futurizing thailand suvit maesincee april 10, 2003

Futurizing Futurizing ThailandThailand

Suvit MaesinceeApril 10, 2003


Looking Looking BackwardBackward

Thailand Thailand At the At the

CrossroadCrossroad

The New The New Competitive Competitive ParadigmParadigm

The New The New Competitive Competitive LandscapeLandscape

Looking Backward: Was There a New Economy?

The First New EconomyThe First New Economy

The Second New EconomyThe Second New Economy

The Third New EconomyThe Third New Economy

The Fourth New EconomyThe Fourth New Economy

1789-1815

Late 1840s-Early 1870

1890-1920s

After WWII-1993

Industrial revolution

The great railroad expansion

Basic technology growth of telephony and electrification

Massive industrialization and economic reconstruction

Source: Roger Cass

• 51 of the 100 Largest Economies in the World are

Now Corporations

--General Motors is bigger than Norway

--Ford is larger than Saudi Arabia

--Japanese Mitsui is bigger than Ireland and New

Zealand combined

• One Third of the World Trade Now Comprises

Inter-company Transactions

• While Countries are Fragmented and Getting Smaller,

Corporations Are Consolidating and Getting Bigger

The Specialization and Integration of Firms

Make It Possible to Increase Aggregate Wealth

New market

offerings Mass production

process

Low cost, consistent

quality, standardized

products

Servinghomogeneous

market

Long product cycles

Stable demand

Long product development

cycles

They Were Based on the Mass Production Paradigm

• Scale• Standardization • Replication • Efficiency • Hierarchy

Critical Driver

Over Over CapacityCapacity

Mass Market Mass Market ParadigmParadigm

Scale Driven Scale Driven EconomyEconomy

Tragedy of Tragedy of the Commonthe Common

Over Over InvestmentInvestment

The Consequence

Industry Rationalization and The Emergence of Global Deflation

IndustryIndustryRationalizationRationalization


HyperHyperCompetitionCompetition

• # of mergers per year in the US has more than tripled over the past decade, while the value of those mergers has risen tenfold

• During 1997-2000, nearly $5 trillion in mergers took place in the US alone

19901991199219931994199519961997199819992000

2,0741,8772,5742,6632,9973,5105,8487,8007,8099,2789,602

108.271.296.7

176.4226.7356.0495.0657.1

1,192.91,425.81,395.5

#Transactions Value (in $ billion)

Mass Market Mass Market ParadigmParadigm







CrossroadCrossroad



Is There a New Economy?

The First New EconomyThe First New Economy

The Second New EconomyThe Second New Economy

The Third New EconomyThe Third New Economy

The Fourth New EconomyThe Fourth New Economy

The Fifth New Economy

1789-18151789-1815

Late 1840s-Late 1840s-Early 1870Early 1870

1890-1920s1890-1920s

After WWIIAfter WWII-1993-1993

1993-2020

Industrial RevolutionIndustrial Revolution

The Great railroad expansionThe Great railroad expansion

Basic technology growth of Basic technology growth of telephony and electrificationtelephony and electrification

Massive Industrialization and Massive Industrialization and Economic ReconstructionEconomic Reconstruction

• Communication technology • Globalization of production and consumer markets

Source: Roger Cass

Complexity of Dialog Supported

One To One One To Many Many To Many

WritingWriting

PrintingPrinting

TelegraphTelegraph

TelephoneTelephone

FaxFax

RadioRadioTelevisionTelevision

InternetInternet

Source: Forth Generation R&D

The Evolution of the Mass Media

The New Communication Platform

• Individuals are interacting with the media to work things out

• It is about using the media in an active way, to form and revise our mental models

Tim

e

Industries and Businesses Are Buzzing With Changes

• Economic globalization results from recent revolutions in technology, information, trade, FDI, and MNCs

• Economic life takes place on the global scale, but human identity remains national

