Central Pattana’s president and chief executive Kobchai Chirathivat spoke with The Nation’s Pichaya Changsorn recently about his management principles and the current restructuring and business expansion strategy of Thailand’s largest retail developer. The following is an edited excerpt from the interview.Faith in Christianity has played more than a passing role in building up the Central Group’s massive portfolio of properties.
President and chief executive Kobchai Chirathivat openly admits to resorting to prayer in some of his business dealings, and his style of leadership demands a generous measure of humility. If proof of the philosophy lies in the group’s amassing of property assets, then consider that Central Group currently manages 17 shopping centres, six office buildings, two hotels and two residential projects, and plans to open two more malls, one in Phitsanulok province and the other on Rama IX Road in Bangkok, by the end of this year.
Central Group’s business world is one of restructuring, expansion and acquisition.
–Can you elaborate on Central Pattana’s current restructuring programme?
We’re restructuring in preparation for installing an enterprise-resource-planning (ERP) system. It is 30- to 50-per-cent complete and will take another 12 to 18 months to finish. It will help to streamline, speed up, integrate and transform our work from paper-based to data-based systems. It is scalable and thus when we expand our malls in the future we won’t need such an increase in our headcount.
–What are the implications for CPN of Central Retail’s recent ¤205-million acquisition of La Rinascente SpA, the upmarket Italian department store chain?
CPN’s strategy is to focus on nearby countries. The most difficult thing is during the entry stage and once you are there, you must be able to extend it further.
I don’t think the European market is worthwhile because the economy has not been growing. While in emerging markets, if you can start [a shopping mall], you can make a leap since there is no other mall there. The risk is also lower.
–So does this mean that you have different ideas to those of Central Retail with regard to overseas-investment strategy?
I guess they [Central Retail] may want to bring out the [European fashion] brands to China. Europe is the original source of many fashion cultures. There are not so many strong European department stores. La Rinascente is the biggest chain with 16 branches, so they have a good connection with every [fashion goods] brand. The store itself is also well-known. If CRC uses the brand for its anchor store in China, it will spice [business] up a lot.
To invest in a department store requires only about Bt400 million to 500 million, whilst for CPN, when we build a shopping mall, investments are much larger, quite often about Bt3 billion to Bt5 billion, depending on the cost of land. Therefore, we have to make sure the location is really good.
We’ve discovered that when we’re doing our own malls, our performance is often better [than that of comparable malls. This is because we have an in-depth understanding on how to design a mall to achieve optimal efficiency. CentralWorld, for instance, last year received the “Best of the Best” – the top award for design and development, selected from projects around the world by the International Council of Shopping Centres. In 2009, it received The Best in Asia award from ICSC.
–How has CPN managed to transfer its indigenous know-how in retail development from one generation to the next?
It [know-how] actually resides in our people. Under the restructuring project, we are trying to transfer this knowledge into the database, because we are recruiting many new staff. Within a few years, the company will have changed a lot…a majority of its staff will have only four to five years’ experience with the company.
We now have 2,000 staff. Since each new mall requires 200 people, if we build 10 new malls, half of our staff in the future will be new-generation workers. If the [knowledge] transfer is not good, the operational [standards and efficiency] of the new malls may deviate [from set standards]. This is our challenge for the future. We have opened four new malls over the past two years and have hired 800 more people. We’re hiring 700 more as we will open a total of 3 new malls this year. Altogether, we will have 1,500 new staff.
If we can overcome this [people] challenge, we will be able [to achieve our goal] to become a world-class [retail developer] that has a system in place that enables it to expand [internationally]. [So far], we’ve discovered a success formula that we can replicate anywhere in Thailand. Based on this confidence, we have been growing rapidly, by an average of 15 per cent every year.
We made it in the past because we had a competent team, each of them striving to do everything by himself. But when we have 18 to 25 malls, they must be able to build good teams. We now have a motto [for our managers and supervisors]: “Coaching only, never do things yourself.” They must dare to trust their subordinates.
–Can you share some recipes for management success?
First, leaders must commit to reaching their goals. You must be enthusiastic, passionate and obsessed with your goals. You must not merely go along for a certain number of miles, or do just enough to save your face.
Second, leaders have to be continuous learners. Since everyone has his own limitations, you sometimes have to listen to people outside your departments, as well as to your suppliers and customers. You have to listen and be able to pick up good information and use it.
You have to be humble. Sometimes this goes contrary [to one’s nature], since successful people usually think that they are good. But successful organisations often have a culture of learning, listening and continuously changing and adapting.
Third, you need to have a clear strategy and roadmap to reach your goal, and you must stay on course despite all interruptions.
Also, you must be a good communicator, with an ability to convince your team that they can achieve their goals. You must listen and pool everyone together so that one plus one equals three.
–You were quoted as saying on a Christian community website that during an early part of your career, you once resigned from the Central Group because you had problems with other people. Is this the truth?
Jesus teaches us to honour others and to treat other people better than we treat ourselves, but most people build up their egos at work.
After working for a while, I came to think that there were only two people standing in my way. So I sarcastically called it quits. To my surprise, they did not plead with me [to stay]. I stayed at home for four to five months.
At one point, I became closer to God, and I realised what my ego [had done]. I was determined to return [to work]. But knowing of my bad reputation, nobody wanted to accept me anymore, except my uncle, Sudhitham Chirathivat, who was heading CPN at that time. I had to restart everything from zero, as one of his secretaries. Previously, I worked at Central Trading, where I had 1,000 subordinates.
Later, I was assigned to take care of the Sathorn Park Place condominium project. At that time, signs of a crisis were already looming. I had no experience in real estate at all. So I prayed to God, and a miracle happened. I was able to transfer 100 per cent of the project’s units without a single lawsuit, while other projects faced numerous lawsuits as buyers, banks and contractors faced troubles. After that, I was assigned to list the company on the stock market, so I was able to learn about finance.
Later, I was tasked with acquiring a mall in Chiang Mai. At that time, there were quite a few mergers and acquisitions in Thailand, but we believed we could do it. As God teaches us, everything begins from faith. But at the same time, you must be humble and keep thinking that you don’t know anything much.
–Can you share some of your further education experience?
I took an MBA class at the Singapore campus of the University of Chicago’s Booth School of Business in 2002. At that time I was already CPN’s chief executive. I thought I held a big responsibility and expected the extra education to help me to gain a comprehensive overview of business. Most people tend to look at business from only two or three sides. Chicago Booth is one of the top business schools in the world. Most of my classmates were “stars” sent by their respective companies.
Source: The Nation