Thailand top destination for Hitachi's operations

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THE ASIAN market is growing rapidly and the region is important for Hitachi’s operations, its president Hiroaki Nakanishi said recently.

The Japanese company has also increased its business activities in many Asian countries that need to expand their infrastructure base.

“Thailand is the top investment destination of Hitachi in the Asean region. The country is very important not only as a manufacturing base but also as a high potential market and as a hub in expanding Hitachi’s business in surrounding countries like Myanmar and Laos. There is no doubt Hitachi will continue to invest in Thailand,” he said.

Hitachi’s core businesses in Thailand are home appliances, electric components and materials for the automobile industry. It also focuses on railways, power transmission, urban development (elevators, building IT management systems) and medical products.

It supplies infrastructure systems to information and telecommunications systems, construction equipment, highly functional materials and components to automobile systems and financial services. The group consisted of 131 companies with 28,156 employees in Asean as of September. About 35 of those companies and 12,225 employees were in Thailand.

There are many projects Hitachi is working on or exploring now in Thailand, including some major transportation projects, but he declined to elaborate.

There are huge infrastructure projects in Thailand, including the planned Bt2-trillion transportation system development. The government is launching campaigns to pass the law, allowing it to borrow and invest in these projects.

Soonchai Kumnoonsate, governor of the Electricity Generating Authority of Thailand (Egat), has said the state enterprise is considering the technical proposals of three bidders, including two consortia, to construct a 600-megawatt power plant in Lampang’s Mae Moh district.

They are Alstom Power System FA-Alstom Thailand-Marubeni Corp, Sumitomo Corp-Hitachi-Italian-Thai Development and Habin Electric International from China.

Hitachi emphasises the importance of setting up a full value chain and seeks strong partnerships in each market it serves. A good example of a strong alliance in Thailand is its elevator and escalator joint venture with Siam Motors. In March, Siam-Hitachi Elevator Co started operations at its new factory in the Amata Nakorn Industrial Estate.

“We are constantly on the lookout for partners to expand our business in Thailand and neighbouring countries,” he said.

Hitachi’s first business with Thailand was exporting locomotives to it in 1936. It set up a representative office in Bangkok in 1958. After the 1970s, Thailand was its biggest and most important manufacturing base in Asean and was positioned to export to other markets.

Through recent economic growth, Thailand has become a high-potential market. However, while Thailand is still an important manufacturing base, it is not a labour-intensive manufacturing base anymore.

Some challenges for Hitachi in Thailand are rising labour costs and low unemployment. The company is now looking at shifting its labour-intensive manufacturing base to other countries and in areas near Thailand’s borders. It will make Thailand its base for more advanced manufacturing.

In June, Hitachi said it had won a ?37 billion contract to construct Vietnam’s first urban railway in Ho Chi Minh City, which is scheduled to begin operations in early 2018. Hitachi will supply 17 trains with 51 cars, the signalling system, telecommunications system and power supply system. It also has a five-year maintenance contract for the railway.

Hitachi regards this deal as a foothold for expanding in the urban railway business in Southeast Asia and other regions. It will continue expanding its bases further in Japan, the UK and China and actively develop new bases in India, Brazil and Southeast Asia.

In August, Hitachi said it clinched an order for a steam turbine, generator and boiler for an ultra-super critical coal-fired thermal power plant in Malaysia. This one-gigawatt plant is being built under a turnkey contract by a consortium of Sumitomo Corp and South Korean construction firm Daelim Industrial Co. This is the first time that Hitachi will supply equipment for this type of plant in Southeast Asia.

Hitachi has set a revenue target in India of ?300 billion in fiscal 2015, up from around ?100 billion in fiscal 2011. As of March, Hitachi had 24 subsidiaries in India, where it started business in the 1930s.


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