• The emergence of global lifestyles, global consumers, global products (e.g., Hollywood movies, pop music, Coca Cola, McDonald’s)

• A vast array of international and trans-governmental institutions and networks setting up the international governance structure and institutional framework

Globalization

Economic Globalization

Cultural Globalization

Political Globalization

Industry Based EconomyIndustry Based Economy

‘Make and Sell’ ‘Sense and Respond’

‘Goods for Elites’ ‘Goods for Everyone’

‘Mass Market’ ‘Markets of One’

‘Owning Assets’ ‘Gaining Access’

‘Corporate Governance’ ‘Market Governance’

‘Just in Time’ ‘Real Time’

‘Local Economy’ ‘Global Economy’

‘Asymmetry of Information’ ‘Democratization of Information’

‘Economics of Diminishing Returns’ ‘Economics of Increasing Returns’

Knowledge Based EconomyKnowledge Based Economy

The Major Shifts

The Major Changes

Source: Consumer Evolution

How we How we perceive time perceive time

and spaceand space

Revolutionary Revolutionary communication communication

technologytechnology

A shift in our A shift in our mental mental energyenergy

Changes Changes our our

behaviorbehavior

How we How we organize our organize our businessesbusinesses

How we How we structure ourselves structure ourselves

to interact to interact with otherswith others

The Way We Communicate

What and How We Know

What We Believe

What and How We Do

Physical

Emotional

Rational

Value Creation

Industry EconomyIndustry Economy Knowledge EconomyKnowledge Economy

Scarcity

Content

Given

Connectivity

Context

Created

Source: Consumer Evolution

We Are Coping With ‘Nanosecond Culture’

• There are a new patent issued in the US every

3 minutes• One hundred twenty-five new products arrive

in supermarkets every weekday

• Technology has always put us within reach,

anywhere, any time, and in multiple ways

• Most of the radical changes are

‘Intra-Generation Changes’• We have discovered how to learn as we go• From uncomfortable with change to

accustomed to big changes

Instance Instance

Obsolescence Obsolescence

Infinite Infinite

ReachReach

Intra-Generation Intra-Generation

ChangesChanges

Oxygen Bar

Organic Food Store

Natural Therapy Shop

Oriental Chinese Boutique

Buddhism Alternative Medicine

Alternative Therapy

Cooking/Painting Classes Natural Beauty Treatment

Zakka Boom

Exploring Local-Contemporary designed products

Exotic Boutique Hotels

Emerging Value

Source: Leo Burnett

People Make Up Their Own Life Stories Instead of Following Traditional Patterns

The Art of Living

The Age of Singularity

Source: McKinsey Quarterly

65% 66%

81%

% Share of Combined Advertising Spend

Geographic Media

Demographic Media

SingularMedia

• Radio• Newspaper• Yellow Pages

• Magazines• Broadcast TV

• Internet• Cable TV• Direct mail

The Alternated Consumers

• 68% research online, buy in store

• 54% research in store, buy online

• 47% research by catalog, buy online

• 38% research online, buy over phone

Source: Jupiter Research/NFO, May 2000, American Demographics, Dec 2000

Time to Mass Market

No.

of

Yea

rs

60

50

40

30

20

10

01860 1880 1900 1920 1940 1960 1980 2000

Auto

Electricity

Phone

Radio

TV

VCR

Microwave

PCCell Phone

WWW

The Adoption Rate Has Been Speeded Up

The Compression of PLCR

even

ue

Time

SalesSales

ProfitProfit




CrossroadCrossroad



Strategic Gap II“Our Competitive Position in the Global Economy”

Strategic Gap I “Get out of the Crisis”

