Why Thailand was selected
This housing business will be started in Thailand for the following reasons:
(1) The Thai market is strongly oriented toward single housing residences, making it possible to utilize the strengths of Sekisui Chemical's Sekisui Heim modular houses.
(2) This joint venture will make it possible to form a partnership with a leading Thai firm, SCGM.
(3) Thailand is home to a group member company under the jurisdiction of the High Performance Plastics Company, making it possible to form local business ties.
The Thai housing market
Conditions in the Thai housing market are outlined below.
(1) Market size
New housing starts trend in the range of 300,000 - 400,000/year, with about 90% of these consisting of single housing residences. In addition, approximately 15% of new housing starts are targeted at the wealthy class.
(2) Current conditions of houses in Thailand and related issues
Ordinary houses are constructed of a combination of steel reinforced concrete (RC) with bricks or concrete blocks, and average construction periods are long at 12 months, due to factors such as the impact of Thailand's climate.
Construction quality is a concern, with numerous problems such as leakage of rainwater and cracking in walls.
Since thermal insulation construction is not common, air-conditioning efficiency is poor, causing cooling costs to place a burden on household budgets.
Since construction of houses themselves and interior finishing are conducted by separate contractors, there are concerns about how to handle any problems that may arise.
Business strategies of the joint venture
The joint venture will establish its brand as a housing manufacturer in Thailand and secure market share through combining Sekisui Heim's proprietary technologies (for high performance, high durability, and short construction times) with the power of the SCG brand. Specifically, it will:
(1) Strive to achieve differentiation through its technologies including advanced air tightness, advanced thermal insulation, and high durability, and its high-performance houses built using the factory production methods Sekisui Heim has established in Japan
(2) Initially deploy marketing focused chiefly on major developers, to secure a stable stream of orders
(3) Strive to differentiate itself through handling all operations from house construction through interior finishing in-house and, furthermore, handling activities from sales through after-sales services as well
In the 2010 fiscal year (January - December), essentially the first business year of the joint venture, it plans to sell 100 houses per year, and in the 2013 fiscal year it plans to sell 1,000 houses per year.