1. Charoen Pokphand Food
Kitchen of
(FDI)

2. Foreign Direct
Investment
Kitchen of

3. What is FDI?
Internationalization strategy
Developed countries will benefit from natural
resource, cheap labor, and avoid trade barrier.
Developing countries will benefit from capital,
knowledge and technology.
Does not include stock exchange investment

4. Horizontal FDI
Vertical FDI
Conglomerate FDI
Types of FDI

5. Horizontal FDI
Firm will invest in the same business as the
firm does in their own countries.
• Example: Toyota factory in Kentucky, United
State

6. Forward and backward
• In forward vertical FDI, the firm will play a role
as a supplier and send finished goods through
subsidiaries or dealers to host countries.
• Example: Volkswagen sell though many car
dealer instead of using only one main dealer.
Vertical FDI

7. Forward and Backward
• In backward vertical FDI, the firm will invest in
the industry that support their business.
• Example: Ford Company build engine factory in
Mexico in order to decrease their cost.
Vertical FDI

8. It is the integrate investment between horizontal
and vertical.
• Example: Hong Kong firm set factory in china
and produce nonrelated product.
Conglomerate FDI

9. Methods of FDI
Greenfield
• Begin everything from zero
Ex: Buying land
Mergers and Acquisitions
• Joining between two firms
Ex: Buying local firm asset

10. Pros & Cons of FDI
Pros
• For developed countries
Decrease cost and increase profit
• For developing countries
Capital, knowledge and technology
Cons
• The host countries may lose their natural
resources because of non strict laws.

11. Effects of FDI
Stimulate nation economy
Stability of FDI
Social development
Infrastructure development and technology
transfer
“Crowding in” and “Crowding out”
Scale and pace of investment
Skewed distribution

12. Kitchen of
Company Profile

13. Brief Overview
Established in 1978
Agro-industrial Business
Core Business
• Animal Feed
• Farming

14. Two Main Operations
Thailand
• Manages all operation in Thailand
• Distributes in domestic
Overseas
• Overseas Operation in 11 countries

15. 3 Main Product Categories
Feed
Farm
• Breeding, Farming, and basic meat processing
Food
• Semi, fully cooked meat, and frozen products

16. Products of CPF
Consumer products
• Ready-to-eat products
• Ready to cook products
• Fresh products
Agricultural products
• Feed
• Breed

17. Consumer Product
Ready-to-eat& Ready to cook products
• Appetizer, and Ready meal

18. Fresh Products
• Chicken
• Eggs
Consumer Product

19. Agricultural Product
Livestock Feed
• Powder
• Pallet
• Concentrate

20. Agricultural Product
Feed
• Leader and Pioneer
• Over 600 Feedmill plants
• High Quality Feed

21. Agricultural Product
Breed (Farm)
• Leader in the research
• Modern Farming system
• Branch all over the countries

22. Kitchen of
Requirements
Considering FDI

23. Factors to Consider
Assessment of internal resources
Competitiveness
Market analysis& Expectation

24. Assessment of Internal
Resources
Internal resources
Internal support
Domestic performance

25. Competitiveness
Competitor
• How well they do
• Market share
Competitive advantage
• Comparison

26. Market Analysis &
Expectation
Market research
• Local regulations
• Local preferences
• Customer groups
Scenario Analysis
• Worse case

27. Kitchen of
CPF’s Historical
Development

28. Charoen Pokphand Group
Found by Chia Ek Chor and Chia Seow Hai in 1921
Started a small shop  “Chia Tai Chung”
Expanded Business to Hong Kong, China, Malaysia
and Singapore
International Trading
(1921-1954)

29. In 1954, Jaran started feed business known as
“Charoen Pokphand”.
Thai Economic Development Plan
Dhanin worked for the government’s
slaughterhouse (1958-1963)
General manager  CEO
Mr. Dhanin Chearavanont
Animal Feed
(1954-1970)

