A Thai Business Wonders, Will It All Crumble?

Vorachan Vinyarath’s wallpaper-importing business got off to a roaring start when she launched it early last year, while Thailand was still enjoying its decade-long economic boom.

The firm jumped from 30 employees up to 50 in five months, and switched from moderately priced Taiwanese wallpaper to a focus on a luxury Italian brand, supplemented by high-quality imports from the United States and New Zealand.

“When Thailand was in a good economic situation, I think people were overspending,” said Vorachan, 55. “That’s why we started importing Italian and American wallpaper. People would buy the best things: the best wallpaper, the best this, the best that. They could afford it.”

Now, with Thailand’s economy suddenly stumbling into a period of near-zero growth or outright contraction, Vorachan, president and main owner of Phoenix Interhome Co., worries about her firm’s survival. With the Thai currency at about 35 baht to the dollar--down some 30% since it was floated on July 2--import businesses are taking a terrible beating.

“For the past two months, we can make sales, but we have no profits,” Vorachan said. “As long as we don’t lose money, we are very lucky. I don’t know how long the situation will go on like this, but if the baht goes to 40, maybe we’ll go bankrupt--not just us, the whole country.”

Vorachan does have a plan for survival. She is switching the firm’s focus once again, this time to South Korean wallpaper.

South Korean products “are as good quality, but maybe the designs are not so modern or the colors are not so subtle,” explained Vorachan’s daughter Ploenchan Vinyarath, 25, a graduate of a London art and design college who helps manage the firm.

But even if imports from South Korea--where a falling won holds export prices down--help Phoenix Interhome survive, they won’t bring back the good old days, when contractors raced to build condominiums, luxury hotels and huge housing developments.

Indeed, the wallpaper import business says a lot about Thailand’s recent, overheated past.

It took off a decade ago, when builders sped up their work in response to rising demand but often let workmanship standards fall. Walls “usually had bad finishes,” so “to cover up their mistakes, they had to use wallpaper,” Ploenchan said. “Now people are running out of money, so they go for similar ones but not as good quality.”

And the bind faced by firms like Phoenix Interhome reflects the myriad difficulties afflicting Thailand’s economy today.

The cost of imports, in baht terms, is up sharply. But with the economy slowing, many firms are trying desperately to sell their stock, so it is nearly impossible to raise prices of luxury goods to cover costs--even as the price of food, utilities and other daily necessities rises, Vorachan said.

Meanwhile, a liquidity crunch is rippling through the financial and real estate sectors, affecting any businesses, such as Vorachan’s, that depend on them.

“What we are suffering from is that housing is dead,” Vorachan said.

The problem is exacerbated because wallpaper is usually “the last job” when homes are built, Ploenchan said. “That’s usually when the money runs out,” she explained. “That’s why we’re facing a problem in collecting the money.”

Vorachan clings to her natural optimism.

“That’s to keep myself happy too,” she admitted. “I don’t want to think too much. If I see the bad points, I think too much and I can’t sleep at night.”

The Thai people are also sustained by a widespread belief that there is a “sacred” force that protects the nation, and by deep respect for the royal family, she said.

“We have our king, who is really concerned about the well-being of his people,” she said. “Even though we are a democratic country, we still listen a lot to our monarchy. With these two together, we feel we won’t go down to the real bottom that other countries suffer. I think this is the lowest we can go. I think we may suffer for a couple of years, and then things will start to get better again.”

She adds, “We need an economist with a talented tongue to persuade those foreign investors to come back.”

*

* THAILAND’S TROUBLES

Nation’s economic meltdown angers, humiliates the public. A1