Challenges Facing Thailand

HIGH PERFORMANCE

ECONOMY

CURRENTECONOMY

- 10

- 5

0

5

10

15

Q1/43 Q2/43 Q3/43 Q4/43 Q1/44 Q2/44 Q3/44 Q4/44 Q1/45

ThailandMalaysia

Singapore

South Korea

TaiwanHong Kong

%20002000 2002200220012001

GDP Growth

Thailand Has Relatively Outperformed in Recovering Its Economy From the Crisis

Source: Ministry of Finance

Short-term Loans

12,000

14,000

16,000

18,000

20,000

Q1 2000 Q1 2001 Q1 2002P

Mil US$

International Reserve

30,000

32,000

34,000

36,000

38,000

40,000

Jan. 43 Jan. 44 Jan. 45

Mil Bht

External Public Debt

19,800

20,000

20,200

20,400

20,600

Sept. 43Sept.44Sept.45

0

20

40

60

80

2000200120022003200420052006200720092010

%Public Debts/GDP

13,489

38,500

41.759.2

33,154

14,545

20,449 20,420

20,055

58.0

Mil US$

As Shown By Many Key Indicators….

However, While the First Strategic Gap Gets Closer and Closer, the Second One Gets Wider and Wider

Strategic Gap II“Our Competitive Position in the

Global Economy”

Strategic Gap I“Get out of the Crisis”

Can Thailand Compete in the New Competitive Landscape?

World Economy

Thai Economy

Industry BasedEconomy

Knowledge Based Economy

?

Resource and Labor Intensive

International Division of Labor

Investment Driven

Mass Customization Critical Mass Knowledge Intensive Economies of Skills Economies of Speed

Mass Production Standardization Capital Intensive Economies of Scale Economies of Scope

Gro

wth

in Im

po

rt S

ha

re

Growth in Export Share

Source: WTO International Trade Statistics 2001

- 1

0

1

2

3

4

- 1 1

US

ChinaIndia

Vietnam

Philippines

Malaysia/IndonesiaThailandThailand

Singapore

Japan

EU

Our Level of Internationalization

5

q1/ 96

q1/ 9

7

q1/ 9

8

q1/ 99

q1/ 0

0

q1/ 01

q1/ 0

2

Export Price Index

Export Volume Index

-13.8

8.8

17.1

-9.2

Baht Devaluation

Our Export Performance

Source: Ministry of Finance

Correlation of Structure of Manufacture Export

Our Major Competitors

Source: Lall et al (1999)