30. Poultry farming
Joint venture (60:40) with Abor Acres
“The contract farming system”.
CP became a major player in agro-industry
Integrated Agro-Industry
(1970-1979)

31. Sausages & Meatballs
“Chester Grill”
Shrimp Farming
Siam Makro & 7-11
Infrastructure Sector
Cable TV Network
Future Integration & Diversification
(1980s-Present)

32. 0.00
100.00
200.00
300.00
400.00
500.00
600.00
700.00
800.00
1994
1995
1996
1996
1997
Frozen Shrimps Exported (1994-1997) (Million US$)
Source: Bank of Thailand

33. Sausages & Meatballs
“Chester Grilled”
Shrimp Farming
Siam Makro & 7-11
Infrastructure Sector
Cable TV Network
Future Integration & Diversification
(1980s-Present)

34. Kitchen of
CPF’s International
Expansion

35. International Expansion
CPF invested in 11 countries around the world:
Turkey
Taiwan
China
India
Indonesia
Philippine
Malaysia
Vietnam
Russia
England
Laos

36. Strategy
• A major food producer in the world
• Expand distribution channels
• A country that has high rate of population
• Research and development
International Expansion

37. Main Products
• Chicken feed
• Breed farming, livestock farm and meat
process manufacturer
• semi-cooked food and ready-to-eat
International Expansion
(Turkey)

38. The biggest and most successful nation of CPF’s FDI
is in Taiwan, called “CPE”.
One of the leading manufacturers in Taiwan
Gain major market shares
“Ready-to-eat” is very popular
International Expansion
(Taiwan)

39. Mr.Dhanin Chearavanont stated that :
International Expansion
(China)
“CP’s investment in China focuses mainly upon
agriculture. Whether it is producing animal feed, or
raising livestock such as pigs, the latest technology
and management systems are utilized.” (Dhanin, 2011)

40. Highest rate of population and potentials.
Main products are feed, farm and food.
CPF just took over CPP (Second largest
market shares in China) and become the
major shareholders (74.18%).
It will boost the net profit and enables
growth in the future.
International Expansion
(China)

41. Second largest rate of population.
Government supports foreign investors.
Main products are feed and farm.
CP brand in India is well-known
Trade with local wholesalers and retailers
International Expansion
(India)

42. Some products in domestic
consumption, supplies are less than
demands.
International Expansion
(India)

43. Kitchen of
Characteristics to the
Overall Growth and
Internalization Process

44. Fully-Integrated Process
Understanding Market
Finding Good Strategic Partner
Characteristics

45. The ability to integrate everything from feed
material production to retail distribution
channels.
Fully Integrated Business

46. Fully Integrated Business

47. Fully Integrated Business

48. Understand markets in developing countries
• Creates opportunities
• Invest in developing countries
• Marketing and distribution strategy
• “Know-How” > “Know-What”
Understand Markets

49. Strategic Partners
American agricultural multinational “Abor Acres”
– Modern technology
– Import chicken breeding stock from USA
– Large scale Production
– More involved in international Market
American Company “Dekalb Co.”
– Reduce trade barriers
– Research and development of green bean and maize breeds
Japanese Company “Mitsubishi Corporation”
– Major target market for shrimp exportation

50. Kitchen of
Oversea Investment
Risks
S

51. Foreign countries’ rules and regulations
Economic conditions
Political changes
Minimum wage
Foreign exchange
Etc.
Oversea Investment Risks

52. Investment Policy: Control and Follow-up system
• Appointments of Representative of Managing
Director and Finance executive
Conduct feasibility studies thoroughly
• Ensure that the investment is profitable and it is
worth the risk.
Meetings in Thailand with Overseas operation
management teams (Every 6 months)
• Reviewing performance and updating plan.
Risks Management
“High risk, High return”

53. Kitchen of
Operating Results

54. Thailand Operation
Oversea Operations

55. Operating Results of Each
Business Line

56. Conclusion

57. Thank
You!