As a holding company, Shin Corp’s brand image has been largely determined by the performance of its various constituent companies, which include mobile giant AIS, along with assets in satellites, aviation, property development, consumer finance and the internet. But all that changed over the past 12 months, a tumultuous period that began when Thaksin’s family sold its 49 per cent stake in Shin Corp to Singapore’s Temasek Holdings in a US$1.9 billion deal.
Since then, of course, Thaksin has been ousted by a military coup and Shin Corp has become a lightning rod for growing pressure against foreign involvement in domestic business. In recent weeks, coup leader General Sonthi Boonyaratklin has stated his intention of seizing three Shin Satellite communications satellites, in the interests of national security.
Meanwhile, plans are reportedly afoot to revoke AIS’ operating concession, in a move that echoes the recent treatment of iTV. The moves come in spite of Shin Corp companies’ generally strong reputation in investment circles — despite a series of controversial episodes that occurred well before Temasek’s invesment.
Amid the turmoil, Shin Corp’s profits plunged 60 per cent in 2006, to 3.4 billion baht (US$94.4 million), down from 8.6 billion baht in 2005. Analysts also forecast sales of Shin Corp’s stakes in Shin Satellite, and budget carrier Thai AirAsia.
In a Bloomberg report, Ayudhya JF Asset Management analyst Nasu Chunsom said: “Regulatory risks surround the company in every direction. We maintain our stance to stay away from the whole group.” These are hardly the kind of comments that inspire confidence in the Shin Corp brand; analysts remain wary that any moves by Thailand’s military Government to dismantle Shin Corp may have a negative effect on foreign investor sentiment.
Fact Box
Temasek — the investment arm of the Singapore Government — bought 49 per cent of Shin Corp for US$1.9 billion in January 2006.
Shin Corp’s profits plunged by 60 per cent in 2006.
Danai Chanchaochai, CEO, DC Consultants and Marketing Communication
Shin Corp and its subsidiary brands, notably AIS, faced a major crisis when the owner, former prime minister Thaksin Shinawatra, sold his shares to Singapore’s Temasek Holdings for a substantial figure.
Shin Corp is frequently under attack by Thailand’s mass media and opinion leaders and is losing the social capital it once enjoyed. The reputation it built over the years with its corporate social responsibility campaigns has sharply declined. The question facing Shin Corp and its sub-brands now is how to regain the trust of the Thai consumers and public, and the bonding it once counted on. From its position as a top Thai corporation that many envied and admired as a benchmark, Shin Corp is seeing its brand going rapidly downhill.
The Shin Corp saga is a lesson for many of the foreign firms wishing to do business in Thailand. With an aggressive mindset perceived here as Western, they may well be faced with culture shock. Resistance and even a boycott may be their fate if they fail to truly understand Thai cultural norms. My advice to them would be to ‘make your entrance gracefully, gradually and, I’d even say, organically’ to erase any impression of wanting to take over.
Mana Jantanayingyong, chief executive officer, MEC Thailand
Shin Corp’s spectacular rise (and many of the troubles it faces now) stemmed largely from its dependence for influence and credibility upon one person. This is a high risk business model anywhere in the world.
Currently, the situation remains murky. No one is sure what (if any) relationship or leverage the ex-prime minister still has with Shin Corp, or what the new owner’s future plans for the company entail, making shaky foundations for any brand advice or crystal ball-gazing.
Perhaps until a new Government is formed, Shin Corp should concentrate on developing investments in its mobile phone services and internet providers — areas that do not entail Government concessions.
It needs to work hard on the PR and corporate responsibility fronts to rebuild trust and minimise confusion. This could involve detaching any remaining links to the Shin family, finding a strong neutral leader from the business community and building projects that contribute to the social fabric of Thailand.
Plus, it might be advisable to consider a total rebranding and name-change in the medium- to long-term. ‘What’s in a name?’ you might say. In this case, quite a lot.
