In Thailand, 7-11 convenience stores are becoming ubiquitous. While many appreciate the fast and accessible services, impacts on small business and local suppliers are mixed.
By Zachary Frye
Thailand has a love affair with 7-11. To date there are over 11,000 stores within the country, serving over 11.8 million customers daily. Nearly 5,000 of those stores are in the Bangkok Metropolitan Region alone. By comparison, the U.S. boasts just over 9,000.
Although the company is headquartered in Dallas, it is owned by the Seven-Eleven Japan Company, based in Tokyo. In Thailand, the chain is a subsidiary of the local CP All group. In 2018, CP All reported revenue of over 500 billion baht (US$15 billion).
In the Land of Smiles, 7-11s offer more than snacks. Patrons can pay utility bills, buy postal services, and book international and domestic flights. Limited banking services were rolled out in stores late last year. 7-11 has established itself in Thailand as a cornerstone of daily economic life.
But with this large array of services and products comes a responsibility to ensure that negative social impacts are mitigated. While 7-11 in Thailand has clearly figured out how to maximize convenience and accessibility, it has had a mixed record on adopting ethical business practices, especially for suppliers.
SME partnerships and relations with street food vendors are positive
7-11 has made an effort to partner with small and medium-sized enterprises (SMEs). According to the company, there were approximately 2,200 SMEs selling products in their stores in 2017. The total number of suppliers hovered around 6,000.
Several ongoing SME programs support the livelihoods of local farmers. One such program is the Golden Banana Project, which partners with small farms to sell certain types of bananas in stores across the country.
7-11’s relationships with street food vendors should also be applauded. While some argue that the influx of 7-11s uniformly disadvantages small vendors, the reality is more nuanced. As Thais have come to depend on 7-11 for a significant portion of their daily needs, street food vendors routinely set up shop just outside its doors. As 7-11s increase foot traffic in a particular area, vendors are able to count on a steady flow of potential customers.
Echoing this sentiment, a local food vendor told ASEAN Today, “It’s good [for me]. It’s open 24 hours. When people come out, some of them buy from me.”
Not all suppliers are treated fairly
Some local suppliers in Thailand partner with corporations under a system known as contract farming, which involves an agreement between farmers and companies for the steady supply of agricultural products.
While contract farming can confer advantages to local producers by promoting increased market exposure in the globalised economy, the risk of exploitation is significant.
Paisit Panitkul, a law professor at Chiang Mai University, says contract farming is often unethical in practice: “Contract farming represents a form of disguised exploitation, with companies taking all benefits from selling seeds, livestock, animal feed and farm equipment. Everything generates huge profits for agribusiness.”
CP All uses its leverage as a large corporation to push unfair contracts on local suppliers. Wilaiwan Khammi, a second-generation fish farmer in Maha Sarakham Province, was left with debts of over 1 million baht ($31,000 USD) after ending her contract with CP. Her family was under contract to buy fish and fish feed from the company to maintain their stocks. But after the fish started dying, she was not compensated for her losses and couldn’t sell enough to make back the money. Although locals claim the deaths were a result of the poor quality products they were sold, the true cause of death is unknown. CP All refused to take responsibility.
She recalled feeling pressure to adhere to the contract. “We felt sad because there was this option to make more profits for our families, but we couldn’t choose it. You have to sell to CP even though you’re not happy or satisfied.”
Moving forward, suppliers and workers need a better deal
Despite some pushback over monopolization in recent years, 7-11 remains hugely popular in Thailand. The combination of convenience and immediacy – along with the sheer size of the operation – ensures that it will continue to be a prominent force in the Thai economy.
But CP All needs to double down on the protection and prosperity of all stakeholders, including its contract farmers, suppliers, and workers.
For the past three years, CP has published its annual sustainability report, outlining company policy toward social and environmental responsibility. The company implemented human rights assessments to cover the entire supply chain and projects to reduce plastic bag usage. It also extended insurance to small-scale contract farmers to help manage risk and ensure economic stability.
These are positive steps, but more should be done. Most pressing is the need to formally unionise its workforce. Collective bargaining mechanisms would strongly benefit store workers, many of whom are low-income individuals.
Contract farmers should also have the freedom to make business decisions that are in their best interest. If a producer wants to use different feed or fertiliser, they should be able to without fear of reprisal. Likewise, fair arbitration standards should be adhered to in cases of conflict and reasonable contract termination channels should be available.
Given its power and influence, CP has an advantage over small farmers and everyday workers. As growth continues, they need to be treated as valued partners, not just a means to an end.