In conversation with
K. Monchai

FDI Spotlight: What would you identify as the changing DNA here at Advance Cool Technology?

Mr. Monchai P.: First I have to begin with how my father started the business. Nowadays we position ourselves as the expert in process cooling systems, the engineering of cooling systems for factories. So, for instance if you run printing machines, the machines need cooling water – we make that cooling water. We also produce very large centralised air conditioning systems for structures like hospitals and hypermarkets, they pump cool water around the building and save a lot of energy compared to standard air conditioning units. The first investment cost is around double that of a traditional air conditioning system, but the payoff is that over three or four years you will recoup the investment in electricity savings. My father started the business 30 years ago making injection household plastic products. When making plastic products you require a cooling water system to cool the moulds after the plastic has been melted and moulded – that moulding process is very slow without a cooling system. My father went to Japan and brought back a small water-chiller, as a result his productivity increased 40%. At that time, he began working with an air conditioning engineer in Thailand to develop these cooling systems, but he only sold them to his friends in the plastic industry. Nobody in Thailand at the time was using this technology, so this increase in productivity was very welcome and gave him an edge.

How did your father come to the conclusion he needed to travel to Japan to obtain this device?

Mr. Monchai P.: At that time in Japan they were very innovative, so he went to buy machines for plastics from conventions there, and from that point everything changed. Later on when I had graduated from Sydney and come back home in 1997, we had the financial crisis and that presented problems for my father, like everybody. Back then we had debts of 100 million Thai Baht – two years later I graduated and my first goal was to pay back all of his debts and make a better living for all of us. At that time, he was forced to stop the chiller venture because he didn’t have the capital, leaving just the plastic business. When I came back there was no competitive advantage in plastic anymore, everybody was capable of the same productivity – so there was no way I could regain 100 million baht by manufacturing plastic in a timely fashion so I decided I wanted to resume manufacturing and selling water chillers. My father was operating the chiller business under the same name as his plastics enterprise, SDC Plastic, but to sell cooling systems you need strong brand name, and I came up with Advanced Cool Technology. You can’t make a success of this enterprise selling under the name of a plastic company.

In the same way to how your father travelled to Japan for a plastic convention and ended up finding this water cooler – have you had your own moment where you’ve found a new development that changed the industry?

Mr. Monchai P.: At Advance Cool Technology we make water chillers, at Advance Cold Room we make cold storage devices. This is the system we innovated; it’s called Smart Cold Room throughout which we can control and monitor the system from distance. We make storage units to store food that needs to be kept at a certain temperature, and this system monitors the energy output and the performance of the unit. All of this information is visible on your laptop or handheld devices. We developed this because if a water chiller breaks down, the cooling machine will not work, so with Distance Controling and Monitoring we can analyse our customer’s system’s performance; I can see right now information on the temperature of the water, when the water needs to be cleaned, so we can take action before it becomes a real problem. We do have competitors, but we have a much more integrated product that can tell us whether the chiller or cold storage is liable to break even days in advance. This is an automated system that uses sensors it the device that we developed with Assist. Prof. Ammata Tusnapuckdi Ph.D. When the system detects a problem, it will send a message to the engineer responsible for looking after that customer, and we can also contact the customer with instructions so they can resolve the issue if they are capable. This prevents machine and stock losses for our clients. One of our customer, a beverage manufacturer, before joining us their cold storage system broke down and as a result they lost their stock. With our integrated system, our clients can monitor the performance and activities without fear of stock loss thanks to our system that prompts maintenance and thus avoids mishaps.

As you see the growth of the middle class in the AEC, do you see potential for expansion in the region?

Mr. Monchai P.: Of course, the creation of AEC brings in great opportunity. In my opinion, Thailand lost a lot of competitive advantage due to labour cost increasing quite a lot in the last few years. Thailand used to produce a lot of commodity products and subcontract for developed nations, but these companies have stopped their expansion in Thailand. While this may present itself as a challenge, this actually places a greater emphasis on Thai manufacturers who focus on value addition like us to differentiate ourselves by offering premium-integrated solutions. Myanmar and Cambodia are currently hot investment destinations for the manufacturing sector, and if that’s where the new factories are being built then we will move to these countries to work with our clients on becoming more efficient.

