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An Elephant In a New World
Is Siam's devotion to reform waning?
The 1000 Biggest Companies


How to shove an elephant through a thread of copper or fiber-optic light — that is the dilemma facing the managers of Siam Cement these days. In truth the elephant is only a corporate logo, but the reality of marrying the Internet with a traditional building products company in a battered, backward economy is barely less difficult than the image.

Thailand's third-largest company, No. 397 in this year's Asiaweek 1000 with revenues of $2.9 billion in 1999 and a $124.2 million loss, is in desperate need of a makeover. Its managers know it. Its employees know it. And most of all, the foreign and domestic investors who have hammered the company's stock — down almost 60% in the last year while the key Bangkok index declined almost 40% — know it. So if there's so much agreement about what should be done, why has restructuring at Siam Cement nearly ground to a halt?

First of all, the company is constrained by its primary marketplace, Thailand. It's one thing to complain that Siam Cement is overbroad with more than 100 subsidiaries and tens of thousands of products. But it is another to understand that its core building-products business, the one it is supposed to be focusing on, is selling to a construction industry that remains flat on its back in Thailand and pretty dismal throughout Asia. And for critics who want to see the company modernized, that is easier said than done. Siam Cement has a defined e-commerce strategy, but it doesn't do much good to be far ahead in building an interactive B2B portal if your customers don't have the equipment or inclination to do business that way in the first place.

But hold the tears: Siam Cement remains one of Thailand's largest and best-connected companies — the Royal Family owns more than one-third of it. While it has done an admirable job of reducing its dollar-denominated debt from more than $4 billion to less than $1 billion in the last three years, its restructuring seems to have slowed to a crawl. The company has sold about $80 million in non-core assets in the last 18 months; an estimated $909 million remains. "They've been slow in bringing off [the sell-off]," says Jeff Earhart, analyst with DBS Thai Danu Securities in Bangkok. "They're waiting for the right buyer at the right price — everybody says that."

Company president Chumpol NaLamlieng says Siam has not backed off its commitment to change. "I am restructuring to get rid of assets that don't fit," he says. "I am not getting rid of a problem. We need buyers." So Chumpol isn't desperate to sell. That may be good, but Siam's remaining shareholders probably think that the company should be a little more aggressive about getting rid of the "non-problems." Forcing an elephant through a wire is one thing, but forcing an elephant to go anywhere it doesn't want to is a whole different problem.

— By Julian Gearing/Bangkok

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