CP E-News International Edition

June 2013 Volume. 03

The Family Business – Lessons from My Father By: Mr. Supachai Chearavanont, President and CEO of True Corporation PCL

“In business,

News Update

experience is

CP All

the best education”

shareholders approved acquisition of Siam Makro

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CP Indonesia sets USD 206 million investment for 2013

From left : Mr. Dhanin Chearavanont, Chairman & CEO of Charoen Pokphand Group and Mr. Supachai Chearavanont, President and CEO of True Corporation PCL

 Experience is the best education

Going back in time to my days at university, I was very much focused on studying engineering. I had already planned to continue my studies in Masters of Business Administration (MBA) and had gone to my father (Mr. Dhanin Chearavanont, Chairman & CEO of Charoen Pokphand Group) for advice. My father asked me what will you do when you graduate and when I replied I would probably go into business, he said then I should study business. So I asked him further if I should study a Master’s degree and he said that there was no need because ‘in business, experience is the best education’. Since I was a child, I was taught not to choose where I would work. Even though I graduated from finance in 1989, my interests were in the financial and property development sector. However, when the opportunity to join a new enterprise like our telecommunications came, I decided to join because the industry gave me great interest and I wanted to become a pioneer. Thus, my first step to become a telecom executive began.

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True Corporation helps initiate Thailand’s first long distance health care service called ‘Happy

District’

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 Utilize ‘technology and branding’

My father was the 9th child born next to the Samphantawong Temple. From my memories, my father was a very hard working person who would tell us stories about our grandfather (Chia Ekchor) who founded the seed store ‘Chia Tai’ which was where the Charoen Pokphand Group originated from. He told us that our grandfather, who had brought vegetable seeds to sell in Thailand, was actually one of the first to use ‘product packaging’ (my father and his siblings helped fold and glue the packaging) as well as apply an expiration date. What my grandfather was trying to teach us was to value integrity and to be thoughtful of others which meant that ‘customers deserve the best quality products’. If our customers received substandard products, it would mean that their whole farming season would be ruined because their seeds wouldn’t be able to produce. In those days, my grandfather was the first to package seeds in a can and which was considered incredibly ‘innovative’. Therefore, what we learnt from our grandfather’s generation was that by utilizing technology we were able to become more efficient and competitive because of it. Furthermore, my father told us that our grandfather branded his vegetable seeds packaging as well. My grandfather had placed the ‘Aeroplane’ trademark that may not have anything to do with the seeds but it represented modernization during that period (1921) because airplanes were just introduced to the public. So, since I was a kid, I was already exposed to ‘branding’ and ‘marketing’.

 Leadership lessons from my father

What I consider as the most important teaching from father was that I ‘needed to be responsible for my duties’. My father also taught us to use our time wisely because ‘creating value with the time we have is of importance’. He gave an example that if we grew a tree today, when tomorrow comes, a tiny leaf will grow. However, if we spend our time playing or listening to music, our day may pass us by and what we set to achieve may become just a dream. Another lesson I learnt from my father and one that I experienced personally was that ‘in crisis, opportunity arises’. From my own work experience, I have come to the realization that ‘those that see changes coming are visionaries, those that create change are pioneers and those that can adapt to changes are survivors’. The most important management and business lesson my father taught me was to first think of ‘Branding’ which represents the ‘Value’ of an organization. For your family business to be of value and sustainable, it will need ‘to incorporate integrity, hard work, consideration of others, continuous learning and innovation’.

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Page 2 The second most important lesson is ‘People’ because they are our working ‘Partners’ and success or failure is dependent on them. It does not matter if you’re a family member or a professional because in the end; ability, the right values and virtues will make the best people for the organization. My father stated that ‘People’ and ‘Partners’ is a very critical issue because when CP wanted to build its first animal feed mill, it was a loan from Mr. Chin Sophonpanich, founder of the Bangkok Bank, that was the starting point for our company to diversify from our Chia Tai vegetable seed business to become the Charoen Pokphand Group. The partnership further developed with his son Mr. Chatri Sophonpanich and then towards my generation with the telecommunications business with his grandson Mr. Chartsiri Sophonpanich who had provided support. This example represents the importance of ‘people’ and ‘partner’ which may not be a member of the family or a professional executive but a partner that has supported us during times of crisis and has enabled us to develop and expand our business.

