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OIE Forum 2010 Thailand Industry Transformation: Thriving in the New Age of Global Capitalism S uvit M aesincee Sasin Institute for Global Affairs (SIGA) Civilization in the Making Between 1000-1800 21 st Century 19 th Century Society Static Growth Dynamic Centricity Local

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slide1

OIE Forum 2010

Thailand Industry Transformation:

Thriving in the New Age of Global Capitalism

SuvitMaesincee

Sasin Institute for Global Affairs (SIGA)

slide2

Civilization in the Making

Between

1000-1800

21st

Century

19th Century

Society

Static

Growth

Dynamic

Centricity

Local

International

Transnational

Community

Rural

Urban

Virtual

Pace of Change

Months

Days

Seconds

slide3

Globalization changes the State of Nature

Country A B C

Nation-State

Company

People

Solid Modernity

Liquid Modernity

  • Connectivity
  • Interactivity
  • Mobility
  • Virtuality
slide4

Required New Mindset & Skill Set

  • New Axioms

Philosophy

Conceptual

Design

  • New Set of Critical Issues
  • New BIG “P”

Paradigm

Principles

  • New Economic Architecture
  • New Industry Portfolio

Mechanism

Design

  • New Business Model

Practices

  • New Bundles of Competencies
  • New Enabling Infrastructure
slide5

Thailand Industry Transformation:

Thriving in the New Age of Global Capitalism

  • Global Structural Change
  • Challenges & Issues Facing Industry
  • Action Agenda for Driving Change
slide6

Thailand Industry Transformation:

Thriving in the New Age of Global Capitalism

  • Global Structural Change
  • Challenges & Issues Facing Industry
  • Action Agenda for Driving Change
slide7

Perpetual Crises are a Normal State of Being

The

Commodity

Price

Bubble

The Global

Financial

Turmoil

The Dot

Com

Burst

European

Sovereign

Debt Crisis

The Global

Economic

Crisis

The Asian

Financial

Crisis

The Real

Estate

Bubble

slide8

For much of the next decade following the

economic crisis, we can reasonably expect to see

  • A rise of economic
  • nationalism
  • A more expanded role
  • for governments
  • A much larger burden
  • of regulation
  • Weak global growth
  • Pressure from overcapacity
  • Persistently high unemployment
  • Volatility in the financial markets
slide9

Three Major Shifts

  • The Age of Philanthro-Capitalism
  • A New Global Middle Class
  • An Emergence of the Asian Century
  • Offshore Farming
  • Extreme Poverty
  • Wall Wide Web
  • Cyber War
  • Food & Fuel Security
  • Nuclear Terrorism
  • A Shift from the Century of Ideology to the Century of Identity
  • A Shift from the Century of Individuality to the Century of Commonality
  • A Shift from the Century of Prosperity to the Century of Security
slide10

From Century of Ideology to Century of Identity

Century of Ideology

Century of Identity

Socialism

State Capitalism

The World

Economy

Capitalism

Market Capitalism

slide11

Identity/ Representation Issues

Capitalism

  • Washington Consensus Vs. Beijing Consensus
  • North South Trade Vs. East West Trade

Citizenship

  • National Citizen Vs. Global Citizen
  • Local Culture Vs. Cosmo Culture

Corporations

  • Indigenous Firms Vs. MNCs
  • Glocalization Vs. Grobalization
  • Closed Vs. Open Collaborative Platform

