Bangkok Tos Chirathivat had to skip the big New Year’s party. Thailand’s department store king actually wanted to welcome crowds of visitors for a concert and fireworks in front of his Bangkok shopping center Central World, which is one of the largest shopping malls in Asia.
But in the end the event took place in the center of the Thai metropolis without any on-site audience – it could only be seen on a medium-sized TV channel and a Facebook stream. Concerns about the omicron wave made a face-to-face event impossible.
Benko is pinning his hopes on the strength and financial power of the 57-year-old family business when he announces that he intends to expand the sales of his department store empire in Europe to around seven billion euros by 2024. Together they wanted to create “the world’s leading luxury department store group,” Tos announces in the press release.
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What the jubilant reports hide: Tos is no longer the bright hope he was when he joined the luxury chain KaDeWe Group in 2015 and became Benko’s partner. The corona crisis, which hit his home country particularly hard, not only cost him a large part of his business, but also significantly reduced his assets.
Together with René Benko, Tos Chirathivat pulled off the spectacular takeover of the traditional British chain for around 4.8 billion euros.
(Photo: AP)
The assets of his entrepreneurial clan had already collapsed massively in the first year and a half of the pandemic: In 2019, according to estimates by Forbes magazine, it was still 21 billion US dollars. At the most recent revaluation last July, the family came to just $11.6 billion. Tos took over the management of the group founded by his grandfather in 2013.
One reason for the financial crash is the disappointing performance of key subsidiary Central Retail, which went public in February 2020 – just weeks after Thailand reported the first coronavirus case outside of China.
The company, which in addition to department stores also includes several supermarket chains with a total of more than 2,000 branches in Thailand, has lost around a quarter of its value since the first day of trading.
Fatal dependency on the troubled home market
The company’s sales, in which the Chirathivat family holds around two-thirds of the shares, had already fallen by twelve percent in the first year of the pandemic. According to estimates by analysts, in 2021 it fell again by two percent – to the equivalent of 4.7 billion euros.
The biggest problem is the dependence of his group of companies on the ailing home market in Southeast Asia: the once booming business with tourists, which brought around 40 million holidaymakers to Thailand in 2019 and from Bangkok to Phuket also for crowds in the more than 20 shopping malls of the group has come to an almost complete standstill due to the corona pandemic.
A small glimmer of hope for the travel industry ended in disappointment after just a few weeks: the option of entering the country almost quarantine-free, which was only introduced at the beginning of November, was quickly canceled by the government in Bangkok – in an attempt to slow down the spread of the Omicron variant.
The borders of the tropical country are only to be gradually opened up to foreign holidaymakers again from February. In the case of fully vaccinated people, the quarantine is then replaced by several PCR tests.
Tos’ cooperation with Benkos Signa Holding in Europe has recently become ever closer.
(Photo: Getty Images)
The situation for Tos’ business remains tense. “Changes in economic conditions that affect consumer spending can directly impact Central Retail’s revenue,” warns Vatcharut Vacharawongsith, analyst at Southeast Asia’s RHB Group.
The CEO, who also operates several hotels in Thailand, acts as a franchisee of fast-food chains such as KFC and Mister Donut and is a shareholder in the Grab taxi service, now sees an alternative in Europe: the luxury department stores operated by him and Benko, which include The KaDeWe Group and the now acquired Selfridges branches, which also include Rinascente in Italy, Illum in Denmark and the Swiss Globus department stores, are to become the new growth areas.
Numerous Asian billionaires are pushing towards Europe
“We will focus on creating exceptional experiences for locals and visitors from abroad,” Tos said of the Selfridges purchase. He predicted a “bright future for the next 100 years” for the company, which recently also suffered from corona lockdowns.
Tos is not the only Asian family entrepreneur using the pandemic to expand in the West: India’s richest man Mukesh Ambani bought the British luxury hotel Stoke Park last year.
He has also secured a majority stake in the five-star Mandarin Oriental in New York. Vietnam’s richest man, Pham Nhat Vuong, is also pushing towards Europe and America: he wants to build and sell electric cars of his Vinfast brand in Germany and the USA.
Attempts to internationalize Tos’ Central Group have not always been successful: An attempt to expand in China, from where group founder Tiang Chirathivat moved to Thailand in the mid-1920s, failed in the past decade.
The cooperation with Benkos Signa Holding in Europe, on the other hand, has recently become ever closer: Signa brought real estate expertise to the partnership and Central its experience in operating large, posh shopping temples. Allegations of bribery against Benko in Austria, which the entrepreneur denies, have not visibly strained the relationship so far.
In public, Tos likes to present himself as a loyal business partner who you can rely on even in bad times. When he gets involved, it’s almost always long-term, he said in a recent interview with Monocle magazine. Parting with investments is almost never the case.
He admitted: “Retail is not a fun business. It’s very hard work – day in, day out.” And he seems to be aware that he still has particularly hard days ahead of him in his home country of Thailand: In his estimation, business will not return to the level before the pandemic in 2022 either. “But hopefully we’ll be there in two or three years.”
More: Vietnam’s richest man is planning an electric car factory in Germany