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HELPING YOUR BUSINESS GROW INTERNATIONALLY<br />

<strong>Thailand</strong><br />

<strong>Business</strong><br />

<strong>Guide</strong>


This guide was produced by the <strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> <strong>Thailand</strong> Markets Unit in collaboration with<br />

the British Posts in <strong>Thailand</strong>.<br />

Disclaimer<br />

Whereas every effort has been made to ensure that the information given in this document is accurate,<br />

neither <strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> nor its parent Departments (the Department for <strong>Business</strong>, Innovation<br />

and Skills, and the Foreign and Commonwealth Office) accept liability for any errors, omissions or<br />

misleading statements, and no warranty is given or responsibility accepted as to the standing of any<br />

individual, firm, company or other organisation mentioned.<br />

2<br />

Front cover image: Bangkok


CONTENTS<br />

INTRODUCTION Why <strong>Thailand</strong>? 4<br />

About this <strong>Business</strong> <strong>Guide</strong> 10<br />

RESEARCHING THE MARKET Where to begin 12<br />

How we can help you 15<br />

MARKET ENTRY Key business locations 17<br />

Establishing a presence 18<br />

Getting to <strong>Thailand</strong> 22<br />

GETTING STARTED Finding a customer or partner 24<br />

Due diligence 25<br />

Employing staff 26<br />

Language 29<br />

Marketing 30<br />

Day-to-day communications 31<br />

Interpreters 32<br />

BUSINESS ISSUES AND Intellectual property rights (IPR) 37<br />

CONSIDERATIONS Procurement 39<br />

Regulations and standards 41<br />

Getting paid and financial issues 46<br />

Insurance 47<br />

Management control and quality assurance 48<br />

Bribery and corruption 48<br />

BUSINESS CULTURE Monarchy 50<br />

Religion 50<br />

Introductions and greetings 51<br />

Making conversation 51<br />

Entertainment 52<br />

Gifts 52<br />

Body language and gestures 53<br />

Meetings and presentations 53<br />

Negotiating techniques 54<br />

<strong>UK</strong> SUCCESS STORIES 55<br />

CONTACTS 56<br />

RESOURCES/USEFUL LINKS 57<br />

3


INTRODUCTION<br />

WHY THAILAND?<br />

<strong>Thailand</strong> offers exciting business opportunities to companies prepared to take a serious<br />

interest in this dynamic market.<br />

Over a number of years, <strong>Thailand</strong>, which has a population of 67 million, has managed to<br />

transform its economy from one that was primarily agriculture-based, to one of the most<br />

diverse in the region. As well as agriculture, major industries include food processing,<br />

cement, integrated circuits, automotive parts and assembly, petroleum products, textiles,<br />

footwear, toys, furniture, synthetic fibre and tourism. The country has a well-developed<br />

infrastructure, a free-enterprise economy and generally pro-investment policies.<br />

Strategically located at the heart of Asia<br />

– one of the world’s largest growing<br />

economic regions – <strong>Thailand</strong> is also<br />

well placed to offer a gateway to both<br />

the ASEAN (Association of Southeast<br />

Asian Nations) and Asia-Pacific markets,<br />

particularly India and China, many of<br />

which offer great business potential.<br />

The ASEAN region alone has a cumulative<br />

population of more than 500 million and<br />

GDP in excess of US$700 billion.<br />

4<br />

Within ASEAN, <strong>Thailand</strong>’s economy is in<br />

the top three in terms of size and volume<br />

of international trade. It is therefore well<br />

positioned as the region moves towards<br />

economic integration and a single freetrade<br />

area in 2015. Zero tariffs between<br />

the top five members (including <strong>Thailand</strong>)<br />

were implemented in January 2010.


Economic leader<br />

<strong>Thailand</strong> is one of the largest growth<br />

markets in Asia, having recovered well from<br />

a recent slump in the global economy.<br />

Growth of 7.85 per cent is estimated<br />

for 2010 and 3-5 per cent for 2011. The<br />

Thai currency, the baht, is reflecting this<br />

performance and is now at its strongest<br />

level since the 1997 Asian financial crisis<br />

and among the fastest-appreciating<br />

currencies in the region.<br />

Stimulus packages will continue into the<br />

medium term, focusing on long-term<br />

competitiveness building rather than<br />

short-term injections. The Government<br />

is expected to spend 1.43 trillion baht<br />

(approx £27 billion) between 2010 and<br />

2012, benefiting sectors such as transport,<br />

public health, water supply development,<br />

education and training, and housing.<br />

<strong>Thailand</strong> has been designated a high-growth<br />

market under <strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong>’s<br />

