Marubeni entrusts Erawan Garment Co to Saha Group

June 05, 2008 - Thailand

Appreciation of baht against US dollar has forced Marubeni, a leading Japanese trading firm, to give up its textile business in Thailand.

The company struggled hard to prevent erosion of its export competitiveness but in vain. Firming of domestic currency, the consequent inflation and weakening purchasing power of the consumers was too much for the company to bear.

Sources from the company told Fibre2fashion, after operating successfully for nearly four decades, Marubeni finally decided to give up in front of such trying and oppressive circumstances. It sold nearly 80 percent of the Erawan Garment Co for one million baht to its local co-partner Saha Group, the largest consumer product conglomerate in Thailand.

However, Marubeni is not only the foreign based company to have shifted its business from Thailand. A number of other companies have surrendered due to spiraling inflation which averaged at 5.8 percent in the first five months of this year after touching 7.6 percent in May.

These companies have found investment in growing countries like Vietnam far more rewarding than keeping up with impractical business conditions in Thailand.

But Saha had its own reasons for buying Erawan Garment Co from Marubeni, one of which is that the domestic market still evinced substantially demand for textile and garment products.

The other reason being just as reasonable shows that Saha, seeks to expand its current business through this new acquisition. The company is very confident that the market is likely to improve and once in full swing, Thailand will have immense potential to become one of the top ranking textile export countries in the world.