China

China

Hong Kong

Hong Kong

Indonesia

Indonesia

South Korea

South Korea

Malaysia

Malaysia Philippines

Philippines

Singapore

Singapore

Thailand

Thailand Taiwan

Taiwan

1

0.59

0.35

0.21

0.17

0.35

1

0.31

0.20

0.570.57

0.40

0.43

0.44

0.51

0.36

0.540.54

0.17

0.18

0.21

0.07

0.210.21

0.09

0.10

1

0.66

0.66

0.520.52

0.64

0.73

1

0.74

0.590.59

0.67

0.82

1

0.580.58

0.56

0.62

1

0.81

0.700.70

1

0.76

11

1

• Lack of Focus• Lack of Differentiation

Share in World Foods Export

1.3

2.12.4

Thailand VS. China

1.4

2.5

3.1

Top Three Share

32.2 32.3

26

1980 1990 2000

USA

France

Netherlands

1980 1990 2000

More for Less

Rice World Rice World Market ShareMarket Share

20002000

Thailand USA Vietnam India China Pakistan

24.9

12.710.2 10.0 8.8 8.1

$US/Metric Ton$US/Metric Ton

-12.9

-87.8 -91.4

-15.2

25.8

147.9

X = 279.7_

Rice Rice ProductivityProductivity

6.66

Japan

6.35

China

4.26

Vietnam

Indonesia

4.25

Bangladesh

3.593.24

Brazil

3.19 3.17

Philippines

Myanmar

India

2.962.57

Thailand

Lev

el o

f In

dust

ry A

ttra

ctiv

ene

ss

• Foods• Garment • Jewelry

• Metals• Petrochemicals• Machinery

HighLow

Thai Producers’ Competitiveness

Low

H

igh

• Leather• Electronics• Autos

• Rubber• Wood Products • Pulp & Paper

• Plastics• Ceramics & Glass• Chemicals

Thai Manufacturing Sector’s Competitive Position

Cluster III

Cluster II

Cluster I

% L

oc

al C

on

ten

t

% Export Share

• Frozen Shrimp80

60

40

20

1 2 3 4 5 6 7 8 9 10 11 12

• Frozen Chicken

• Apparel

•

• Precious Stones

• JewelryFabric,Woven

• Footwear

Passenger Car

• Pick Up•

• Computer Equipment

13

•

Electric Appliances

Zooming in the First Cluster

Le

ad

ers

Te

ch

no

log

ya

nd

De

sig

nF

ollo

we

rs

Low Cost

Competitive Advantage

Differentiation

Italy (2)

China (1)

Thailand (11)

Design /differentiation

basedcompetition

Low Cost-basedcompetition

Competitive Nutcracker: Apparel

Hong Kong (3)

Top ThreeTop Three

15,60015,700

16,400

18,500

1,044 1,080 1,105 1,259

ThailandThailand

ChinaChina

ItalyItaly

Hong KongHong Kong

1997 1998 1999 2000

Thai Service Sector’s Competitive PositionL

eve

l of I

ndu

stry

Attr

act

iven

ess

HighLow

Thai Producers’ Competitiveness

Low

• Distribution• Financial Services• Transports

• Business Services • Communications• Environmental Management

• Construction & Engineering• Education• Health & Social• Tourism &Travel• Recreation, Culture, Sporting

Hig

h

The World Top 15 Tourist Destination

# of Tourist Arrivals(Mil)

Receipts (Bil.$US)

30

45

60

75

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

• •

•

•

• •

• • • • • •

• • • •

France

Spain

Italy

USA

UKChina

GermanyRussia

ThailandGreeceHong Kong

MexicoCanadaAustriaPoland

Hungary20

The World Top 25 Tourist DestinationGrowth in # of Tourist Arrivals(%)

Growth in Receipts (%)

20

30

35

-15 -10 -5 0 5 10 15 20 25 30 35 40 45 50

• •

•

•

•

•

•

•

•

•

• •

•

• FranceSpain

Italy

USA

UK

China

Germany

Malaysia

Thailand

Hong Kong

MexicoCanada

Austria

Turkey

25

10

15

-5

0

5

40

Food

Hong KongHong Kong

Soft Adventure

MalaysiaMalaysia

Asia’s Best Cities

Rank

Source: Asiaweek, Dec 15, 2000

City Country

12344....

FukuakaTokyo

SingaporeOsakaTaipei

.

.

.

.

JapanJapan

SingaporeJapan

Taiwan....

