By Maxmilian Wechsler
AMERICAN businessman Larry Sloven has just finished a meeting with the Board of Investment (BOI) – and he looks extremely happy with what he’s learned.
The director of Capstone International, a China-based company that manufactures products ranging from LED lights to power tools in Shenzen province, is looking forward to moving some of his operations out of China – and Thailand is very much on the agenda.
“We’re planning on establishing a subsidiary office in Thailand to manage the manufacture of a new line of digital electronics products to be launched in January 2019 at the International Consumer Electronics Show in Las Vegas,” explains Mr Sloven.
The American-born businessman first began doing business in China around 40 years ago. For the last three decades, he’s lived in Hong Kong, where Capstone is based.
But now he’s ready to launch the manufacture of Chinese products in other Asian countries, and Thailand is the logical place to begin. “The decision to divert some Capstone activities to Thailand is part of a twopronged approach -to avoid putting all the eggs in one basket, so to speak. I see Thailand as a country that can offer what China has offered over the past 40-plus years.
“I believe this can be an excellent place to manufacture consumer products that are not extremely cheap and not extremely expensive,” said Mr Sloven. He added that the transition would take time; to duplicate the production infrastructure of China, inclusive of supply chain management, is no easy task.
“I am a New York boy who knew only that if I wanted money, I had to earn it. I didn’t get an allowance. I mowed lawns, pulled weeds, raked leaves, shoveled snow and had a paper route. Those were the opportunities in the 50s and 60s. My first real job I started at 13, working for my father loading trucks, carrying wood, and eventually driving my own truck.
“I graduated from Bryant University in Smithfield, Rhode Island, with a degree in business. I was going to go into my father’s business, but he died at the beginning of my senior year and my mother lost the business. So I started over, and finally I found an opportunity to work for an automotive accessory importer. This gave me my first experience selling goods from overseas.
“After a while I branched out and started representing companies that imported products and sold them to retailers in the US. When I couldn’t find companies to represent, I learned how to import products myself.”
He was the official buying agent for US-based Dick’s Sporting Goods, and from 2001-2004 assisted in the development of private label hardware and accessory lines for Circuit City. He’s also been involved in development, manufacture and sourcing of products for AT&T, Duracell, Rayovac, Stanley, Attari and Farell Sport Concepts.
Mr Sloven is a former board member of the American Club in Hong Kong and a member of the American Chamber of Commerce in Hong Kong and Shanghai. He joined Capstone International Hong Kong in 2012. The company manufactures products ranging from LED lights to power tools in Shenzen province and exports them to the United States, where they are sold by some of the country biggest retailers.
“One thing that proved extremely valuable to my success is that you can make things happen very quickly in China. It is a 24/7 country and there’s a real sense of urgency. However, you must control your own destiny. Do not let other people control you. Most people in the 80s and 90s believed in the fast buck, the one-hit wonder. They also valued you for what business you could give them, and when they found bigger opportunities they jumped ship to someone else. However, that has changed. Business relationships have become more stable.”
“I opened up my first company in China in 1983, and I did so in order to create my own electronics products. I wanted to be independent and not rely on products everyone else could buy and sell. I decided to permanently move to Asia in 1989 after I discovered my local partner in Hong Kong was diverting my European business to another company.
“I wanted to be headquartered in Asia and sell to my customers direct from Asia. So I eliminated my two USA warehouses and reorganized my operations to successfully make the transition. There were some legal issues, and I spent two years dealing with them in High Court in Hong Kong. Eventually I was successful.
“Being in Hong Kong gave me direct access to suppliers in real time. As well, I started to develop my own products with my own inhouse engineers and designers. The biggest obstacle I faced was that I was a foreigner competing with the local people. Most American buyers believed they should only deal with local people, who often promoted the impression they had big power since their relatives on the Mainland were military generals or party bigwigs and whatnot. However, over time I established my own relationships through networking and I gained the confidence of some large American retailers.
