Sun, May 20, 2018 page15

• Thai cosmetics, food firms tap into Chinese tourism boom

  Skin whiteners made from snail secretions and private rooms reserved for durian connoisseurs are all the rage among Chinese tourists in Thailand, who are helping drive up company earnings and stock prices

  • By Chayut Setboonsarng / Reuters, BANGKOK
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  The label on the pink-and-white box of face cream sold in a Bangkok hypermarket proudly declares that it is based on a “snail secretion filtrate moisture system.” The Snail White brand — plus some positive Internet reviews — is enough to have Chinese tourists lining up to buy the slime-infused product.

  Alice Chen, 21, a Chinese college student, said she saw the face cream reviewed online and wanted to try it out because she could not find it back home.

  A 22-year-old Chinese tourist also at the Big C Ratchadamri store, who only gave her name as Yvonne, said she bought some — it retails at about US$40 a box — because “a blogger said it was good and inexpensive.”

  

  A waitress serves a durian sticky rice kakigori at an After You Dessert Cafe in Bangkok on May 3.

  Photo: Reuters

  Meanwhile, at a dessert cafe just up the road in Bangkok’s upscale Siam Paragon shopping center, another group of Chinese tourists took photographs on their smartphones of whimsical treats made from durian.

  About 11 million Chinese tourists are expected to visit Thailand this year, up from just more than 1 million in 2010, making China by far the biggest source of tourism there.

  They are spending more per head than previously, according to Thai government figures.

  It is not only the hotels, tour operators and airlines that are benefiting. A big slice of the spending is with retailers, restaurants, and food and cosmetics makers that target the Chinese audience.

  Investors have taken note, driving up the share prices of many of the companies concerned to high price-to-earnings ratios. In some cases, securities analysts have said they are wary of valuations, especially as tourists’ tastes can change rapidly.

  Do Day Dream PCL, the company behind the skin-whitening Snail White cream, is one.

  Boxes of the firm’s signature cream, which the firm said it makes from snail slime extracted using a process done in South Korea, are stacked high at Thailand’s airports and malls as it has become a must-buy item for many Chinese visitors who covet paler skin.

  Sales of Snail White products have been rising since 2014 as beauty bloggers in Hong Kong and Singapore gave them rave reviews, Do Day Dream chief financial officer Piyawat Ratchapolsitte said.

  The company’s revenue last year rose 35 percent to 1.7 billion baht (US$52 million) as the company also built a strong domestic market and grew online sales direct to Chinese consumers.

  It also sells other snail secretion-based products, including shower gels and lotions.

  The sales to tourists are at risk, if for any reason there is a sudden drop in Chinese visitors, Piyawat said.

  That happened briefly in 2015 and 2016, when the Thai government made it much more difficult for tour operators to offer cheap packages to Chinese — known as “zero-dollar tours.”

  Exports to China produced 30 percent of the company’s revenue last year, Piyawat said.

  That is more than the 10 to 15 percent that comes from Chinese tourists buying in Thailand.

  There is also increasing competition in the niche world of snail slime products. Reuters visited a snail farm in Thailand that provides the secretion to a manufacturer that sells it either in its original form or after turning it into a powder for use in cosmetics around the world.

  Another Thai beauty firm that sells color cosmetics and skincare products, Beauty Community PCL, is also seeing substantial growth.

  Beauty Community chief executive Suwin Kraibhubes said he expects tourists from China and Southeast Asia to account for 15 percent of revenue, which would help the firm reach a 20 percent growth target this year.

  Suwin, a physician-turned-businessman, and Do Day Dream founder Sarawut Pornpatanaruk this year made the Forbes’ Richest 50 Thais list for the first time.

  Another sweet success story is After You Dessert Cafe. The chain has 28 cafes throughout Bangkok, with six in popular tourist destinations, such as shopping malls, and along the Skytrain line.

  The cafe, known for long lines and its Shibuya honey toast — a block of bread served with ice cream — was initially popular among Singaporean and Malaysian visitors.

  However, in 2016, Chinese tourists began to pour into the cafes, After You chief executive Maetup T. Suwan said.

  “Tourists see our long lines, a picture on social media or read a great review and want to try,” he said.

  After You last year capitalized on the flow of Chinese customers to set up “durian rooms” offering fresh durian desserts specifically aimed at the fruit’s lovers.

  Durian is often banned in taxis, hotels and airlines around Southeast Asia because of its pungent smell.

  The company plans new branches and durian rooms in top Thai tourist destinations outside of Bangkok and it also plans to start a franchise model in Malaysia next year, Maetup said.

  Chinese tourists are also snapping up savory snacks. Taokaenoi Food & Marketing PLC’s crispy seaweed snack has been a hit for years.

  About 20 percent of Taokaenoi’s domestic sales last year were to tourists, while 60 percent came from exports, nearly half of them to China, head of investor relations Koosoon Rattanaporn said.

  The benefits of Chinese demand and expectations of further supercharged growth are reflected in share prices. Investors are paying 52 times earnings for the Do Day Dream shares, well above the Thai personal product industry average of 21 times, and After You’s shares are trading at 79 times earnings, while Taokaenoi’s prices are 43 times earnings.

  There is expectation of higher earnings because these companies are in the growth stage of their business life cycle, CGS-CIMB Securities Thailand Co analyst Uraiwan Tantisuwannakul said.

  Domestic consumption has slowed over the past few years, so investors are willing to pay a premium for firms with plans to diversify to the Chinese market, she said.

  Additional reporting by Satawasin Staporncharnchai
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