five-year strategy.<br />

Open for business<br />

The Thai Government welcomes foreign<br />

investment. The country maintains an<br />

open, market-oriented economy and<br />

views foreign investment as a means<br />

of promoting economic development,<br />

employment and technology transfer.<br />

Through <strong>Thailand</strong>’s Board of <strong>Investment</strong><br />

(BOI), the Thai Government offers a range<br />

of tax incentives, support services and<br />

import duty concessions to companies<br />

from various sectors seeking to invest in<br />

the market.<br />

Over the last few decades <strong>Thailand</strong> has<br />

been a major destination for foreign<br />

investment and this looks set to continue.<br />

A recent survey conducted by the Japan<br />

External <strong>Trade</strong> Organization (JETRO) stated<br />

that <strong>Thailand</strong> was the “most optimal<br />

location for establishing a production/sales<br />

base in the coming five to ten years.”<br />

5


INTRODUCTION<br />

WHY THAILAND? (CONTINUED)<br />

Political situation<br />

<strong>Thailand</strong> is a constitutional monarchy with<br />

a parliamentary government. The King, a<br />

highly revered figure in <strong>Thailand</strong>, is the<br />

Head of State, while the Prime Minister is<br />

the Head of Government.<br />

<strong>Thailand</strong> has had a number of military coups,<br />

most recently in September 2006. Civilian<br />

rule returned in February 2008. Despite<br />

frequent changes in government, <strong>Thailand</strong>’s<br />

economy continues to grow and has<br />

weathered the global economic crisis and the<br />

political demonstrations in early 2010.<br />

The recent political unrest has tested the<br />

operating environment for businesses in<br />

<strong>Thailand</strong>. Most companies are confident<br />

their operations can continue uninterrupted<br />

with adequate preparations in place, such as<br />

business continuity plans and backup sites.<br />

Political demonstrations, on occasion, have<br />

disrupted infrastructure, such as the closure<br />

of Bangkok’s international airport in 2008<br />

and its Skytrain system in early 2010.<br />

6<br />

Commercial opportunities<br />

The <strong>UK</strong> enjoys a healthy trading<br />

relationship with <strong>Thailand</strong>. From 2005 to<br />

2009 two-way trade in goods and services<br />

averaged £3.6 billion a year. In 2009 <strong>UK</strong><br />

goods and services exports to <strong>Thailand</strong><br />

increased by 14 per cent and 39 per cent<br />

respectively compared to the previous year.<br />

Although the balance of trade remains<br />

in <strong>Thailand</strong>’s favour (1:2.5), the <strong>UK</strong> is<br />

<strong>Thailand</strong>’s most significant European<br />

investor and the second-largest European<br />

exporter (after Germany).<br />

<strong>Thailand</strong> takes a welcoming approach to<br />

<strong>UK</strong> companies. British goods enjoy an<br />

excellent reputation there, although they<br />

must generally be cost-effective and have<br />

good after-sales support.<br />

There are a wide range of business<br />

opportunities for <strong>UK</strong> companies in<br />

<strong>Thailand</strong>. In particular, the country’s<br />

economic growth has created openings<br />

for <strong>UK</strong> firms in a number of infrastructure<br />

sectors, including electrical power,<br />

telecommunications and renewable energy.


Thai consumers are also creating<br />

opportunities for new sales of <strong>UK</strong> medical<br />

products, cosmetics, security equipment,<br />

food supplements and educational services.<br />

Moreover, <strong>UK</strong> companies are increasingly<br />

looking to <strong>Thailand</strong> not only as a thriving<br />

market in its own right, but also as a<br />

regional base for doing business more<br />

widely in Asia.<br />

The British Chamber of Commerce<br />

<strong>Thailand</strong> (BCCT) is the oldest foreign<br />

chamber and the largest non-Asian foreign<br />

chamber in <strong>Thailand</strong>. It is also the largest<br />

and oldest British Chamber in Asia with<br />

a membership of over 650 companies<br />

including Barclays Capital, BG Group, BT,<br />

Diageo, GlaxoSmithKline, HSBC, Prudential,<br />

Rolls-Royce, Shell, Standard Chartered Bank<br />

and Unilever. The <strong>UK</strong> retail sector is also<br />

well represented by a growing number of<br />

companies including Tesco, Boots, M&S,<br />

The Body Shop, Next, Mothercare, Burberry,<br />

Paul Smith, Thomas Pink, Savile Row<br />

Company, Ted Baker, Topshop and Fitflop.<br />

TOP TEN <strong>UK</strong> EXPORTS OF GOODS TO THAILAND IN 2010 (£MILLIONS)<br />

