Aeon Thana Sinsap (Thailand) Plc (AEONTS) was incorporated on Sept 18, 1992 by Aeon Credit Service Co Ltd in Japan. The company currently has paid up capital of 250 million baht. Managing director Yasuhiko Kondo and senior vice-president Supannee Asawasuwan discuss the company’s strategy and outlook.
What is the AEONTS business model?
AEONTS has been in Thailand for 20 years, operating first as a hire-purchase company before expanding into personal loans, member cards and credit cards. Today our business comprises 42% credit cards, nearly 55% loans, which are both cash- and product-related, and the rest is hire-purchase financing of motorcycles. Thus AEONTS is a complete retail finance company with a total of 6.5 million cards comprising both member and credit cards.
What is the difference between an Aeon Member Card and an Aeon Credit Card?
To be a member of Aeon there are basic qualifications similar to other finance companies: a minimum age of 20 years, earning a regular income, having a secure job and so forth. Once someone has an Aeon Member Card, it can be used to draw personal loans from Aeon ATMs or Kasikornbank ATMs now as well.
If a member goes to purchase a motorcycle and requires financing, he or she can use the Aeon Member Card, fill out the necessary application and within 30 minutes, should they pass our lending criteria based on their profile and record with Aeon, will be able to purchase the motorcycle.
In order to obtain an Aeon Credit Card, a customer requires a minimum salary of 15,000 baht per month as required by the Bank of Thailand. That customer will then have access to credit card facilities that are not available to Member Card holders. What we have seen is that over time our Member Card holders grow into our Credit Card holders as their earning power increases, and we hope to continue to grow and service our members well.
Does AEONTS do the majority of its business in Bangkok or upcountry?
We have a total of 93 branches with 60 outside of Bangkok today. What we are looking more closely at now is how to service and improve the convenience of customers throughout Thailand, which is why we have introduced new services, more outlets, and more facilities. Before we only had 362 ATMs but now, through our partnerships with Kasikornbank and Thanachart Bank, our members can use their ATMs with our cards, so we have expanded the network to 9,000 ATMs for customers.
We have also partnered with Counter Services at 7-Eleven, which has more than 6,800 outlets nationally, and thus through these partnerships we have been able to service our customers better and we will continue to do more going forward.
Who are AEONTS’ target customers?
One needs to look at Thailand as a whole because essentially anyone who earns a living is a potential customer of AEONTS. There only 4 million people in Thailand who earn above 15,000 baht per month, and 16 million who earn between 5,000 and 15,000 baht; thus our target customers are this combined market.
Today we have 4 million member cards and 2 million credit cards and because of the government policies that have increased the minimum wage and minimum salary for university graduates, we can see this growing. The impact of this policy has increased the majority of Thailand’s working population’s earning power and this has been reflected in the number of applications for credit cards and member cards that AEONTS receives monthly _ they have doubled from 30,000 to 60,000 a month.
AEONTS has operations in both Vietnam and Cambodia. What businesses are being conducted there and how are they performing?
In Cambodia the sales volume is increasing and the motorcycle business and collections are showing good results. An interesting trend that we noted in Cambodia is that it’s not only lower-income people who use our service, but also higher-income people. We believe that a combination of our service and their learning about the instalment business is what is driving this.
In Vietnam we are seeing the same trend as in Cambodia and we have expanded our branches from Ho Chi Minh City and Hanoi to Danang as well. AEONTS is also looking at Laos and Myanmar. We have already established a representative office in Laos and are applying for a licence to conduct business there. As for Myanmar we still have to understand the market, the network, dealers, culture and so forth and perhaps in a few years will look to do business there.
What are the biggest risks facing your business?
For the past few years, every year Thailand has had events whether they be domestic, international or natural disaster in nature, so we have to ensure that our business and our systems are capable to manage any potential crisis or event that may occur. Thankfully, as we saw last year with the floods, our business and team were able to manage the crisis well and we have recovered well as a company.
What impact will the Asean Economic Community have on your business?
The AEC’s biggest impact will be the trade of goods and mobility of people within the region, which is why AEONTS has already opened operations in Cambodia and Vietnam and plans to begin operations in Laos and Myanmar.
Where do you see AEONTS in five years from now?
Initially AEONTS was an instalment company and has shifted toward being a credit card company. In five years from now we will still have a finance business but from this we will have an extensive database of information and can begin to use that data effectively as a marketing company, and our profits will shift from interest-based to fee-based.
Originally published in the Bangkok Post 12.10.12