Thai silk company Jim Thompson vows Covid comeback as a global brand
When James Harrison Wilson Thompson — better known as Jim Thompson — first set foot on Thai soil as an operative for the US Office of Strategic Services in 1945, he surely never imagined one day returning to the kingdom and settling in, nor devoting himself to saving the country’s silk industry from extinction.
Though Thompson mysteriously went missing in the woods of Malaysia’s Cameron Highlands in 1967, his Thai silk company survived, successfully sailing through tough times such as Thailand’s repeated coups and the Asian financial crisis. But the Thai fashion brand that bears his name now faces new threats that it hopes to conquer with a recently appointed chief executive.
Jim Thompson is hurrying to turn round its business, hurt by restrictions on tourism due to Covid-19. It has slashed its workforce drastically and revamped its product line-up to entice Thai residents, including the younger generation, rather than tourists from abroad.
In an exclusive interview, chief executive Frank Cancelloni told Nikkei Asia that while he was focusing on salvaging the brand from the effects of the pandemic, Jim Thompson has not given up its ambitions to grow internationally.
“We have everything to become the first Asian iconic global lifestyle brand,” said Cancelloni, who joined in March 2021.
For most visitors to Thailand, Jim Thompson is a household name. Scarves and neckties made of bright, high-quality silk and other materials have become established souvenirs of the country for tourists from Europe, the US, Japan and China.
Thompson, who was sent to Asia as a spy towards the end of the second world war, started his business when he found a settlement of silk weavers in Bangkok. The Thai Silk Co, founded in 1951 by Thompson, who was fascinated by the unique texture woven in the kingdom, remains the parent company of the Jim Thompson brand.
Thompson introduced Thai silk textiles to the west, earning him the name “King of Silk”. But on March 26, 1967, he disappeared while on holiday in Malaysia and has never been seen again.
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“When it comes to Thai silk, Jim Thompson is the first name that comes to mind. It has an impressive brand story, with Thompson almost single-handedly saving the Thai silk industry in the middle of the last century. His disappearance adds mystery to the story,” said Jörg Dietzel, a brand consultant and author of The Next Big Asian Brands.
Despite its authentic brand image, Jim Thompson was hit hard by the pandemic because of its heavy reliance on inbound tourists. “The company had to make a drastic decision to go through Covid, and one of the decisions was to downsize the workforce”, said Cancelloni, a fashion brand executive from France who previously oversaw the operations of Tommy Hilfiger and Calvin Klein as former president of PVH Asia.
As much as three-quarters of the workforce, including factory workers, was axed, reducing the number from 2,650 in 2018 to 650 at one point.
Jim Thompson has also reduced its presence in foreign markets, closing stores in Singapore and Malaysia. A network of 40 stores in south-east Asia before the pandemic has shrunk to 22. The number of workers has recovered to 1,000, according to Cancelloni.
Cancelloni, who stressed the urgency of breaking away from dependence on tourists, also led the initiative to review Jim Thompson’s product line. A Laotian-American designer was appointed as the creative director to bolster the line-up. In addition to incorporating a new colour called Jim Thompson Red — close to orange — for stores and brand communication materials, new designs with a minimal look and modern graphics have been adopted to products such as fisherman pants, polo shirts, and T-shirts to entice younger generations.
“Our products are getting more contemporary,” the chief executive said.
The product reform was aimed at building the fan base in Thailand, especially young customers and including foreigners. Cancelloni conducted a large-scale survey of Thai residents, including Japanese and Chinese, immediately after he took the helm. While brand recognition was high at 91 per cent, 50 per cent said they had never actually purchased the product.
“The style of the product was perceived as a bit out of date, no innovation, something you will buy for your father or grandmother. Nothing sexy, nothing exciting. We had a product issue,” Cancelloni said.
The results of the series of reforms are starting to appear. While Cancelloni declined to give specific numbers, he said the company planned for sales and profits in 2023 to be higher than in 2019, the pre-pandemic period. According to data from Thailand’s Department of Business Development under the Ministry of Commerce, the Thai Silk Co had revenue of 806.2mn baht ($23mn) and a net loss of 737.8mn baht in 2021.
Revenue needs to grow about 170 per cent to return to the 2019 level of 2.2bn baht. In 2019, the company had a net loss of 480.1mn baht.
Cancelloni suggested the company’s bottom line will keep improving next year after getting close to break-even this year. The company has been losing money since 2017, when it had a net loss of 9.62mn baht, Department of Business Development’s data show. “We would not comment on the numbers that are public information,” he told Nikkei.
It is likely that hefty costs related to the massive lay-offs have weighed on the company’s figures. Thailand’s Labor Protection Act requires companies to offer generous severance pay. A worker with a company for 20 years or more earns 400 days in severance pay.
Cancelloni said he did not want to touch on the workforce cuts, which happened before he joined the company and were a direct consequence of the pandemic. “We have hired more than 300 employees this year”, with another 150 open positions to fill, “and will probably hire 150 additional associates next year”, he said.
Two things make Cancelloni confident that next year will be better than 2019. Progress has been made in reducing the dependence on tourists, and the contribution of Thai residents to sales has grown. “Around 30 to 35 per cent of our revenue is coming from people living in Thailand, which is a big change from a few years ago, where we really almost exclusively depended on tourists,” he said.
In addition, a full-fledged recovery of tourism can be expected. Approximately 40mn tourists visited Thailand in 2019, before the spread of coronavirus, but by 2021 the number had plummeted to 430,000. From October 1 this year, Thailand abolished border restrictions associated with Covid countermeasures. On November 21, the National Economic and Social Development Council said it expected foreign tourist numbers to recover to 23.5mn in 2023, after an estimated 10mn in 2022.
Jim Thompson has three business pillars: Fashion, which makes and sells clothing; Furnishing, which deals in interior fabrics such as wallpaper and cushions; and Hospitality, which runs restaurants under the brand name in Thailand, Singapore, and Tokyo and Yokohama in Japan.
Cancelloni said Jim Thompson benchmarks Ralph Lauren and Giorgio Armani as its bigger rivals as lifestyle brands. Both offer a wide range of products as well as services beyond fashion, from room decor to cosmetics, cafés and restaurants.
A renovation of Jim Thompson House, Thompson’s residence, which is now a tourist destination in Bangkok, will be completed next April and is expected to contribute to increasing the brand’s recognition. The house, with a museum and restaurant, boasted more than 300,000 visitors a year before the pandemic.
On November 17, Jim Thompson got a surprise boost from French president Emmanuel Macron, who was in Bangkok to attend the Asia-Pacific Economic Cooperation (Apec) summit and stopped by the Jim Thompson House, led by fellow Frenchman Cancelloni.
During his stay in Thailand Macron, who wanted to promote France’s involvement in the Indo-Pacific region, posted a tweet about the streets of Bangkok and how he interacted with Thais. “President Macron was very engaged and asked a lot of questions about Mr Jim Thompson, the art pieces he collected and about Jim Thompson as a company,” Cancelloni explained.
“Globally, we see a trend towards quality and genuine brands and materials, also sustainability and authenticity. So silk from Thailand is well placed to appeal to millennials and even Gen Zs,” said Dietzel, the brand consultant.
“I’m totally convinced that this brand would be worth 3, 4 or even 5 hundred million dollars in the midterm. It will take time. I mean, you don’t become Ralph Lauren and Giorgio Armani within two to three years. For me, it’s an eight-to-10 year plan,’‘ he said.
Additional reporting by Niyakarn Atiyudhakul
A version of this article was first published by Nikkei Asia on December 2 2022. ©2022 Nikkei Inc. All rights reserved.