Item 2010 2009 % change<br />

Road vehicles 238 80 198<br />

Office machines 89 83 7<br />

Metal and scrap metal 60 36 67<br />

Specialised machinery 57 40 43<br />

Medicines and pharmaceutical products 54 48 13<br />

Power generating machinery and equipment 48 47 2<br />

General industrial machinery 44 42 5<br />

Beverages 43 31 39<br />

Electronic machinery and appliances 41 52 -21<br />

Miscellaneous manufactured articles 35 25 40<br />

Total 709 484 47<br />

Source: Department for <strong>Business</strong>, Innovation and Skills analysis of Office for National Statistics data<br />

7


INTRODUCTION<br />

WHY THAILAND? (CONTINUED)<br />

8<br />

MARKET STRENGTHS<br />

Key strengths of the Thai market for <strong>UK</strong> companies include:<br />

• Hub of South-East Asia, gateway to Indochina and Southern China.<br />

• Improved and modernised transportation facilities.<br />

• Well-developed infrastructure and upgraded IT and communication systems.<br />

• State-of-the-art industrial estates.<br />

• <strong>Thailand</strong> ranked nineteenth out of 183 nations by the World Bank’s Ease<br />

of Doing <strong>Business</strong> survey in 2011.<br />

• Good transport hub.<br />

• Low-cost skilled workers and labour.<br />

• Government efforts to make <strong>Thailand</strong> a foreign-investor-friendly market, for example<br />

by tackling bribery and corruption, and simplifying import regulations.<br />

• Wealth of experienced international legal advisers and business consultants.


PRIORITY SECTORS<br />

The following sectors offer significant commercial opportunities for <strong>UK</strong> companies<br />

and reflect <strong>Thailand</strong>’s priorities and <strong>UK</strong> capability:<br />

Advanced engineering<br />

Agriculture<br />

Education and training<br />

Environment<br />

Food and drink<br />

Railways<br />

Power<br />

Opportunities also exist in:<br />

Automotive and automotive parts<br />

Healthcare, medical devices and<br />

pharmaceuticals (<strong>Thailand</strong> is aiming<br />

to be Asia’s medical hub)<br />

Petrochemicals<br />

Renewable energy<br />

Tourism<br />

Sports and leisure equipment<br />

9


INTRODUCTION<br />

ABOUT THIS BUSINESS GUIDE<br />

Much of the information presented in this<br />

booklet is contributed by experts at <strong>UK</strong><br />

<strong>Trade</strong> & <strong>Investment</strong>, British Diplomatic Posts<br />

and the British Chambers of Commerce.<br />

The <strong>Thailand</strong> <strong>Business</strong> <strong>Guide</strong>, which can<br />

also be downloaded from www.ukti.gov.<br />

uk/export/thailand, is intended to provide<br />

general business advice and should not be<br />

used as a substitute for market research, due<br />

diligence or legal and professional services.<br />

About <strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong><br />

<strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> (<strong>UK</strong>TI) is the<br />

government department that helps <strong>UK</strong>-based<br />

companies succeed in international markets<br />

and assists overseas companies in bringing<br />

their high-quality investment to the <strong>UK</strong>’s<br />

dynamic economy.<br />

Combining the resources of the Department<br />

for <strong>Business</strong>, Innovation and Skills (BIS)<br />

and the Foreign and Commonwealth Office<br />

(FCO), <strong>UK</strong>TI has a global network of 1,300<br />

staff in 162 locations in 96 markets based<br />

in British embassies and other diplomatic<br />

offices around the world.<br />

10<br />

We have helped many thousands of<br />

businesses achieve international success by<br />

providing tailored services with specialist<br />

support covering a wide range of industries.<br />

<strong>UK</strong>TI’s capacity-building services can<br />

make a real difference to your business.<br />

To use them your business may need to<br />

meet certain eligibility criteria. Your local<br />

International <strong>Trade</strong> Adviser (or equivalent<br />

person in Scotland, Wales and Northern<br />

Ireland) will be able to explain our range<br />

of services and how they can help you<br />

grow your business internationally.<br />

To find your local International <strong>Trade</strong><br />

Adviser visit www.ukti.gov.uk/export.html


RESEARCHING THE MARKET<br />

WHERE TO BEGIN<br />

Doing business in <strong>Thailand</strong><br />

may seem rather daunting for<br />

those new to the market, but<br />

taking a strategic approach<br />

is the key to making the<br />

process manageable.<br />

Companies should conduct<br />

reliable research before<br />

venturing into business in any<br />

new territory. Good research<br />

saves money and improves<br />

efficiency and performance<br />

right from the start.<br />

12<br />

Desk research<br />

General introductory business information<br />

about <strong>Thailand</strong> is increasingly available<br />

and companies can obtain a reasonable<br />

amount of preliminary insights through<br />

desk research.<br />

Economic research and sector analysis can<br />

often be obtained from a large number of<br />

leading consultancies, research agencies and<br />

public-sector trade promotion organisations.<br />

Furthermore, the increasing use of<br />

e-commerce and B2B (business-to-business)<br />

websites in <strong>Thailand</strong> has made identification<br />

of, and access to, potential partners possible<br />

across the globe.<br />

A good place to start is the <strong>UK</strong>TI website<br />

(www.ukti.gov.uk), which provides detailed<br />

country and sector information. Registration<br />

is free and offers additional benefits such<br />

as access to business opportunity alerts and<br />

information updates.


