Chapter 4 A Profile of Thai-tone Company
4.1 Overview of T.T. Company
T.T. Company has been in trading business about 30 years. This company was founded in 1985 by Mr. Hung Ken. Nowadays, T.T. Company is the largest fruit (longan) export company in Thailand. T.T. Company has highly exporting potential and strong competitive position in longan markets (see Table 8), because of the highly favorable export conditions created by the China-Thailand Free Trade Agreement (FTA). In terms of export volume and market share, the market share of T.T. Company reached 45.6 % in 2014. Now, China is the largest fruit export market for Thailand. Likewise, Thailand is the largest fruit import market for China. Chinese love to eat longan and they believe longan providing vitality and may have medicinal effects. T.T. Company provides 5 different varieties of longan which are fresh longan, dried longan, tinned longan, frozen longan and other longan products. In order to purchase the best quality of longan in Thailand, the purchasing department of the company investigated many regions of Thailand, such as North, Northeast and Central part of Thailand to find the best suppliers. T.T. Company always focuses on the quality of their products.
Therefore, the processes of selecting, producing and packaging are strictly controlled by T.T.
Company. The main reason that it established a headquarters in Chiang Mai is that the main customers are located on the nearby big cities of China, and Chiang Mai is the nearest shipping hub to these cities compared with other hubs of Thailand (Thai-tone, 2012).
Particularly, Chiang Mai (North part of Thailand) produces longan products more than other places on Thailand (see Table 9). Moreover, the company wants to supply longan to worldwide customers with high quality standard, super craftsmanship and competitive price Every season of a year, the company operates a rigid production process of fruits. The production process follows the agricultural standards under Global G.A.P (Good Agricultural Practices) certificate thus the quality of its fruits quality was appreciated by customers around the world. With experiences of years, T.T. Company specializes in producing Thai fruits such as Longan, Fresh Durian, Mangosteen, Rambutan, Coconut, etc., to fulfill customer’s
requirement. Now, T.T. Company expands its business to canned fruits and dried fruits, and produces its products under international standards, such as ISO 9001:2008, HACCP (Hazard Analysis and Critical Control Points) and BRC (British Retail Consortium).
Table 8 The volume and value of longan by Thailand and Thai-tone Company
Years 2011 2012 2013 2014
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦𝑎 𝑉𝑎𝑙𝑢𝑒𝑏 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑉𝑎𝑙𝑢𝑒 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑉𝑎𝑙𝑢𝑒 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑉𝑎𝑙𝑢𝑒 Total
Longan products in whole Thailand
583,872 483.73 959,457 538.11 695,944 582.96 439,554 659.78
Export 556,627.85 449.55 596,418.68 384.30 565,960.77 394.14 565,559.04 420.47 Export by
T.T.
Company
129,662 116.37 136,032 87.65 178,603 124.28 257,672 191.57 Market
share of T.T.
Company by quantity
(%)
23.3% 22.8% 31.5% 45.6%
Source: Bureau of Agriculture Economic
a: Quantity = metric ton
b: Value = million US$ ( Exchange Rate from US Dollars to Thai Baht for May 7, 2015)
Table 9 Longan yields by provinces of Thailand
Sector
Years
Production (Metric ton)
2011 2012 2013 2014
North (9 Provinces)
513,433 473,686 557,108 674,020Chiang Mai Province 222,300 215,200 266,937 323,221
Lumphum Province 200,300 165,800 162,067 210,700
Chiang Rai Province 53,100 71,100 61,270 70,900
Northeast (20 Provinces)
18,967 20,144 39,034 48,709Central (22 Provinces)
29,872 31,413 36,878 39,146As well as countries (77 provinces)
772,099 811,518 885,550 897,985Market share of Chiang Mai Province
by production
28.79% 26.52% 33.17% 35.99%Source: Office of Agricultural Economics. The cooperation of the Department of Customs, 2015 According to the data of T.T. Company, which is the largest exporter of longan to China, its products are categorized into 6 major products: fresh longan, dried longan, tinned longan, frozen longan , other longan products and other agri-food products. In 2008, longan products accounted for 97 percent of company products and 3 percent for the agri-food products. The categories of T.T. Company products are shown in Figure 6. They are divided into 5 categories as follows;
Fresh longan – accounted for 49 percent of products.
Dried longan – accounted for 36 percent of products and give relatively high margin.
Tinned longan – accounted for 7 percent of products.
Frozen longan – accounted for 5 percent of products.
Other longan products and other agri-food products – accounted for 3 percent of products.
Figure 6 The product categories of Thai-tone Company
(Source: T.T. Company report 2012)
There are two main sources of supply of longan for T.T. Company. One is suppliers and the other is contract farmers
About 91% of products of T.T. Company are supplied from 100 to 200 suppliers. Each supplier has the share for less than 20% of the total sales since the company wants not to be dependent on any particular supplier by policy.
The left about 9% of products come from contract farmers who supplied seasonal products such as fresh longan, corn, and other agriculture product to T.T. Company. Now T.T.
Company has 12 contract farmers in Chiang Mai and in other north cities. Contracts are generally signed at planting time and the length of contract is about 5 years. Product quality and price will be specified in the contract based on the agreement between the company and farmers. All its fresh fruits are from garden with high quality, big shape, white pulps, shiny skin and ready for serve in big quantities.
49%
36%
7% 5%
3% Fresh longan
Dried longan
Tinned longan
Frozen longan
Other longan products and other agri-food products
T.T. Company purchases fresh fruits from supplier and farmers then transports the fruits to its factories. To keep good quality of fruits, T.T. Company controls the process of transportation by using advanced technology such as global position system to increase speed.
All machines used in the factories are well maintained. After production, all products are packaged and shipped to warehouse, waiting for export.
The company has ability to procure commodities at farm gate level and store stock close to the point of origin until sufficient mass has been reached to make transportation less costly. The capacity of warehouse of T.T. Company is over 1.9 million metric tons, and its warehouses locate across 10 different regions of Thailand. Next, Experts with decades of experience, global market knowledge, trading expertise, form a talented team to develop integrated logistics plan to deliver the best products of dried longan and other agricultural commodities to the customers in China.