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First Full-Scale Overseas Advancement of Sekisui Heim Unit House Business
Sep 17, 2009
SEKISUI CHEMICAL CO., LTD
- Housing Manufacturing and Distribution Joint Ventures Established in Thailand -

  • Housing business utilizing the strengths of modular approach begins in Thailand
  • Employing technologies for high performance, high durability, and short construction times as differentiation strategies

Housing Company (President: Teiji Kouge) of SEKISUI CHEMICAL CO., LTD. (President: Naofumi Negishi, hereinafter Sekisui Chemical) has been discussing the full-scale advancement of the housing business into overseas markets utilizing the expertise it has accumulated in the Sekisui Heim modular house business in Japan. Sekisui Chemical has now reached agreement with SCG Building Materials Co., Ltd. (hereinafter SCG), a subsidiary of Siam Cement Group (hereinafter SCG), one of the largest conglomerates in Thailand, on establishment of a joint-venture company to manufacture and distribute modular house. Its housing business will begin operating in and around the city of Bangkok, Thailand in October.
This project will capitalize to the maximum extent on Sekisui Heim's unique expertise and SCG's strengths in human resources and its brand power.

Specifically, it will: (1) Construct a house production plant and hire local employees, realizing sale prices similar to those of locally built houses through local procurement of steel frames and other parts and materials; (2) Strive to differentiate its houses through employing Sekisui Heim's unique expertise to solve local housing issues and, furthermore, demonstrating the superiorities achieved in Japan in the area of life-cycle costs; and, (3) Carry out efficient sales activities through cooperation with multiple major local developers.

Positioning overseas operations as part of its Next Frontier Projects, Housing Company of Sekisui Chemical plans to make proactive progress in development of this new frontier in the future.

Outline of the Joint Venture

  Manufacturing Joint Venture Company Distributor Joint Venture Company
Company Name SEKISUI-SCG INDUSTRY CO., LTD. SCG-SEKISUI SALES CO., LTD.
Business Contents Manufacture of modular house Modular house distribution and construction, and after-sale services
Capital 600 million yen 300 million yen
Investment Ratio 51% by Sekisui Chemical; 49% by SCGM 49% by Sekisui Chemical; 51% by SCGM
Investment Size 306 million yen invested by Sekisui Chemical 147 million yen invested by Sekisui Chemical
Headquarters Bangkok, Thailand (Plants located in Saraburi Prefecture) Bangkok, Thailand
Name of Representative Hidemi Sakurai (planned to take office on October 1, 2009) To be determined (planned to be appointed from SCGM)
Employees 37 persons at the start 17 persons at the start
Operations Start November 1, 2009 October 1, 2009

Note: Figures above have been calculated using the exchange rate 1 baht = 3 yen.

Diagram of the Joint Venture

Diagram of the Joint Venture

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

Business plans

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.

[Reference]

Outline of Siam Cement Group (SCG)

Name of representative: Kan Trakulhoon
Business content: SCG's five main businesses are chemicals, paper, cement, building materials, and distribution.
Headquarters: Bangkok, Thailand
Net sales: 879.5 billion yen (FY 2008)
Number of employees: approximately 28,500

Outline of SCG Building Materials (SCGM)

Name of representative: Pichit Maipoom
Business content: Building materials including roofing materials, ceiling materials, wall materials, flooring materials, tile, and sanitary ware
Headquarters: Bangkok, Thailand
Net sales: 70.1 billion yen (FY 2008)
Number of employees: approximately 7,800
Overseas facilities: nine facilities in Indonesia, the Philippines, Cambodia, Laos, and Vietnam

A prototype house constructed in Thailand
A prototype house constructed in Thailand


Press Contact

SEKISUI CHEMICAL CO., LTD.
Corporate Communication Department
Fax: (+81) 3-5521-0510

Disclaimer

This press release may contain forward-looking statements. Such forward-looking statements are based on current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements due to changes in global economic, business, competitive market and regulatory factors.
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