Dhanin Chearavanont: Growing with China

By Wu Xiaohan, Sun Qi

The Thailand-based Chia Tai Group, also known as Charoen Pokphand Group, had already become a household name throughout China as early as the 1990s when China Central Television (CCTV) presented a weekly show called Chia Tai Variety Show. It was at that time that Dhanin Chearavanont, chairman of Chia Tai, the first foreign corporation to invest in the Chinese mainland since the country initiated reform and opening up, rose to fame in China.

On September 3, 2015, Dhanin Chearavanont was invited to mount Tian’anmen Rostrum in Beijing to observe the military parade marking the 70th anniversary of the victory in the World Anti-Fascist War—an honor he regards as recognition of Chia Tai’s impressive development in China.

License No.001

In 1979, upon hearing the news that China had implemented reform and opening up policies, Dhanin, at the age of 40, resolutely decided to expand his business into China. With Shenzhen’s “No.001” business license for a Sino-foreign joint venture in hand, he established Chia Tai Conti Co., Ltd., which, with annual production of 80,000 tons, became China’s leading animal-feed producer, as well as the earliest and largest foreign-invested project in the Shenzhen Special Economic Zone.

In November 2005, at the ceremony celebrating the 20th anniversary of China’s feed industry, Chia Tai Group received an honorable award for its “special contribution to the development of China’s feed industry”.

Unsurprisingly, this move shocked the international business community, which was still taking a wait-and-see approach. In the several years that followed, Chia Tai Group witnessed exponential development in China, with its business expanded to cover a wide range of fields including agriculture, animal husbandry, fisheries, petrochemicals, real estate, pharmaceuticals, retails, motorcycles, telecommunication and finance.

In the spring of 1990, Chinese leader Deng Xiaoping met with Dhanin Chearavanont.

“Deng highly acknowledged what we had done,” Dhanin recalled. “He said that Chia Tai’s investment in China, especially in the fields of agriculture and animal husbandry, was valuable and exemplary.”

By then, Chia Tai Group was already one of the top foreign investors in China in terms of investment scale, number of investment projects and investment volume.

Unwavering Perseverance

Since China and ASEAN established dialogue relations, ASEAN countries’ economic ties with China have developed rapidly, and Thailand is no exception. As one of the leading conglomerates in Thailand, Chia Tai Group has continuously deepened its cooperation with Chinese enterprises, focusing on agricultural food processing. So far, Chia Tai-invested companies in this field have exceeded 100. It also initiated the “company+farmers” model in China, which not only ensures quality products, but also gives farmers access to feeds, technology, and production management guidance, playing a contributive role in China’s development of agriculture and animal husbandry.

 

 

Attaching great importance to talent cultivation, Dhanin Chearavanont employs the strategy of “talent localization.” Over the years, Chia Tai Group has organized various lectures and training programs for agricultural enterprises in different places, benefiting millions of attendees. As a world-class entrepreneur with acute business acumen, Dhanin regards Jack Ma, founder and chairman of China’s e-commerce giant Alibaba, as a mentor.

“Although Ma is many years my junior,” he said, “his outstanding competence in many aspects, particularly in the information industry, is worth learning from. In this era, age gaps are no longer an obstacle to making friends.” In November 2005, at the ceremony celebrating the 20th anniversary of China’s feed industry, Chia Tai Group received an honorable award for its “special contribution to the development of China’s feed industry”. Some even hailed Chia Tai as a flag, a model, and a school in China’s feed industry, given the fact that a great number of people had directly or indirectly received training from Chia Tai.

In April 2012, a modernized egg factory began operation in the rural area of Beijing’s Pinggu District. It adopts a fully mechanized process from feed preparation to egg collection, allowing 3 million hens to produce 2.4 million eggs each day. To protect the henhouses from exposure to harmful bacteria, the entire factory is isolated from the outside, with feed transported via pipes to henhouses and eggs carried by conveyer belts to the warehouse, where the eggs are moved onto shelves by robotic arms. Each step of the process is computer-controlled.

Despite its location in the countryside, where the labor force is abundant, the factory only employs a few dozen workers, while nearly 5,000 farmers inhabiting the peripheral areas have become its de-facto shareholders. The factory implements a profit allocation system according to which each shareholder can get at least a certain amount of dividend regardless of whether its business makes a profit.

To Chia Tai Group, whether the egg factory makes money is not a big issue, because other businesses under its umbrella including feed, breeding hens, and food processing can ensure profits, not to mention retail opportunities at the end of its business chain. In 20 years, all the factory’s ownership will be transferred to local farmer-shareholders, allowing them to manage the business independently.

Why did Chia Tai Group establish a mechanized factory in the countryside? Dhanin explained their intentions. First, they hope to help the farmers increase their income, he said. Chia Tai not only provides employment for local villagers, but also allows them to hold shares and acquire dividends.

Another aim is to address challenges posed by an aging population with fewer children. Today in China, including in rural areas, there are fewer young labor force participants, while the elderly population is rising. Mechanized production can effectively avoid inefficient and incorrect operation by non-professionals.

Over the past three decades, Chia Tai Group has accumulated a total investment of 110 billion yuan (US$16.6 billion) in China, with more than 300 enterprises scattered across nearly all  of the country’s provinces, employing some 80,000 people. Keeping his eye on the future, Dhanin Chearavanont is leading Chia Tai along the path towards greater prosperity as China grows.