KaohsiungChiangmai

MacauShanghai

BeijingBangkok

TaiwanThailand

ChinaChinaChina

Thailand

121314151617

Asia’s Top Brands

Rank Brand Category Origin

1 Singapore Airline Airline Singapore

2 Speedo Apparel Australia

3 Shangri-La Hotel Hospitality Hong Kong

4 Lee Kim Kee Food and Beverage Hong Kong

5 Foster’s Alcoholic Beverage Australia

6 Qantas Airline Australia

7 Sound Blaster I/T Singapore

8 Acer I/T Taiwan

9 Star TV Media Hong Kong

10 Cathay Pacific Airline Hong Kong

11 Mandarin Oriental Hospitality Hong Kong

12 Thai Airway Airline Thailand

Note: Not include JapanSource: Paul Temporal

The Silent War

Mass Market Mass Market Competitive Competitive

ParadigmParadigm

MassMassCustomizationCustomizationCompetitive Competitive

ParadigmParadigm

New market

offerings

Customization,customerization,

and personalization process

Low cost, high

quality, customized

products

Servingheterogeneous/

individual markets

Shortproduct cycles

Dynamicdemand

Short product development

cycles

Level of Customization

Lev

el o

f S

op

his

tica

tio

n

High Tech

Low Tech

Low Touch High Touch

Creative Industry Landscape

Video GamesVideo Games AdvertisingAdvertisingArchitectureArchitecture

ArtArt

CraftCraft

DesignDesign

FashionFashion

FilmFilmMusicMusic

Performing ArtsPerforming ArtsPublishingPublishing

R&DR&DSoftwareSoftware

Toys and GamesToys and Games

TV and RadioTV and Radio

The Emergence of Creative Industry

Sector Global US UK

AdvertisingArchitecture

ArtCraft

DesignFashion

FilmMusic

Performing ArtsPublishing

R&DSoftware

Toys and GamesTV and Radio Video Games

4540

920

14012577040

50654548955

19517

2,240

2017

42

505

1725

71372433252182

5

960

8231

271362

162156

281

157

Billion $US, 1999

• Demand not Supply

• Creativity not Capital

• Entrepreneurs not Professionals

• Time not Space

• Speed not Scale

The Shortage In the Creative Economy Falls In the Areas of

The Paradigm Lost




Shortage of Shortage of DemandDemand

IndustryIndustryRationalizationRationalization


HyperHyperCompetitionCompetition

Mass Market Mass Market Competitive Competitive

ParadigmParadigm

MassMassCustomizationCustomizationCompetitive Competitive

ParadigmParadigm

Creativity Creativity Driven Driven

EconomyEconomy

New New Competitive Competitive Playing FieldPlaying Field

ParadigmParadigmLostLost

Strategic Traps

More More for Lessfor Less

CompetitiveCompetitiveNutcrackerNutcracker

ProfitlessProfitlessGrowthGrowth

World Market Share

Co

mp

etit

ive

Po

siti

on

Low High

Str

on

gW

eak Ditcher

Our Current Competitive Position

CURRENT ISSUES AND CHALLENGES

Lo

w

High

Operational efficiency

LowPol

icy

effe

ctiv

enes

s

Hig

hL

ow

High

Productivity

Low

Inno

vativ

enes

s

Hig

hL

ow

High

Competitive Advantage

LowCom

par

ativ

e A

dvan

tage

Hig

h

Government

Business

Citizen

Government Expenditure 1997-2001

Fiscal Year

Fixed Expense

Public Investment

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1997 1998 1999 2000 2001

Mil Bht

Our Budgeting Constraint

International Comparison of R&D Investment

Our Investment for the Future Are Significantly Low

Source: Thailand Economic Monitor, June 2000

0

2.0

1.0

1.5

0.5

2.5

3.5

3.0

USAJapan Korea MalaysiaTaiwan Singapore Thailand

Gaps in Science and Technology (At Current Level of Demand)

We Still Deal With a Wide Manpower Gap in Science and Technology

Source: Lall (1999), Raising Competitiveness in Thai Economy, Country Employment Policy Review, ILO.

M.Eng /D. EngB. Engineering B. Science MS/DS

4,520

10,963

5,874

7,015

180541

(113) (352)

1996

2001

...So We Cast Doubt on Our Ability to Compete

High

Singapore

IrelandThailand

Philippines

IndonesiaChina

France

GermanyUK

India

USA

High

Low

LowEntrepreneurial Capabilities

• Number

• Quality

HR Capabilities

• Number

• Wages

• Skills

Source: Nasscom 1999

Software Industry

The Catalysts for Future Growth Such As Venture Capital Have Lagged Behind Its Competitors

Singapore

Hong Kong

USA

India

Japan

Malaysia

Australia

Vietnam

South Korea

USA

Taiwan

HK/China

Singapore

Thailand

Indonesia

Philippines

South Korea

Australia

PR China

Taiwan

Indonesia

Philippines

Thailand

Malaysia

Venture Capital Assets Under Management (% of GDP)

