Rinnai Thailand Co. Ltd. is Thailand’s leading manufacturer of quality household and industrial products. They are known for their world-class product standards and energy-saving qualities. Rinnai offers a selection of products to best meet consumer needs and demands. Their products range from water heaters and tabletop gas cookers to built-in hobs and cooker hoods.
The company was established in May 1990 as a joint venture between Rinnai Corporation Japan and Lucky Flame Co. Ltd. The company’s registered capital is 40 million Baht, making Rinnai a market leader.
Manabu Goto is the deputy managing director of the Thailand business and has been working internationally with the company for thirty-four years across both Japan and Thailand. When we chat, he is feeling positive, having steered the company successfully through the recent pandemic. While so many sectors felt the pain of the stay-at-home directive, Mr. Goto describes how Rinnai was fortunate.
“Last year, our markets actually grew because people stayed home, and they could not go overseas. They used their money for our cooking and heating appliances instead.” It is well documented that through the COVID-19 crisis, in many countries, consumers redirected their surplus funds away from booking holidays and into home improvement. Rinnai found this to be the case in almost every market they serve. “All our Asian markets—Japan, China, Korea, all grew, as did America and Australia. The only market that didn’t grow was Vietnam, but generally, it was a good result last year.”
After the successful navigation through the last few years, Mr. Goto is firmly fixed on the future. His immediate plans for the Thai market centre around growth strategies. “In Thailand, Rinnai is the is number two largest water heater manufacturer, but only 25% of people use it. Around 75% of people still don’t use an electric hot water heater, so one of our missions is to expand the sale of the water heater in this market.”
We want to provide better conveniences for Thai people.
Expansion plans for Mr. Goto reach well beyond the next three to five years. “Certainly, the expansion of the water heater products into new markets is key.” But another part of the expansion involves a broader collaboration within the Rinnai Japan Corporation parent group. “Our group company works across all Asian countries, including Indonesia, Vietnam, Malaysia, Singapore. We also distribute in Myanmar, Laos, Cambodia, and others. So we’d like to expand there. We’d want to create collaborations through group synergies, and then export our products through the group company into Asia.” Clearly, Mr. Goto and the company have ambitious plans for the future.
But for companies with strong growth trajectories like these, strategies for product expansion, development, and collaboration must be underpinned by a clear sense of brand identity and a strong understanding of what differentiates a brand and its products from its competitors. Certainly, on these factors, Mr. Goto is clear.
“We have a very different brand position, and we are different in the quality of course.” Quality is so important to Rinnai, particularly due to the safety requirements. Consumers, quite rightly, have concerns for safety with water heating products, so being able to provide products with strong, stable, and reliable brand attributes is important. “Quality improves our brand awareness. These are the two key factors for us, with new functions and products also being important for us too.”
Innovation is an area that Rinnai constantly works on, as Mr. Goto believes it makes a difference within the Asian markets. Labour costs in Thailand are high compared to Vietnam, Myanmar, Laos, or China, and the low Chinese product costs are hard to compete with at scale. It takes a combination of strong product value-adds and innovation to tackle these issues in a low-cost appliance-driven market. “Before 2018, Chinese products entered the Thailand market with a 20% import duty. But from 2018, the import duty dropped to only 5%, so low-cost products from China were far more readily sold. New competitors sprang up with products that were cheaper than most made in Thailand.”
It stands to reason that when a company manufactures high-end local quality products that separate themselves from the cheaper end of the market, some pressures must naturally fall onto the supply chain, but Mr. Goto doesn’t see this. “One of my philosophies is that our suppliers are our business partners. So we work to keep good relationships with all our suppliers. It’s not just about cost, but how we cooperate and grow with each other, how we work as a team.” Rinnai has around three hundred suppliers, but 70% of their purchase volume comes from just twenty to thirty key suppliers.
Good supplier relations, particularly with a small core group of key suppliers, are underpinned by long-term relationships built on trust and working together. “We try to keep suppliers as a priority. Even though in the last two years there have been difficulties, we never stopped our production line. We have always been able to supply enough products to the market. And of course, this kind of healthy relationship with key suppliers is very vital for the success and growth of the company.”
Part of the strength of the Rinnai company is its strong brand name and long history in the business. While Rinnai Thailand was established in 1990, it brought the name from Rinnai Corporation Japan, which began with a small, incorporated company called Rinnai & Co back in 1920 by founders Hidejiro Naito and Kanekichi Hayashi. Their first products were pressurised oil stoves, and the Rinnai name has gone on to become a household name since then right across Asia as well as Australia and the US.
The people that make up the Rinnai company are important to Mr. Goto. He deeply understands and values the asset that the company holds with its staff. “My philosophy is that our human resources are of critical importance to the company. When we spend money on our employees, we don’t consider them a cost to the business, but an asset. They are the engine that drives the company day-to-day and the engine that drives the company’s long-term growth.”
Mr. Goto is conscious of leveraging the strong Rinnai brand name and company history further, to build the path for the brand into the future. Growing and developing his staff is key to this. “So we have a 32-year-old company history. When our managers become 60, they will have changed a generation. So we need to look for and set up our successors.”
Exciting times lie ahead for Rinnai Thailand. Under the watch of Mr. Goto, it’s onwards and upwards.