For the telecommunications business, we will set to ‘scale’ our business with a target to become a regional player. Furthermore, we have set out to earn a share of the ‘Digital Media’ market or e-commerce or online content that will target 10% of the global population. However, when we experienced the ‘Tom Yum Kung’ financial crisis in 1997, a lesson on foreign investment and inflation was learnt. Charoen Pokphand Group’s policy to ensure sustainability on business expansion for the next ten years will therefore consider any potential financial crises that may occur and ensure that any new business locally or abroad will need to be self-sufficient and will not affect our core businesses. In addition, we are confident that Charoen Pokphand Group’s businesses will not only grow the organization’s business but will also help create a platform or foundation for the nation’s economy and the economy of countries where we operate. This is in accordance with our 3-Benefit Principle of our Chairman Mr. Dhanin Chearavanont that is to benefit the country and the society first before we benefit our company so that we can operate our business sustainably.

 Proving Yourself

 Responsibility to society will sustain your business

When I first came to work, having your family surname meant that I had to work harder than others to prove myself because professional executives of the family business may view that I was being ‘fast tracked’ or wasn’t capable. My father taught me that to be a leader, other people will first have to accept you as their leader. ‘If you don’t dedicate and sacrifice yourself, people won’t accept you’. Your surname isn’t important but it can at least give you an opportunity to build trust if you dedicate and sacrifice yourself as much as professionals do. When we have to work with family members in business, my father taught me that transparency, fairness and sacrifice is needed. If we have to work more and receive less than others to earn respect then we have to do it. He shared with me that ‘remaining humble, caring and respectful of your family members at all times is of absolute importance’.

The Charoen Pokphand Group believes that Corporate Social Responsibility supports the sustainability of its businesses and has worked towards ensuring that its stakeholder’s needs have been met, its business practices are transparent and that it is responsible towards society and the environment. Furthermore, by conducting research and development (R&D) with academic and governmental institutions, businesses can lower environmental impacts as well as develop knowledge which in the end will be shared through the industry. We believe that for the future, major corporations can help drive the need for more corporate social responsibility and can further play a significant role in creating value for society and the nation’s economy.

 The Next Decade for the Charoen Pokphand Group

According to various studies, the next 10 years will see the economies of ASEAN or AEC equal those of the European Union at present. The Asian or SE Asia region has expanded greatly and there are opportunities in various business sectors. For the Charoen Pokphand Group, our strength is in the agro-industry and food business and our business expansion will be based on this sector. At this moment, the Charoen Pokphand Group’s attention in Asia and Eastern Europe has allowed it to become a global player in the agro-industry and food business; however its focus has yet to reach Western Europe and the USA. Our retail business represents another core business for the Charoen Pokphand Group and when we recently acquired Siam Makro PCL, a lot of questions regarding our intention to enter the retail business were asked. The reason we made the acquisition was because our 7-Eleven convenience stores had grown successfully but we were only allowed to operate in Thailand. By acquiring the cashand-carry business, we will be able to expand our retail business throughout ASEAN and China.

Note: Taken from Mr. Supachai Chearavanont’s speech and summarized at the ‘Bualuang SMART Family Enterprise’ organized by the Bangkok Bank PCL on May 29, 2013 at the Plaza Athenee Hotel.

www.cpthailand.com/enews

News Update

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CP All shareholders approves acquisition of Siam Makro

