Are Thai billionaires taking over Galeria department stores? | tagesschau.de

The Chirathivats from Bangkok are among Asia’s richest families. Many department stores in Europe are already part of their conglomerate, such as KaDeWe. Are the billionaires now expanding further in Germany after the Galeria bankruptcy?

After the Signa bankruptcies surrounding the Austrian billionaire René Benko, a Thai billionaire family came into the public eye: the Chirathivats from Bangkok. According to the US magazine Forbes, they are the fourth richest family in Thailand and the tenth richest family in Asia.

They own the Central Group, a huge and widespread conglomerate with hotels, restaurants and around 120 department stores, including 16 luxury department stores. Benko was their most important trading partner in Europe. With 50.1 percent, the Central Group is already the majority owner of Signa Premium and thus of German luxury department stores such as the KaDeWe in Berlin, the Alsterhaus in Hamburg and the Oberpollinger in Munich.

It is quite possible that the Thai Central Group will use the bankruptcy of the Austrian Signa Holding to completely take over the venerable department stores, says Pavida Pananond, professor at the Thammasat Business School in Bangkok. The takeover of further branches of the insolvent Galeria Karstadt Kaufhof also fits with the Central Group’s announced strategy of expanding in Europe.

Which branches could be interesting

Johannes Berentzen from the Munich trading consultancy BBE shares this view. “They have claimed to become the world’s largest luxury department store chain. The Central Group could be particularly interested in the expensive fillets at selected locations.” Ten to 20 of Galeria Karstadt Kaufhof’s branches could be interesting for investors from Thailand, says Berentzen; Locations in large cities, with a large catchment area and high purchasing power. When asked, no representative of the family business wanted to comment.

The Central Group is led by 59-year-old Tos Chirathivat. He is the grandson of the company’s founder, Tiang Chirathivat. In 1925 he moved from Hainan, China, to Bangkok, where he opened his first shop a short time later. In 1956, his son Samrit, the father of the current CEO, opened the first shopping center in Thailand in Bangkok.

Today the Central Group is the largest operator of shopping centers in Thailand. The family’s fortune is estimated by Forbes magazine at $12.4 billion.

“We’re staying for the long term”

The group not only owns shares in department stores in Germany, but also in several European countries, including Globus in Switzerland, La Rinascente in Italy, Illum in Denmark and Selfridges in England. In the latter case, the Thai investor only took advantage of Signa’s financial difficulties last November and increased his shares.

When asked why the Central Group from Thailand had to save European department stores, managing director Tos replied in one of his rare newspaper interviews in the magazine “Monocle” in 2022: “Because it’s not easy and no one else wants to do it anymore. People would rather invest, buy, sell, make money and move on.” The Central Group is different. “We stay long-term and almost never sell anything. It can take years to complete a project, especially in Europe. I don’t see many people or companies willing to do that anymore.”

The experience in retail and with large department stores is what sets the Thai Central Group apart from the Austrian investor René Benko, says retail expert Berentzen. “They don’t say, I speculate like Benko and actually run a real estate business. Rather, they have broad trading experience, including in Europe, even in Germany.”

Family business as an opportunity and a risk

But the Central Group also looks back on difficult times. During the corona pandemic, the retail, catering and hotel industries suffered. According to estimates by the US magazine Forbes, the family lost around half of their wealth and slipped from second to fourth place among Thailand’s richest families.

The timing was bad. In February 2020, the family business went public with its retail division. At $2.5 billion, it was Thailand’s largest IPO. However, the first Covid infections outside of China were reported during this time. Within a few weeks, the stock lost half its value. To this day she has not fully recovered.

The family-run business is both an opportunity and a risk. Company founder Tiang Chirathivat had 26 children with three wives. The family now includes more than 200 members – plenty of choice for potential offspring for the company. Numerous family members work in the company. If you look at the supervisory board on the homepage, you can see that less than half of them do not have the name Chirathivat. There is not a single person in the seven-member central management body, the “Executive Committee”.

Actors and rappers also belong to the clan

But not everyone is qualified to run a company just because of their name, says retail expert Berentzen. The succession and selection of suitable family members must be well organized and follow clear rules. CEO Tos Chirathivat likes to emphasize that only family members who received three quarters of the supervisory board’s votes after a tough selection process would be accepted into the management team.

The “family council” also decides how assets are used, the educational paths of the offspring and supports family members who are not actively involved in the business, explains economics professor Pananond. The wealthy family can provide their children with a very good education. This means they are well prepared for their future tasks and, as a family, have a broad network in politics and business, says Pananond. A disadvantage is that older people are often in charge and there are few opportunities for qualified external candidates.

The family not only works closely together, but has also lived together in a residential complex in the center of Bangkok since the beginning – around 50 Chirathivats over three generations. When the facility becomes too old and too small for everyone, a new one is built. To this day, many family members are said to still live together in three residential complexes spread across Bangkok.

While Tos is considered to be rather media-shy, other members of the family clan are less reserved. Pachara “Peach” Chirathivat is an actor, singer and model. Patsarakorn “Pok” Chirathivat is a rapper, host of his own YouTube channel and married to a Thai actress.

Parallels to the Brenninkmeyer family

The CEO Tos Chirathivat is married and has two sons. As a teenager, he helped out in his parents’ shops. He later studied finance at Columbia University in New York. At first he wanted to become an investment banker. He worked at Citibank in Thailand for a year, then joined the family business and opened a new supermarket chain. He has been head of the Central Group since 2013. He once explained that he doesn’t understand enough about e-commerce himself, but younger family members like his son do.

Trade expert Berentzen sees parallels with the Brenninkmeyer family in Germany, the founders of the textile trading company C&A. The extended family of over 500 people is one of the richest families in Europe with an estimated fortune of more than 25 billion euros. She also runs a conglomerate with retail, hotels, restaurants and real estate. Like the Chirathivats, many members of the family are involved in operational business.

In the end, what counts in the Signa insolvency proceedings is who brings the most money. And the family-run Central Group from Thailand has a good chance. Retail expert Berentzen estimates that they could probably invest several hundred million euros in the department stores. Even if he thinks that the department stores will go into different hands.

Fashion shows and concerts in the shopping center

If some houses go to the Central Group, the locations could have a future. CEO Tos attaches great importance to the fact that the respective houses adapt to the local culture. Every department store should be unique so that customers have a reason to go there. Economics professor Pananond emphasizes that this has already worked successfully in Italy. In Switzerland, the Central Group separated from branches in smaller cities, concentrated on the larger ones and fundamentally renewed them. Business is running again.

Shopping centers are very important in Asia. People like to spend a lot of time there, says Pananond. They are meeting places where you shop, eat, go to the cinema or fitness center and take your children to daycare. Central Group’s department stores in Thailand host fashion shows, concerts and other events, combined with online business. The family company from Thailand could also implement a similar model in Germany.