Civil Society

  • Globalization from Above Vs. Globalization from Below
slide12

From the Century of Individuality to the Century of Commonality

Regional

Society

Local

Economy

Global

Environment

Economy

Society

Environment

Local

Regional

Global

slide13

These Multiple Realities are Multifaceted,

Multilayered and Multi-Domained by Nature

Economy

Society

Environment

Local

CSR

New Growth Engine

Low Carbon Society

Multifaceted

Food & Energy Security

Asean Economic Community

Regional

The New USA

Multilayered

BRIC

The Rise of the Rest

G20

Global Civil Society

Copenhagen Accord

Global

Multi-domained

Philanthro-Capitalism/ Citizen Philanthropy

Global Standards

slide14

From the Century of Prosperity to the Century of Security

National

Security

Freedom & Equality

Human Security

Security

Construction & maintenance of

social & political order

Management of uncertainty, risk & insecurity

Laissez-faire

Precaution

slide15

Globalization of Risk &Threats

  • Financial Turmoil
  • Economic Crisis
  • Pandemics
  • Climate Change

Global

  • Terrorism
  • Mass Production
  • of Refugee
  • Extreme Poverty
  • Genocide
  • Civil War

Local

Local

Global

slide16

The New World Order in the Making

  • Financial Turmoil
  • Economic Crisis
  • Commodity Price
  • Offshore Farming
  • New Global Middle Class
  • Extreme Poverty
  • Etc.

Individual

Identity

Prosperity

  • Terrorism
  • Organized Crime
  • Pandemic
  • Cyber War
  • Pirates
  • Nuclear Proliferation
  • Food & Fuel Security
  • Etc.

Global

Common

Security

slide17

The New Normal

Management Paradox

Competition

Conflict

Crisis

Stock

Unilateral

Passive/

Reactive

Collaboration

Coherence

Co-prosperity

Flow

Multilateral

Proactive/

Preactive

Level of Uncertainty

Low High

Low High

Level of Complexity

slide18

Thailand Industry Transformation:

Thriving in the New Age of Global Capitalism

  • Global Structural Change
  • Challenges & Issues Facing Industry
  • Action Agenda for Driving Change
slide19

Change in the World Economic Structure

World Economic Structure

Global GDP* %

75

Developed Countries

The Rise of the Rest

The Triad

50

Developing Countries

The Rest of the World

The Rise of Asia

25

1820

70

1913

50

73

2005

The Rest of Asia

China/India

slide20

The spending power has already shifted away from the richest countries towards a growing middle income bloc

By 2050, China and India will together, account for nearly

50% of the global GDP

slide21

The New USA

3,284 mil

(50% World Population)

12,250 bil US$

(22% World GDP)

ASEAN + 6

2,068 Mil

(31% World Population)

9,901 bil US$

(18 % World GDP)

ASEAN + 3

ASEAN

585 Mil

(9% World Population)

1,275 bil US$

(2 % World GDP)

slide22

…This can help explain the boom in consumer products such as televisions and mobile phones throughout Asia

As of 2007, India had more cell phone users than the United States, while China had twice as many

slide23

Car ownership rises as income grows

  • Automotive industry is growing at an
  • unprecedented speed in developing Asia,
  • with China, India, and the ASEAN economies
  • as the major growth markets for the Asian
  • automotive industry
  • By 2025 China could overtake the US as the
  • country with the most cars in the world—
  • around 200 million in all
  • Moreover, there will be flow-on effects across
  • the board--More cars mean more roads, more
  • demand for demand for insurance, more
  • service stations; more tourists mean more
  • aircraft, airports, customs officers, metal
  • detectors, hotels, and demand for souvenirs

Number of Cars Owed

From January through August 2009, more passenger cars were sold to Chinese consumers than to their American counterparts

slide24

Demand more and better services-- Education, Health,

and International Tourism

World Tourism is expected to

double between 2004 and 2020

  • International travel: as income increase
  • so does the incidence of leisure activities,
  • including international travel
  • Already in 2004, 20 percent of all
  • outbound tourism came from East and
  • South Asia
  • By 2020 the overall number of tourist
  • arrivals is expected to double to 1.5
  • billion, with growing share coming
  • from developing regions
slide25