June 12, CP All PCL’s (CP ALL) shareholders approved the proposal to acquire Siam Makro PCL (Makro) for USD 6.6 Billion (Thai Baht 188,880 million). About 87% of CP ALL’s shareholders approved the purchase proposal for Siam Makro’s cash-and-carry wholesaler and the deal will be completed within the third quarter of this year. The acquisition represents the largest ever transaction for a Thai company and will strengthen CP ALL’s retail business in Thailand. Mr. Korsak Chairasmisak, Chief Executive Officer of CP ALL, stated that “CP ALL and Siam Makro management will meet to discuss how we can synergize on such things as material purchases. Siam Makro’s main overseas expansion will be to neighboring countries of Laos, Myanmar and Cambodia.” Mr. Korsak Chairasmisak Chief Executive Officer of CP ALL

True Corporation

launches Thailand’s first 4G LTE service True Corporation PCL (True Corp), a Thai telecommunications operator, launched Thailand’s first 4G mobile communications network on the 2100 MHz frequency. As the 4G network is five times faster than 3G, the company launched its services within Bangkok first and will then expand to 15 major provinces this year that includes, Chon Buri, Prachuap KhiriKhan, Chiang Mai, Phuket, Surat Thani and Ayutthaya. The 4G and 3.5G networks are operated under the brand ‘True Move H’. Mr. Supachai Chearavanont, President and Chief Executive Officer of True Corp, said, “True Group, as a Thai telecommunications operator, is committed to offering the best communications technology for consumers in Thailand. True Corp., is the first to develop 4G technology on the 2100 MHz and offer 4G LTE services to customers in Thailand. This reflects our commitment to bring the best technologies to Thai consumers so they can experience superior services with 4G technology while also bringing Thailand’s telecommunications services on par with other countries. True Corp also developed its own 3G and 4G devices under the ‘True Beyond’ brand that seeks to shift customers from the 2G network and will explore the opportunity to sell the smart devices in the ASEAN market. The leading girl group ‘Girls Generation’ from South Korean has been appointed as brand ambassadors of the True Beyond devices.

(From left to right: Mr. Adhiruth Thothaveesansuk - Managing Director, Mobile Bus ine s s , M r . S upac hai C he ar avanont – P r e s ide nt and C hie f E x e c utiv e , Mr. Vichaow Rakhongphairoj – Group Chief Operating Officer)

www.cpthailand.com/enews

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CP ALL PCL to expand network with USD 104 million investment

CP ALL PCL (CP ALL), operator of 7-11 convenience stores in Thailand, will build four new distribution centers in the country with an investment of USD 104 million within the next 5 years to help achieve its target of 10,000 stores by 2015. Mr. Pittaya Jearavisitkul, Deputy Chief Executive Officer, stated that the distribution centers will also be used to serve the influx of goods from neighboring countries when the ASEAN Economic Community commences in 2015. He further explained that a new distribution center will be constructed in the province of Samut Sakhon covering 20,000 sqm at a cost of USD 33 million which will Mr. Pittaya Jearavisitkul, Deputy Chief Executive Officer

serve the Southern region, western part of Thailand and Bangkok. More distribution centers will be established in the lower part of the Northeast region, along with the Central and Southern regions with a cost of about USD 16.6 million - USD 20 million each. Currently, CP ALL has five major distribution centers located at Bang Bua Thong, Suvarnabhumi, Surat Thani, Khon Kaen, Phetchabun and Chon Buri with a combined total area of 81,000 sqm. The sixth distribution center recently opened in the province of Lamphun with a retail space of 17,000 sqm and will serve 14 provinces in the Northern region. Founded in 1988, CP ALL has more 7,000 7-11 stores and has a network of 3,000 suppliers and carries about 15,000 items that serve 9 million customers per day.

CP Indonesia

sets USD 206 million investment for 2013

FinanceAsia Magazine polls CP ALL and True Corporation

as one of the best managed companies in Thailand

PT Charoen Pokphand Indonesia, the largest producer of poultry feed, day-old chicks and processed chicken in Indonesia, has prepared USD 206 million (Rp 2 trillion) for investments to expand its chicken breeding, livestock feed and processed food segments. The new investment represents an 11 percent increase from the year 2012 and will increase the company’s production capacity of processed chicken meat by up to 33 percent set for the end of the year, thereby increasing production from 6,000 tons to 8,000 tons. Mr. Ong MeiSian, Director of Charoen Pokphand Indonesia stated that “Fifty percent of the capex is allotted for chicken breeding, 25 percent will be for livestock feed and 25 percent is for processed food.” PT Charoen Pokphand Indonesia Tbk was founded since 1972 in Jakarta by operating a poultry feed mill. The company has since then developed to operate a network of feed and poultry facilities in Balaraja (West Java), Semarang (Central Java), Sepanjang and Krian (East Java), Bandar Lampung (Lampung), Medan (North Sumatra) and Makassar (South Sulawesi).