0.10 0.21

9.173.16

1994 1999

The Same Is Also True for the Incubator Businesses

Incubator Growth

4,000 1,000

US

Germany

E. Europe

UK

France

India

Australia

Canada

Israel

Scan-dinavia

Japan

Thailand

Africa1980 1985 1990 20001995 2005

Incubator by Region/Country

Source: Incubators

Telecommunications Productivity

Our ICT

TFP31-57

Labor Productivity

34-51

Capital Productivity

30-60

Lines/Employee

64

Network Utilization

53-79

Subscribed lines/Unit of Investment

56-76

Installed lines/Unit of Investment

73-100

Subscription Rate76

Index of US (1999) =100; Thai data 1999Source: =McKinsey

+

X

X

X

Thailand’s Current Technology Position

Technology Achievement Index

Leader

FinlandUSSwedenJapanKoreaNetherlandsUKCanadaAustraliaSingaporeGermanyNorwayIrelandBelgiumNew ZealandAustriaFranceIsrael

PotentialLeader

SpainItalyCzechHungarySloveniaHKSlovakiaGreeceBulgariaPolandMalaysiaCroatiaMexicoCyprusArgentinaRomaniaCosta RicaChile

Dynamic Adopter

UruguaySouth AfricaThailandPanamaBrazilPhilippinesBoliviaChinaColumbiaPeruJamaicaIranIndonesiaIndiaSri LankaAlgeriaEgypt

Maginalized

PakistanSenegalNicaraguaGhanaKenyaSudanTanzania

Thailand At the Crossroad

First SphereFirst Sphere

Second SphereSecond Sphere

Third SphereThird Sphere

Political Disorder Mature/Stable Liberal Democracy

Mature/Stable Market Economy

Stagnant/ChaoticEconomy

•ThailandThailand

• SingaporeSingapore

• South KoreaSouth Korea• VietnamVietnam

• PakistanPakistan

Source: Tanaka Akihiko




CrossroadCrossroad



From a Ditch to a Niche

World Market Share

Co

mp

eti

tive

P

osi

tio

n

Low High

Strong

Weak

Nicher

Ditcher

Four Strategic Thrusts

Cultural Based Competition

Value Based Transformation

Cluster Based Configuration

Global Local Integration





Strategic

Thrusts

Globalization is turning the world into a gigantic

supermarket where nations are nothing more than

products on the shelf, frantically trying to attract the

attention of each passing consumer

Source: Simon Anholt

Germany

France

Italy

Britain

Japan

USA

Engineering Culture

Chic Culture

Sexy Culture

Heritage Culture

Technology Culture

Youth Culture

Culture as the Root of Competency

Cultural OrientationCultural OrientationCountryCountry

Thailand Human Touch

Our Flagship Products

Finland

Switzerland

Ireland

Scotland

India

Singapore

Mobile Phone

Pharmaceuticals; Tourism; Foods; Watches

Wireless Technology

Whisky; Biotechnology; Energy

Software; Talents

Professional Services; Regional Financial Center

Source: Moving the Nation by Dr. Suvit Maesincee

Thailand

Lev

el o

f S

op

his

tica

tio

n

High Tech

Low Tech

FoodsFoods TourismTourism

FashionFashion

SoftwareSoftware

Auto industryAuto industry

Level of Customization

Low Touch High Touch

Potential Global Niches

Cultural Cultural InfluenceInfluence

Cultural Cultural InfluenceInfluence

Craftsmanship Craftsmanship SkillsSkills

Peace of MindPeace of Mind

Delicate LivingDelicate Living

Flavorful SenseFlavorful Sense





Strategic

Thrusts

Value addedValue addedPotentialsPotentials

Focus of Focus of Thai ProducersThai Producers

A Nation Orientating Toward a Knowledge Driven Platform Will Consider Outsourcing Much of Its Capital Intensive Production Related Processes