The Demographical Imbalance

Developed

Countries

The

First

World

The

Second

World

The

Third

World

Developing

Countries

Aging

Society

Dynamic Young Society

slide26

Demographic Challenges & Issues Facing Thailand

Potential

supportive ratio

Shortage of Labor

7

Economic

6

5

Lower potential

supportive ratio

Socioeconomic

4

3

2

1

1:2:4

Sociological

0

2000

2020

2050

Source: Kua Wongboonsin

slide27

Four Southeast Asian countries are likely to face more severe consequences than the global average due to limited adaptive capabilities

slide28

Climate-Related Multilateral Arrangement

Mexico Accord

  • Reduction of GHG Emission by both developed & developing countries;
  • Low Carbon Development Pathway;
  • Reduction of emissions through deforestation and degradation (REDD+);
  • Copenhagen Green Climate Fund & Technology Transfer.

Emission Trading

Adaptation

Linkage to trade measures

Nationally Appropriate Mitigation Actions (NAMAs)

CopenhagenAccord

Carbon Off-shoring

Carbon Credits

Numerical targets of emission reductions

Finance

REDD+

Carbon Leakage

Sectoral Approach for Heavy Emitters - e.g. Steel, Cement, Electricity , Paper pulp …(possibly including agriculture sector)

Technology

global forces trends towards low carbon society
Global Forces & Trends Towards Low Carbon Society

Citizens

Government

Business

  • Improvement of energy
  • efficiency to reduce costs
  • Voluntary emission reduction
  • for “green” image
  • Low Carbon, Technology-
  • driven
  • Environmentally Awareness / Go Green
  • Health Concern
  • Green Growth as a new economic growth engine
  • Stricter rules on “less green” imports & provision of adaptation support to maintain competitive edge of domestic industries.

Change in consumers preferences - “Eco-buying”

Manufacturing  Services

Carbon leakage/off-shoring to developing countries??

Examples

  • Korea To become the World 7th Green Power by 2010 and 5th by 2050
  • Japan Carbon Minimization in All Sectors
  • Toward a Simpler Life Style that Realize Richer Quality of Life
  • Coexistence with Nature
  • US, UK, China, India etc.
slide30

Environmental Climate Dimension (+)

Climate Change in the Sectoral Context

Double

Winners

Beneficiaries from Climate Change

under Government Control

Construction&

Associated Sector

Tourism

Chemical

Industry

Mechanical

& Electrical

Engineering

Renewable

Energies

Building Materials,

Paper Industry

Metal Industry

Auto-

motive

Regulatory

Market

Economy

Condition

(+)

Energy Sector

(Fossil Fuels)

Textile

& Clothing

Agriculture

& Forestry

Finance

(-)

Transportation

Food

Industry

Beneficiaries from Government

Measures with Climate Risks

Double

Losers

(-)

Source: DB Research

slide31

Are Thai’s Companies still fitting in ?

Thai’s Companies ???

Green

Green

Green

Green

Global Supply Chain

thethree great waves of outsourcing
TheThree Great Waves of Outsourcing

The First

Wave

The Third

Wave

The Second

Wave

Manufacturing

Services

Food & Agriculture

The Resources Battle

--The world will demand

70 % more food by 2050, outstripping population growth

the third wave of outsourcing global land grab
The Third Wave of Outsourcing-- Global Land Grab
  • China is buying up large tracks of land throughout Africa to produce bio-fuels and food
  • Indian companies have formed a consortium to invest in corporate farming of oilseeds in Latin America, most notably Uruguay and Paraguay
  • Cash-rich Arab and Asian governments are buying up arable farmland all over the developing world
slide34