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FinanceAsia Magazine, one of Asia’s leading financial publishing companies based in Hong Kong recently held an annual poll of Asia’s top managed companies and for Thailand, CP ALL PCL was selected as one of the top ten companies under the categories of ‘Best managed company’ and ‘Most committed to a strong dividend policy’. True Corporation PCL was selected as one of the top ten companies for ‘Corporate social responsibility’.

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Charoen Pokphand Foods PCL and CP Intertrade exhibits at THAIFEX-WORLD of Food Asia 2013 Charoen Pokphand Foods PCL (CPF) and C.P. Intertrade Co. Ltd., exhibited their products at the THAIFEX-WORLD of Food ASIA 2013 in Bangkok, Thailand under the theme “Savor the Best in Asia”. The THAIFEX event is considered Thailand’s biggest food exhibition held annually and visited by more than 90,000 people locally and worldwide. This year both CPF and C.P. Intertrade showcased a variety of products from CP Ready-to-Eat meals, FiveStar Chicken to packaged Royal Umbrella rice. Mr. Vittavat Tantivess, Executive Vice President of CPF Food Business, stated this year marks CPF’s 10 th year at the THAI FEX event and the exhibition’s aim to propel Thai food products for export as well as showcase food producer’s technology and service will only help the company to fulfill its vision to become the ‘Kitchen of the World’.

True Corporation helps initiate

Thailand’s first long distance health care service called ‘Happy District’ True Corporation PCL (True Corp) along with Google Thailand and Chiang Mai University have recently joined together to create a pioneering long distance health care service named ‘Happy District’ for the first time in Thailand that was initiated by the Thai Health Promotion Foundation. Using True

(3rd from left: Dr. Kantima Kunjara Na Ayudhya, Director of Corporate Communications at True Corporation PCL and 3rd from right: Dr. Jaras Singkaew, Director of Saraphi Hospital)

Corp’s 3G network for communication and data transfer, the pilot project at Chiang Mai’s Saraphi district will be the first of its kind with the aim to integrate information technology and healthcare services across a long distance and will be operated by local communities. Currently, Saraphi district has 25,000 households and so far data collection regarding their health information only accounts for 60% of the population. To counter the problem, the ‘Happy District’ project utilizes a specially created application for smartphones and tablets that operates on Google’s android platform and Apple’s iOS platform to conduct health data surveys among the community. The ‘SaraphiHealth’ application created by the Chiang Mai University, will provide volunteers

and officials with the ability to collect data and report results in real time. The application will enable users to view basic health data of communities, households and individuals including their health behaviors that cover family eating habits and exercise activities in the Saraphi district. Dr. Kantima Kunjara Na Ayudhya, Director of Corporate Communications at True Corporation PCL (True Corp.) stated that True Corporation will provide the Saraphi project with mobile

Charoen Pokphand Group Co., Ltd. Office of Corporate Communication Affairs C.P. Tower, 12th Floor, 313 Silom Road, Bangrak Bangkok Tel. +66 625 8129 Fax. +668 638 2741 E-mail : [email protected]

‘Subscriber Identity Module’ cards (sim cards) and data packages to help the project transfer health data in real time. True Corp. is proud to assist in the development of health services that will improve the livelihood of the people. Dr. Jaras Singkaew, Director of Saraphi Hospital, stated that this application will allow for doctors and care-givers to view the number of chronic patients and check the disease history of families and community members. When the health information has been completed in three years, it will reduce the number of chronic diseases by 20% and will help rehabilitate chronic disease patients systematically by 60% in the area.