It seems there is a mis-trust amongst the Thai people of the quality of Thai made products. Have you ever experienced this, and what can we do as a collective to make the Thai people more proud and internationally minded?

Mr. Monchai P.: For me, as Thai people, we all think differently. Some of us are happy with taking orders, but there are some who want to do more than that. Some of us want to innovate so we can make more profit and enjoy a better sustainable future, but there are not many people with this mindset. If you start off being a subcontractor, then you don’t have time to think about anything else because the people you work for will give you too much work for you to have time to think about new product development and going out on your own. I had the same issue when helping my father with the plastic business. We made the household products to sell to a UK business man, who sold them to the USA and Australia. We could work with a low margin because they gave us big orders, as a result we could not afford mistakes. If we made a mistake, then we made a loss on that order. You don’t have the free time to think about innovation. Once you start an OEM (original equipment manufacturer) it’s very difficult to get out of it. You have fixed costs and labour, so if you have no orders then you are wasting a lot of money. In this situation the only thing you can think about is how to reduce costs, you don’t think about how you can increase the selling price because the selling price is controlled by your customer and not you. Now we set the price to make an honest margin. Even though we make products that people need, we are not the kind of company to charge more than is reasonable. If you can get the product elsewhere cheaper we are not going to sell for ten times that price, but we will make a nice margin to let our people survive in the business. Our business isn’t like a food factory with repeated orders, every day we have to find new customers. If you buy a cold storage unit, you will buy one and use it for many years and you won’t need to buy a new one until you expand your factory.

For Thailand to move from this middle income trap, how would you encourage your fellow peers, clients and customers to make this shift towards more value addition and innovation, in the way you have?

Mr. Monchai P.: My friends ask me this question a lot and the advice I give them is – you have to think about tomorrow. You need to have a second plan. You can’t rely on one or two customers; you have to understand that Thailand is no longer as competitive as of three years ago, what about next year? Your customers are not going to buy from you forever, they are going to buy from Cambodia or Myanmar. You need to find something else to do. As you know, it’s a big challenge to find that innovation. People know they have to do something different, they are now swimming in the red ocean moving towards to a blue ocean. Some people don’t know a blue ocean even if they’re swimming in it. When I was helping my father with the plastic business, when we found our UK buyer, we were very happy. We had a lot of orders coming into the factory, but one day I was thinking we can’t do much more in plastic, even if you innovate, people can copy you fast. I saw that it wasn’t going to work anymore, so I focused on other things. That’s why I had time to come up with this. We did it the safe way, we continued the plastic business to keep us alive, but we stemmed development in that, we just went through the motions, but not actively looking for customers – this gave us time to work on other things.

With the eyes of the world on this region, what is your message of confidence to the international community? Why should they come and explore Thailand, why should they come and partner with you?

Mr. Monchai P.: I think for me, I study a lot of history, and I believe every period in history repeats itself in cycles. Thailand is going to be something like Japan has been in the past; very innovative. We’re going to need some time for sure, but that is what we are looking to. We’re not looking to compete with Singapore and Malaysia, we’re looking to emulate Japan. There are countries like Myanmar and Cambodia that want to emulate Thailand, so there is going to be a shift, our factories will be there, so we need to find products that are suitable for that market.

How do you see yourself as a role model in the industry and how would you implement the changes required so that Thailand can again become competitive?

Mr. Monchai P.: The way I see it is that you don’t have to have a big business with lots of employees, you can do your small medium size business, but you have to be the best one. I like small sized enterprises, I work with a lot of small companies as suppliers and customers because I believe they are good at what they are doing and they have a lot of focus, but if you deal with big companies they are not into the product excellence as much, they are into how they manage people, sales, purchases and human resources; but small companies like ours think about how we can find the product that serves the market, and then commercialise it. You have to find the product champion, so you can really discover your brand, so when people want to buy a product they will think of you. That is my opinion. I do engineering because it is what I like to do. I believe if people do what they like to do then they will do it well. I also don’t like to employ an external manager, I prefer to promote a junior staff member from within and have them stay until they become the manager, so they can share the passion that I have.