things and wait for the wind to rise.

Zhixiang goes overseas: You have been in Thailand for more than ten years, if you were to briefly summarize the development process of Chinese car companies and OEMs in Thailand in the past ten years, what would you say?

Edward: From 2011 to 2015, SAIC, which first entered Thailand, was very far-sighted and did a lot of things, it ran the supply chain, solved many problems such as logistics and parts localization, cultivated a lot of talents, and also let Thais begin to understand Chinese car companies and OEMs (OEMs), and educated the Thai market. But SAIC did not seize the window opportunity.

In the past five years, with the entry of other Chinese car companies and OEMs (OEMs), the situation has become clearer, and when new energy has become a consensus of everyone, SAIC has also lost its first-mover advantage. Now it has become a period when Chinese automakers and OEMs (OEMs) such as SAIC, Great Wall, Foton, GAC, and Changan, led by BYD, are competing for the deer.

Zhixiang goes to sea: Do you think new energy is a gust of wind in Thailand? Or will it last?

Edward: New energy is certainly not a gust of wind, it will last in ten years, as mentioned earlier, new energy is a conspiracy of the Thai government to maintain Thailand's position as a car manufacturing center in Southeast Asia and upgrade the existing automobile industry, so it must be a long-term policy of the Thai government, and the chaebol companies have reached out to this industry, which is also a proof that the industry has a good long-term prospect. New energy has indeed become the hottest industry in China in recent years, and Thailand is just beginning, and there is still a lot of room for development in the future.

Smart Elephant Going to the Sea: What is the future development plan of A plus?

Edward: All in new energy, do the whole industry chain business, make good use of their existing professional knowledge, service capabilities and deep understanding of the Thai market, hardened the village, fight the war, connect the front-loading market and the after-installation market, take local operation as the main business, build a more complete channel system and a more convenient and efficient service network, expand turnover, high-quality development, and strive to become Thailand's first auto parts supply chain management platform as soon as possible.