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3-on-3 with Dr Sarasin Viraphol

15 Aug 3-on-3 with Dr Sarasin Viraphol

Thai conglomerate Charoen Pokphand (CP) Group was the first foreign investor to enter China when Chinese leader Deng Xiaoping opened the economy in 1979. Its registration number in China is 001. Today, the agribusiness giant employs some 80,000 people for its US$9 billion (S$11 billion) business in China.

The CP Group’s long-standing ties with China have not stopped it from warming up to Japan though, even as the maritime row between the two Asian giants escalates. Its recent high-profile tie-up with Itochu, Japan’s oldest and third largest trading house, is a case in point. But was the CP group’s management ever concerned about winning one partner at the risk of losing another? How should ASEAN companies steer through the troubled waters?

We posed the questions to Dr. Sarasin Viraphol, Executive Vice-chairman of the CP Group. Before joining the private sector, Dr. Sarasin also served as an ambassador, representing Thailand in China, Japan and the Philippines. He was in Singapore to speak at the SIIA’s 7th ASEAN & Asia Forum on 1 August 2014.

Q1. As a former diplomat to China and Japan, what do you make of the growing tensions between China and Japan, particularly over their disputes in the East China Sea?

Dr Sarasin: This is something very worrisome. Territorial issues are very hard to settle – if there is such a word as “settle”. It will take a long, long, time. It won’t happen overnight.

But in the meantime, what do you do? You have to carry on with other relations, bilateral and multilateral. Most countries take the pragmatic approach. They handle territorial issues seriously, but they won’t throw out the possibility of working together in other areas.

Economically, China and Japan are very close. The two countries are also investing more and more resources in our region, ASEAN. We welcome that. We need to bring China and Japan into the equation for the development of peace, stability and prosperity.

Q2. When Deng Xiaoping opened China to foreign investment in 1979, the CP Group was the first to register its business there. Now, your company’s business in China is worth US$9 billion.  We also see that CP is enjoying warming ties with the Japanese. CP’s recent US$1 billion tie-up with Japan’s oldest and third largest trading house Itochu is one example. Has it been a challenge for an ASEAN firm like the CP Group to try winning both sides?

Dr Sarasin: I think we have demonstrated the potential for such a three-way tie up, and the capability of an ASEAN firm in doing so. But I won’t boast about my company’s accomplishments because today’s success doesn’t guarantee tomorrow’s success. There are always new issues and crises.

But coming from ASEAN, I feel it is our duty to tell our Chinese and Japanese friends, who may not be talking to each other, that we are sharing a common destiny. Our tie-up with Itochu is a result of our common recognition that working together can bring us new opportunities in China and parts of ASEAN for a start. Our synergy can also help grow our presence in Japan. This common understanding is important.

Q3. Are ASEAN firms under pressure to take sides since the China-Japan row escalated last year? Have you seen such a tendency?

Dr Sarasin: We don’t see that at all. In fact this is not an issue in the corporate world. Just because we are closer to China doesn’t mean we go with Diaoyu and not Senkaku. We have demonstrated that we can work with the Chinese and the Japanese – with the approval of the Chinese themselves.

Based on our experience, we know Chinese consumers like Japan in many ways. They admire Japanese products. The problem, if I may be frank, lies more with the Japanese because they don’t reach out as much. Korea seems to hold more sway than Japan among Chinese consumers now. The Koreans make efforts to “sinicise” Korean products. They take time to study how to make a product friendly to Chinese consumers. I think the Japanese can do more.