ANNUAL REPORT 2011 - Thecorporatelibrary.net

THAI UNION FROZEN PRODUCTS PCL.
Risk Factors and Other Related
CONSIDERATIONS
BUSINESS RISKS
Trade Barriers
to become one of the world’s leading players,
both in terms of production potential and
competitiveness as well as acceptance by countries
throughout the world in its recognized food
safety and world-class quality. These factors in
combination have placed Thailand on a strategic
position to gain strong reputation and unwavering
trust in global marketplace as one of the world’s
top seafood processing and exporting countries.
Seafood exports bring tremendous amount of
export revenues into the Thai economy each
economic growth. However, this remarkable
growth is not without obstacles. Thailand has
been continuously facing trade barriers erected
by its trade partners. Such barriers include both
tariff and non-tariff measures, the latter of which
have particularly become more prevalent and
further incorporating sensitive topics into their more
rigid international trade standards, creating more
hurdles for Thai seafood operators to overcome.
Under this continually unfavorable circumstance,
close monitoring of situations and keeping abreast
of new conditional updates and developments
are all a must among Thai seafood operators
to ensure their timely adoption of appropriate
measures in order to stay compliant with any
upcoming non-tariff barriers.
The Company’s Policy and Actions Taken
We have been closely monitoring all situations
that may affect our exports and have undertaken
measures to adapt to new regulations and rapidly
changing market trends. As a result of our policy
to always maintain our status as a good corporate
citizen in the global seafood market, TUF and its
trade partners and customers, both within Thailand
and throughout the world. We continuously emphasize
sustainable development in all aspects of our
operations under our internally Sustainability at
TUF encompasses protection of natural resources
and the environment through our responsible
environmental management, fair and equitable
treatment of our workers, and meaningful long-term
contributions to sustainable social development
of the surrounding communities as well as on
the national and international levels. Marketing
and investment policies are also developed and
implemented with the aim to broaden our markets
to cover all parts of the world and to diversify our
product portfolio, with strong emphasis on value
added products, in order to better serve our
customers’ needs. Through a series of strategic
investments, we now have or are constructing
manufacturing facilities in 10 countries, including
Guinea, the United States, France, Portugal,
Ghana and Seychelles with Thailand as the main
production base. Such diverse production locations
enable us to successfully take advantage of, or
manage risks of, the country of origin requirement
that is normally stipulated in preferential trade
measures or trade barriers.
PRODUCTION RISKS
Raw Material Price and Procurement
The cost of raw materials accounts for about 70
to 80 percent of our overall production cost. Raw
material procurement is therefore a major driver
of the Company’s costs and profits. Prices of
in accordance with world market situations.
Therefore, it is our policy to set our prices based
on the prevailing market trend which could
occasionally result in cost differential between raw
60 ANNUAL REPORT 2011