Sectoral Shift

GDPComposition (%) 2004

Source: DTN

slide35

Challenges & Issues

Agriculture

  • Offshore Farming
  • Food & Fuel Security
  • Frugal Innovation
  • Scale Out

Manufacturing

Services

  • Service as Enabler
  • Service as Infrastructure
slide36

A company as a Bundle of Competencies

System Lock-In

Best

Product

Total Customer

Solution

Source: The Delta Project, MIT

slide37

Options for Strategic Positioning

System Lock-In

Dominant Exchange

eBay

Proprietary Standard

Microsoft, Intel

Exclusive Channel

Rural Wal-Mart

Low Cost

Southwest Airlines

Horizontal Breadth

Fidelity

Best

Product

Total Customer

Solution

Redefining

the Customer

Relationship

Saturn

Customer

Integration

EDS

Differentiation

Sony Wega

Source: The Delta Project, MIT

slide38

Amazon.com

System Lock-In

Dominant Exchange

  • Just in time procurement
  • No sale tax
  • Very small return rate
  • The broadest
  • discounters in the world
  • Proprietary computer
  • systems
  • Information broker
  • between publishers
  • and readers

Low Cost

Horizontal Breadth

  • More than 1
  • million titles

Best

Product

Total Customer

Solution

  • Virtual bookstore
  • Massive books
  • and information

Differentiation

Customer

Integration

Redefining

the Customer

Relationship

  • 24/7 availability
  • Book review and Recommendations
  • Eyes & Editors (personalized services)
  • Associate
  • Program

Source: The Delta Project, MIT

slide39

Thailand Industry Transformation:

Thriving in the New Age of Global Capitalism

  • Global Structural Change
  • Challenges & Issues Facing Industry
  • Action Agenda for Driving Change
slide40

Vision-Action Gap

  • Mindset
  • Skill Set

Liquid Set

  • Governance Structure
  • Institutional Framework
  • Capacity Building
  • Operating Models

Solid Set

Solid State

Liquid State

thailand s trade industry architecture
Thailand’s Trade & Industry Architecture

Trade & Industry Policy

Agriculture

Market

Access

Manufacturing

Capacity

Building

Market

Penetration

Global Dynamics

Services & Tourism

Market

Facilitation

Enabling Infrastructure

slide42

Regionalization of Thai’s Industry

Production

Service

Resource

Singapore

Thailand/ Malaysia/ Indonesia/ Philippines/Vietnam

  • Rubber
  • Automotives
  • Tourism and Aviation
  • Fashion
  • Food
  • Education
  • Logistics/Transportation
  • Agriculture and Fisheries
  • Wood
  • ICT and Healthcare
  • Electronics
  • Financial Services
  • Energy
  • Construction

Brunei

Cambodia

Laos

Myanmar

slide43

Thailand as a Regional Hub

Cultural Tourism

Jewelry: THA,MYN,CAM

Land Transportation: THA,MYN,

LAOS,CAM,VIET,MAL,SING

Food & Restaurant: THA

Textile

Automotives

Rubber/

Leisure Tourism

Aviation/

Education/

Healthcare

using aec as a stepping stone to enhance thailand competitiveness in the global markets
Using AEC as a stepping stone to enhance Thailand competitiveness in the global markets
  • The US/Canada
  • Western Europe
  • Japan/South Korea
  • China/India
  • Russia
  • Argentina/ Brazil/ Chile
  • Mexico
  • South Africa

Advanced Countries

Dynamic

Countries

AEC

Emerging Countries

  • African Countries
  • Middle East

Thailand

the new market space
The New Market Space

Advanced

Developing

Frugal Innovation

Under-developing

Scale Out

Upper

Middle

Lower

industry space the convergence of human technology
Industry Space: the Convergence of Human & Technology

Sector

Business

Level

Product

Agriculture

Manufacturing

Services

Industry

the new division of labor
The New Division of Labor

Competencies

Markets

Products

Ministry of Industry

Ministry of Commerce

  • Sector Development
  • Business Development
  • Product Development
  • Market Access
  • Market Penetration
  • Market Facilitation
industry space the convergence of human technology48
Industry Space: the Convergence of Human & Technology