Production MarketingR&D

Production Marketing

Low Cost LeadersLow Cost Leaders

DifferentiatorsDifferentiators

...And Freeing up Capital to Focus on the Parts of Their Industries That Can Be Globally Differentiated

Knowledge based companies will focus on building brand, capturing ‘ownership’ of the customer, end market leadership and investing in knowledge-based core competencies

R&D

Value Created

Dollar

Value

CostCost

PricePrice

Profit

Profit Increases With Value Created

Thai

Testing and Support

Coding

Low-Level Design

High-Level Design

Requirement Analysis

Conceptualization

Ireland

Israel

India

Example: Software Industry Value Created

More for Less

More for More

Less for More

Source: Software Park

1948-1970Self Sufficient

1970-1980Export Agricultural

ProductsProductivity Improvement

1980 upExport Know-How

and Technologies

Exp

ort

Lo

cal

Co

nsu

mp

tio

n

Value addedValue added

Agricultural Output

‘000 ton 1967 1982 Growth

Vegetable 70 165 6%

Citrus fruits 98 160 3%

Other fruits 30 80 7%

Field crops 30 60 5%

Beef 10 40 10%

Source: Israel Ministry of Agriculture and Rural Development

Example: Israel’s Agricultural Industry

Upgrading Our Entrepreneurs From Being Subcontractors to Being Brand-Owners...

Mar

ket

Product

OEM

Loca

lR

egio

nal

Glo

bal

ODM OBM

Fly

No

wF

ly N

ow

Pen

a G

rou

pP

ena

Gro

up

Sen

ada

Sen

ada

AII

ZA

IIZ

Apparel AvenueApparel Avenue

Heart & MindHeart & Mind

KaritaKarita

Toffy BoutiqueToffy Boutique

X-ACTX-ACT DapperDapper

Thai Fashion DesignThai Fashion Design

To Reap More Value Added and Growth Potentials

OBMOBMODMODMOEMOEM SHOP BRANDSHOP BRAND

10-35%

35-40%

50-75%

75-90%FashionFashion BusinessBusiness ValueValue SystemSystem

Transforming from Investment Driven to Knowledge Driven Platform

Investment Driven Platform

Job Creation

Wealth Investment

FinancialCapital

Physical infrastructure as an enabler

ICTas an enabler

ConstructiveEnvironment

Talents

Value Created

Knowledge Driven Platform

Wealth





Strategic

Thrusts

Clustering Clustering DevelopmentDevelopment

Knowledge Driven PlatformKnowledge Driven Platform

Emerging

Extending

“Lift-off”

A Cluster Provides a Conducive Platform for the Creation, Diffusion, Adoption and Interaction of Innovation

