2014 Forbes Zheng Chang Family

The Zheng Chang Family: The “Chain Thinking” of Thailand’s Retail Giants

Published: 2014-02-27 05:34 Source: Jingchu.com enters the e-newsletter

Chutian Jinbao News On the Hurun 2014 Global Rich List released on February 25, a new face appeared: 50-year-old Thai Chinese Zheng Chang (Tos Chirathivat).

Zheng Chang and his family debuted on the list with a fortune of 63 billion yuan, entering the top 10 in Greater China and ranking 112th globally.

The Zheng Chang family’s Central Retail Group is famous in Thailand. 73 years ago, the Zheng family from Hainan opened a grocery store in Thailand. Today, this grocery store has developed into a retail giant with sales of US$3.8 billion. Its Central Department Store entered China in 2010 and opened three stores in Hangzhou, Shenyang, and Chengdu. Central also plans to enter 4-5 major cities in China and open 40 branches.

Proper site selection

From selling groceries to opening a department store

In 1924, Poshang Village, Puqian Town, Wenchang, Hainan. Zheng Xinping, who was in his 20s, followed the local tradition of traveling to Southeast Asia and traveled across the ocean to Thailand to make a living and became a clerk in his father-in-law's restaurant.

In 1941, Zheng Xinping, who did not want to enjoy the shade under his father-in-law’s big tree, opened a small grocery store in the suburbs of Bangkok with 300 baht borrowed from his father-in-law, and named it "Chengshengli". .

After six years of operation, Zheng Xinping’s store has shown little improvement. Until he moved his small shop and home to the Oriental Hotel in Thailand, which is regarded as the best hotel in Asia, and changed its name to "Central Trading Store". He first operated books, newspapers and magazines, and then expanded the categories. Nine years later, the eldest son Zheng Youhua realized his father's wish to open a department store and opened Thailand's first department store in Chinatown.

Zheng Xinping had 26 children. Zheng Youhua inherited his business, established the Central Retail Group, opened Thailand's first shopping mall, opened the first Central Department Store in Chiang Mai, and achieved provincial success. international expansion. By the time of his death in 1992, Central Retail Group had become one of the largest group companies in Thailand. Zheng Youhua created many "firsts" in Thailand: the first to introduce international cosmetics brands, the first to provide complete customer service, and the first to carry out innovative marketing exchanges.

Today, Central Retail Group is led by Zheng Xinping’s second son, Vanchai, but the core retail business of the group is still under the control of Zheng Chang, the son of Zheng Youhua, the eldest son.

Self-produced and self-sold

Chain thinking to avoid the financial crisis

In the 60 years of growth, Central Retail has accumulated a wealth of wealth in its unique survival trajectory. strategic assets.

In the early days of department store operations, due to the discovery that Thais liked foreign brands and Thailand’s tourism advantages, Central Retail established a series of joint ventures for world-famous brands, specializing in the production of Adidas. Sports shoes, Lee jeans and other designer clothes.

The chain thinking of "self-produced and self-sold" has brought great value-added effects to central retail. It not only achieves integrated integration and saves procurement costs, but also increases flexibility and reduces the cost of complete adoption. High risks brought by the purchasing model of European and American department stores. Along this business chain, Central Retail has also developed more than 4,000 stable quality suppliers, who have decades of experience in cooperation with Central Retail.

After the 1997 crisis, the trend of modern retail swept across Asia, with Thailand bearing the brunt. The traditional department store business model struggled to survive in the cold wind, and many small and medium-sized Thai local retailers were in a very difficult situation.

It was in this bloody competition that Central Retail, with abundant cash flow, expanded against the market trend, occupying 30% of the market share of Thailand's retail industry and becoming the industry leader.

Add instead of subtract

Many brands follow loyally

The secret of Central Retail’s success is to add and chain, and this is Zheng Chang’s strategy .

Zheng Chang, born in 1964, holds an MBA degree in finance from Columbia University in the United States. In 1989, he returned to Bangkok and first worked at Citibank for a year before entering the family business.

Unlike the U.S. department store industry’s subtraction model of cutting off business that it is not good at and focusing on fashion, Central Retail under the leadership of Zheng Chang is not satisfied with just being a “category killer” (i.e. daily necessities, books, electronic products, home decoration and other departments into specialized retail chain stores)”. From the popular "Central Festival Pattaya Beach" to the high-end "Central Chidlom", fashion department stores, best-selling books, vegetable supermarkets, and bedding are all stored in the basket of a building. Consumers can meet almost all their material needs from birth to death in a shopping mall. Top-notch watches and cheap lactose are just a flight away.

In 1996, Zheng Chang successfully merged Central Retail and Robinson, a famous department store retailer in Singapore, to establish Central Retail Corporation (CRC). He also negotiated with some global retail companies, such as Casino, Royal Ahold, Carrefour, Watsons, Marks & Spencer, to establish partnerships. By obtaining Thai agency rights and joint ventures, he was able to enter previously unfamiliar professional retail areas and absorb "category killers" "Business experience.

Just like building a matrix structure, Central Retail’s segmented brand building and chain operation addition strategies have not only gained the unique economies of scale advantage of “category killers”, but also maintained the “one-stop” nature of the traditional department store retail industry. The competitive advantage of "buying everything in one style" has achieved economies of scope.

Whenever central retail expands into a location, what follows is often a fleet of specialty retail brands. Therefore, when Central Retail enters China, it is not just another foreign department store entering a second-tier city in China. (Comprehensive reports from "Oriental Morning Post" and "Competitiveness")