“One thing that proved extremely valuable to my success is that you can make things happen very quickly in China. It is a 24/7 country and there’s a real sense of urgency. However, you must control your own destiny. Do not let other people control you. Most people in the 80s and 90s believed in the fast buck, the one-hit wonder. They also valued you for what business you could give them, and when they found bigger opportunities they jumped ship to someone else. However, that has changed. Business relationships have become more stable.
“The Chinese are wonderful people, and I want to stress that advanced technology.
“Owning a factory and producing consumer products is no longer really on the national agenda. In addition, younger educated Chinese want to raise the bar for success in China. Being an investment banker, stock broker, e-commerce developer, lawyer or doctor is the high profile image they want to strive for. Finally, the new US trade tariffs have been a wake-up call for people who thought things would never change. The Chinese government has been speaking clearly for some time of the need to speed up the process of dual sourcing of Chinese goods.”
Mr Sloven is confident that Thailand’s government, the BOI and business leaders can make his plans happen, and he’s happy to be able to spend more time in a country he already knows very well.
“I started traveling to Thailand on holiday with my wife and two very young children years ago. From the start I fell in love with the culture and the people and their smiling helpful faces and personalities. I felt like I had found the perfect place. I have visited Thailand well over 50 times. For a period of 15 years I only vacationed in Phuket. It is like a Shangri-La. I had a house in Ban Chai Nam, which was unfortunately destroyed in the 2004 tsunami.
“There are many advantages in doing business here. Thai people are intelligent, well-mannered and cultured. Compared to China, Thai people have greater fluency in the English language and a more Westernized mentality. There is a stable currency, great health care and the standard of living is quite good.
“Thais have the intelligence, attitude and work ethic to develop into a strong international exporter. However, I feel that many Thai manufacturers are uncomfortable about branching out of their comfort zone of only selling to the local market. You do find many Japanese-, Korean-, and Taiwanese-owned factories here that make brands for export, however even these brands are reluctant to take on the Chinese market.
“The Thai government must educate the workforce and the manufacturing sector and instill in them the confidence and core competencies to follow the Taiwanese and Chinese model of self-sufficiency, and not allowing anyone to take advantage of them. To help guide the country on this path I believe the government should seek the assistance of Americans and other Westerners who have practical experience negotiating the global economy.
“Thailand can be a manufacturing and financial center like Hong Kong by using its abundant resources, and supplement these by accessing neighboring countries’ strengths. But in order to do this the Thai people need to be more creative and proactive. The BOI is very much on the right track and it can benefit from the assistance of Westernized experts in creating the proper infrastructure and incentives for factories and workers. Thailand should take advantage of the new globalized society and bring in experienced people to make the transition to a thriving export-based economy.
“In essence, you can put the puzzle together all by yourself, or find someone who knows the lay of the land to be your trustworthy ‘seeing eye dog’. I would advise the Thai business sector to hire consultants who know the drill. Don’t send a global sourcing analyst who has never gotten their feet wet out in the real world. Find an adventurer who’s been around the block a few times, a Davey Crocket or Daniel Boon. The opportunity gates are now open for Thailand and other developing countries with the right resources to walk through to their dreams, and dramatically raise their standards of living.
“I definitely want to help move Thailand to be on a par with China in terms of manufacturing and global distribution. I am considering all options, especially on supply chain issues. There are, no doubt, many differences in the way business is done in Hong Kong and China and the way it’s done in Thailand. I am not familiar with Thai bureaucracy. However, I am not going to build factories. I am going to leverage what exists and reorient skill sets to suit my needs. I will let the Thai factory management deal with the bureaucrats.
“I have had numerous meetings with expats living in Thailand who are doing export business, and I have met with the Thai Department of Trade many times. I am very proud to say I have helped change the lives of many people in China by putting good and fair business practices in place at companies I have been associated with. Now I am ready to bring a pioneer spirit to Thailand, then Vietnam and possibly Cambodia.”