Monday, July 21, 2008

Nareerat Wiriyapong

The innovation team of SCG Paper, Southeast Asia`s largest paper producer, called their brainchild a hybrid eucalyptus. It was inspired by customers` requirements but it will also mean higher margins for the company.

Like other genetically modified farm products, the hybrid eucalyptus was created in a bid to resist climate conditions and endemic diseases, allowing farmers to use fewer chemicals while earning more income from higher yields.

The new variety won one of two outstanding innovative product awards in the SCG Power of Innovation Awards 2008. The contest, now in its third year, is a part of Siam Cement Group`s (SCG) efforts to strengthen its innovations in products, manufacturing processes and services.

Chaovalit Ekabut, the president of SCG Paper, one of the conglomerate`s core businesses, said innovation was critical for the group, especially when margins have shrunk because of rising costs while competition has intensified.

"We are limited in raising our product prices to recover higher costs because of fierce competition in the market," said Mr Chaovalit.

"Profit margins are falling, prompting us to try to add value to our products and differentiate them from those of our competitors."

A few SCG innovations have been commercialised, such as the "eye-friendly" paper that features less glare and has become popular among pocket book publishers, said Mr Chaovalit.

The "Green Read" paper is 15% more popular than normal printing paper.

Another outstanding innovative product is SCG Cement`s CPAC agricultural drying-yard concrete, which helps shorten the period of drying agricultural products in the field. Consequently, farmers will get more dried products that can be forwarded to the next process even faster.

SCG, Thailand`s biggest industrial conglomerate with sales of 267.7 billion baht in 2007, last week announced its five-year investment of six billion baht from this year to 2012 to support its innovation strategies including budgets for R&D and intellectual property (IP) management.

"We have doubled our R&D spending every year for the past three to four years," said president and chief executive Kan Trakulhoon.

"To be a regional leader, we have to have our own technologies. We can not just follow others in the industries we are operating in."

The number of in-house researchers has tripled to 300, including more than 20 doctorate holders, Mr Kan said.

Citing the substantial investment in innovation, Mr Kan said SCG definitely aimed for reasonable financial returns.

"This kind of investment could bring about a return of 15% EBITDA (earnings before interest, taxes, depreciation and amortisation) on investment," he said.

"On top of that, we gain a good reputation from investing more than one billion baht annually on innovations."


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