Snail cream, smelly fruit

Thai firms tap Chi­nese tourism

Global Times - Weekend - - TRAVEL -

The la­bel on the pink and white box of face cream sold in a Bangkok hy­per­mar­ket proudly de­clares that it is based on a “snail se­cre­tion fil­trate mois­ture sys­tem.” The Snail White brand­ing – plus some pos­i­tive In­ter­net re­views – is enough to have Chi­nese tourists re­cently lin­ing up to buy the slime-in­fused prod­uct.

Alice Chen, 21, a Chi­nese col­lege stu­dent, says she saw the face cream re­viewed on­line and wanted to try it out be­cause she couldn’t get it back home. And a 22-year-old Chi­nese tourist also at the Big C Ratchadamri store, who only gave her name as Yvonne, said she bought some – it re­tails at about $40 a box – be­cause “a blog­ger said it was good and in­ex­pen­sive.”

Mean­while, at a dessert cafe just up the road in Bangkok’s up­scale Siam Paragon shop­ping cen­ter, another group of Chi­nese tourists take pic­tures on their phones of whim­si­cal treats made from durian – the yel­low fruit known for its sul­fury smell that is mainly grown in south­east Asia.

About 11 mil­lion Chi­nese tourists are ex­pected to come to Thai­land this year, up from just over 1 mil­lion in 2010, mak­ing China by far the big­gest source of tourism here. And they are spend­ing more per head than pre­vi­ously, ac­cord­ing to Thai gov­ern­ment fig­ures.

And it isn’t only the ho­tels, tour op­er­a­tors and air­lines that are ben­e­fit­ing. A big slice of this spend­ing is with re­tail­ers, res­tau­rants, and food and cos­met­ics makers that tar­get the Chi­nese au­di­ence.

In­vestors have taken note, driv­ing up the share prices of many of the com­pa­nies con­cerned to high priceto-earn­ings ra­tios. So far, in some cases, that se­cu­ri­ties an­a­lysts say they are wary of valu­a­tions, es­pe­cially as tourists’ tastes can change rapidly.

Do Day Dream Pcl, the com­pany be­hind the skin-whiten­ing Snail White cream, is one.

Boxes of the firm’s sig­na­ture cream, which the firm says it makes from snail slime ex­tracted us­ing a process done in South Korea, are stacked high at Thai­land’s airports and malls as it has be­come a must-buy item for many Chi­nese vis­i­tors who covet paler skin.

Sales of the Snail White prod­ucts have been sky­rock­et­ing since 2014 as beauty blog­gers in Hong Kong and Sin­ga­pore gave them rave re­views, ac­cord­ing to Do Day Dream Chief Financial Of­fi­cer Piyawat Ratchapol­sitte.

In 2017, the com­pany’s rev­enue bal­looned 35 per­cent to 1.7 bil- lion baht ($52 mil­lion) as the com­pany also built a strong Thai do­mes­tic mar­ket and grew on­line sales di­rect to Chi­nese con­sumers. It also sells other snail se­cre­tion-based prod­ucts, in­clud­ing shower gel and lo­tions. The sales to vis­i­tors are at risk, he said, if for any rea­son there is a sud­den drop off in Chi­nese tourists. That hap­pened briefly in 2015 and 2016 when the Thai gov­ern­ment made it much more dif­fi­cult for the tour op­er­a­tors of­fer­ing re­ally cheap pack­ages to the Chi­nese – known as “zero-dol­lar tours.” Ex­ports to China pro­duced 30 per­cent of its rev­enue last year, Piyawat said. That is more than the 10-15 per­cent that comes from Chi­nese tourists buy­ing in Thai­land.

Forbe’s rich­est list

Another Thai beauty firm that sells color

cos­met­ics and skin­care prod­ucts, Beauty Com­mu­nity, is also see­ing sub­stan­tial growth.

Chief Ex­ec­u­tive Suwin Kraib­hubes and said South­east Asia to ac­count for 15 he ex­pects tourists from China per­cent of rev­enue, which will help him reach a 20 per­cent growth tar­get this year.

Suwin, a physi­cian-turned­busi­ness­man, and Do Day Dream founder Sarawut Porn­pata­naruk both for the first time made this year’s Thai­land’s 50 Rich­est List com­piled by Forbes.

Another sweet suc­cess story is Af­ter You. The pop­u­lar dessert restau­rant has 28 cafes through­out Bangkok, with six in pop­u­lar tourist des­ti­na­tions such as shop­ping malls and along the skytrain line.

The cafe, known for long queues and its Shibuya Honey Toast – a block of bread served with ice cream – was ini­tially pop­u­lar among Sin­ga­porean and Malaysian cus­tomers.

But in 2016, Chi­nese tourists Suwan. Af­ter be­gan You to pour into the cafes, said Chief Ex­ec­u­tive Maetup T.

“Tourists see our long queues, a pic­ture on so­cial me­dia or read a great re­view

and want to try,” he said.

Af­ter You has cap­i­tal­ized on the flow of Chi­nese cus­tomers to set up “durian rooms” last year of­fer­ing fresh durian desserts specif­i­cally aimed at the fruit’s lovers. Durian is of­ten banned in taxis and ho­tels and air­lines around South­east Asia be­cause of its pun­gent smell.

The com­pany plans new branches and durian rooms in top Thai tourist des­ti­na­tions out­side of Bangkok and it also plans to start a fran­chise model in Malaysia next year, said Maetup.

Chi­nese tourists are also snap­ping up sa­vory snacks. Taokaenoi’s crispy sea­weed snack has been a hit for years.

About 20 per­cent of Taokaenoi’s 2017 do­mes­tic sales were to tourists, the com­pany’s Head of In­vestor Re­la­tions, Koosoon Rat­tana­porn, said, while 60 per­cent came from ex­ports, nearly half of them to China.

Com­mand­ing pre­mi­ums

The ben­e­fits of Chi­nese de­mand and ex­pec­ta­tions of fur­ther su­per­charged growth are clearly re­flected in share prices.

In­vestors are pay­ing 52 times earn­ings for the Do Day Dream shares, well above the Thai per­sonal prod­uct in­dus­try av­er­age of 21 times, and Af­ter You’s shares are trad­ing at 79 times earn­ings, while Taokaenoi’s prices are 43 times earn­ings.

There is ex­pec­ta­tion of higher earn­ings be­cause th­ese com­pa­nies are in the “growth stage of their busi­ness life cy­cle,” said CGS-CIMB Se­cu­ri­ties Thai­land an­a­lyst Urai­wan Tan­tisuwan­nakul.

Do­mes­tic con­sump­tion has slowed in recent years so in­vestors are will­ing to “pay a pre­mium” for firms with plans to di­ver­sify to the Chi­nese mar­ket, she said.

Photo: VCG

A Chi­nese tourist takes pic­ture in Bangkok, Thai­land.

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