Sector

Level

Business

Product

People

Agriculture

Manufacturing

Services

Private

Industry

Public

Partnership

slide49

Transforming towards a Balanced Industry Portfolio

Economic

Wealth

Environmental

Wellness

Economic

Wealth

Environmental

Wellness

Social

Well-beings

Human

Wisdom

Social

Well-beings

Human

Wisdom

slide50

Economic Wealth

  • Profitability
  • Return on investment
  • Growth
  • Customer satisfaction & retention

Rebalancing Capacity

Environmental Wellness

  • Resource/ energy use
  • Waste management practices
  • Water & air quality
  • Integrity of supply chain
  • Compliance with standards

Economic

Wealth

Environmental

Wellness

Social Well-beings

  • Labor Practices
  • Maintenance of human rights
  • Impact on the Communities
  • Taking responsibilities for products

Human Wisdom

Human

Wisdom

Social

Well-beings

  • Human value
  • Human creativity & value creation
  • Intellectual independence
  • Individual autonomy
  • Free culture
slide51

Balanced Industry Portfolio

Environmental

Centric

Industries

Economic

Centric

Industries

Human

Centric

Industries

Social

Centric

Industries

  • Manufacturing
  • Alternative
  • Energy
  • Recycle
  • Business
  • Creative
  • Economy
  • Service
  • Industries
  • Knowledge
  • Industries
  • OTOP
  • BOP
  • Social Production
  • Peer Production
  • Distributed
  • Creativity

Resource

Spending

Content

Resource

Saving

Content

Knowledge/

Creative

Content

Social

Content

Efficiency

Sustainability

Creativity

Co-Prosperity

strategic engagement
Strategic Engagement

Environmental

Centric

Industries

Economic

Centric

Industries

Sector

Level

Business

Product

People

Agriculture

Manufacturing

Services

Private

Industry

Human

Centric

Industries

Social

Centric

Industries

Public

Partnership

slide53

New World Order uncovers new sources of legitimation and options for action for states and civic movements

Public Private

Partnership

Civil Society

Multilayer

Polycentric

Network

Governance

Third

Sectors

Nation-

State

Social

Enterprises

slide54

Global Reaches, Local Links

Cluster

of Province

Province

Village

Global

Regional

Social

Cohesion

Internalization

International

Competitiveness

Internationalization

slide55

Industry Pyramid

MOP

TOP

BOP

Agri.

Manu.

Serv.

Sect.

Bus.

Prod.

Public

Private

People

slide56

Industry Optimization

Equity

Agri.

Manu.

Serv.

Sect.

Bus.

Prod.

Equality

Public

Private

People

slide57

The New Strategic Thrusts

Prosperity

Return

Performance

Macro

Legitimacy

Responsibility

Security

Risk

Compliance

Micro

slide58

Gearing towards the Philanthro-Capitalism

Corporate

Social

Responsibility

Corporate

Social

Entrepreneurship

Global

Corporate

Citizenship

Corporate

Philanthropy

Corporate

Governance

Source: Global Corporate Citizenship, Klaus Schwab

slide59

A Set of Reform Initiatives

  • Alternative Model of
  • Global Capitalism
  • International Legitimacy

Regimental Reform

  • Social Inclusion
  • Socio Economic Security
  • Social Empowerment
  • Social Cohesion

Cultural

Reform

Institutional Reform

  • National Ideologies
  • People Empowerment
  • Education
  • New Social Contract
  • Economic Transformation
  • Social Protection
  • Community Building

Instrumental

Reform

  • Land
  • Tax
  • Welfare
  • Infrastructure
slide60

Every morning in Africa, a gazelle wakes up.It knows it must run faster than the fastest lion or it will be killed.

Every morning a lion wakes up.It knows it must outrun the slowest gazelle or it will starve to death.

It does not matter whether you are a lion or a gazelle.

When the sun comes up, you had better start running.

African Proverb

slide61

“If You want to go quickly,

go alone;

if you want to go far,

go together.”

African Proverb

slide62

“It is not the strongest of

the species that survive,

nor the most intelligent,

but the one most responsive to change.”

Charles Darwin