Creation

DiffusionInteraction

Innovation CycleInnovation Cycle

Adoption

Pro

cess

Rel

ated

Market Related

Local

Loca

lN

atio

nal

Inte

rnat

iona

l

National International

Rural Enterprises

FamilyEnterprises Traditional

Subcontractors

Industrial Districts

Medium SizedNiche Enterprises

SME Networks

Global Subcontractors

Source: Bianchi and Tommaso

Most of Thai Industry Clusters Are Still in the Emerging Stage

ClusteringFormation

Physical Capital

Human Capital

Social Capital

Financial Capital

ConnectivityInteractivity

Key Success Factors For Clustering Formation

Creativity Liquidity

Co-Prosperity

Making Thailand Globally AttractiveCharacteristics Old New

Labor Low cost, unskilled Quality, Higher skilled

Low tax, low service Modest tax, high service

Least cost production, cheap land and labor

Value-added adaptable labor force, professionals

Housing and Transportation

Culture, recreation, museums, shopping, airport

Availability Quality Schools

Not Key Quality schools and research facilities

Minimum Compatible quality of life and business flexibility

Cost/Availability Dependability/reliability

Assumed Technology access

Aggressive chamber of commerce

Partnership

Tax Climate

Incentives

Amenities

Schools

Higher Education

Regulation

Energy

Communication

Business

Source: Kotler, 1999

Strategic

Thrusts





Leveraging Geographical Collaborative Network

Local Local LinksLinks

Interregional Interregional BondsBonds

Global Global ReachesReaches

DomesticDomestic TiesTies

The New Geopolitical Equation

Thailand• US

• Japan

• Europe

• India

• Russia

• China

Existing Triad

New Triad

• Japan

• Korea

• ChinaASEAN +

3

Regional Development Strategy

Greater Maklong Sub-region

Source :Marketing of the Nations

• Population 4 millions

• 90,000 SMEs covering 40%

of employment

• Stand alone and subcontractors

SMEs

• Supporting infrastructure:

transports, research center,

financial institutes, university,

laboratories

• Gain advantages of economies of

specialization

• Export-oriented and has capacity

to respond to market changes

and compete globally

Key Features

Emilia-Romagna

Northern Italy

Exam

ple

ATSME

CCC

Northern Network of Service Providers for SME

NOHMEX

FTI

IPC1

NSTDA

NNSPSMENNSPSME

CMU

Service Provided

Information FinanceTrainingMarketing

• Investment Advisory Services

• Business Management Training

• R&D for SME• Market Information• Product Design• Trade Fair

• Financial Advisory Service• Financial Support Service

Community-RegionalCommunity-RegionalTradeTrade

Community-GlobalCommunity-GlobalTradeTrade

Inter-CommunityInter-CommunityTradeTrade

Intra-CommunityIntra-CommunitySelf-SufficiencySelf-Sufficiency

SurplusSurplus

SpecializationSpecialization

Local Links Global Reaches

Social Cohesion

International Competitiveness

Efficiency Cost effective Productivity Innovation

Sufficiency Community Building Cultural Identity Family Value

Final Word

Talent

Conducive Environment

Value Created

Wealth

Job-Wealth Cycle

Job

Wealth Investment

Capital

Knowledge Wealth Cycle

Higher Education Agenda

Source: Modified from Plowing the Sea

• System thinking, results form mental models• Integrative, interdisciplinary approaches• Team oriented

• Create wealth through innovation and distribute to most productive people• Law and regulatory framework as enabling investment in innovation• Informal producers increasingly integrated

The Old Direction A New Direction

Social Capital

Human Relations

• Paternalistic• Hierarchical organizations• Individual oriented

• Trust oriented• Interdependent• Meritocratic• Team oriented

Human Capital

• Labors and managers are fungible• Viewed as input costs• General education

• Source of competitive advantage• Source of increasing return on inv.• Education as specialized, focused

Learning

• Linear learning, results form strategy choices and organizational design (single loop learning)• Reductionist strategies• Technical and compartmentalized

Justice and Social Equity

• Redistribute finite wealth• Law and regulatory framework as constraints• Informal producers are marginalized

New Direction of Investment in Human and Social Capital

Value addedValue addedPotentialsPotentials

Focus of Focus of Thai ProducersThai Producers

Strategic Focus

Production MarketingR&D

Community-RegionalCommunity-RegionalTradeTrade

Community-GlobalCommunity-GlobalTradeTrade

Inter-CommunityInter-CommunityTradeTrade

Intra-CommunityIntra-CommunitySelf-SufficiencySelf-Sufficiency

SurplusSurplus

SpecializationSpecialization

Strategic Coverage

Social Cohesion

International Competitiveness

Efficiency Cost effective Productivity Innovation

Sufficiency Community Building Cultural Identity Family Value

Innovate or Die

futurizing thailand suvit maesincee april 10, 2003

Documents

new economy

new competitive paradigm

new zealand

overinvestment slide

consequence slide

backward thailand

roger cass slide

aggregate wealth slide