Consultation and bespoke research<br />

You should not rely solely on desk research.<br />

Websites and online materials can be out<br />

of date and the quality and reliability of<br />

content varies widely. Sometimes, you may<br />

simply be unable to find the information<br />

you’re looking for. This is why it is essential<br />

to verify initial research findings and<br />

conduct further investigations.<br />

Often, this requires you to map out a<br />

bespoke research brief with the help of<br />

specialists, exploring what additional<br />

information you might need to make an<br />

effective entry into the market and how<br />

you can make the contacts vital to success.<br />

<strong>UK</strong>TI offers a range of such services to<br />

<strong>UK</strong> businesses interested in exploring the<br />

Thai market.<br />

Speaking to an expert<br />

<strong>UK</strong>TI provides support for <strong>UK</strong> companies<br />

through a network of international trade<br />

teams based in the English regions.<br />

<strong>UK</strong>TI services are also available to firms<br />

in Scotland, Wales and Northern Ireland.<br />

To arrange a consultation with your<br />

local International <strong>Trade</strong> Adviser<br />

call +44 (0)20 7215 8000 or visit<br />

www.ukti.gov.uk<br />

Overseas Market Introduction Service<br />

The Overseas Market Introduction Service<br />

(OMIS) is a <strong>UK</strong>TI service available to companies<br />

interested in researching the Thai market. It<br />

can assist you by undertaking tailored research<br />

using <strong>UK</strong>TI’s extensive network of dedicated<br />

researchers across <strong>Thailand</strong>.<br />

OMIS can be used in a wide variety of ways<br />

to help your business with its particular<br />

needs when entering the Thai market.<br />

They include:<br />

• Market research and analysis<br />

– Sector reports<br />

– Market initiatives<br />

– Regulatory environment<br />

– Market opportunities<br />

• Identification of local contacts<br />

– Agents<br />

– Distributors<br />

– Suppliers<br />

– Potential partners<br />

• In-market activities<br />

– Meeting arrangements<br />

– Event organisation, such as workshops,<br />

seminars, promotional activities and<br />

product launches.<br />

For more information about how OMIS<br />

could help you grow your business in<br />

<strong>Thailand</strong>, please contact your local<br />

International <strong>Trade</strong> Adviser.<br />

13


Key questions<br />

• What are the unique selling points to<br />

your business proposition? Will there<br />

be a market for your products and<br />

services?<br />

• Are there any legal barriers to your<br />

business model?<br />

• Where in <strong>Thailand</strong> would you start?<br />

• Do you have sufficient resources<br />

(management time, project finance and<br />

expenses) to fund your Thai projects?<br />

• Who will be leading the project within<br />

your company?<br />

• Do you need to work with a partner<br />

in <strong>Thailand</strong> to succeed? Can you<br />

communicate with them effectively?<br />

• Have you evaluated business risks<br />

(such as protecting your intellectual<br />

property) and conducted research and<br />

due diligence?<br />

• Do you know how to secure payment<br />

and get the right quality products?<br />

Rarely will one have answers to all the<br />

questions above, and this “knowledge<br />

gap” forms the basis of further research<br />

and investigation.<br />

14<br />

Events and seminars<br />

<strong>UK</strong>TI organises business events, seminars<br />

and workshops in the <strong>UK</strong> and <strong>Thailand</strong><br />

covering a wide range of business interests<br />

and issues. These events inform companies<br />

about business opportunities and offer the<br />

latest information about the Thai market.<br />

They also provide a valuable platform for<br />

networking and sharing experiences with<br />

like-minded peers and regular access to<br />

visiting Thai delegations.<br />

For information about events please visit<br />

www.ukti.gov.uk<br />

Market visits and trade missions<br />

Visiting <strong>Thailand</strong> is an invaluable part<br />

of the process of market entry. You will<br />

experience the marketplace first-hand,<br />

and make the contacts necessary to do<br />

business. This is essential, but will be much<br />

more effective with careful planning.<br />

<strong>UK</strong>TI organises regular trade missions<br />

to <strong>Thailand</strong> where you can benefit<br />

from group activities in addition to your<br />

own programme.<br />

<strong>UK</strong>TI’s OMIS service can be used to<br />

support visits, providing bespoke meeting<br />

arrangements with appropriate potential<br />

partners, agents and distributors or with<br />

relevant government officials.


RESEARCHING THE MARKET<br />

HOW WE CAN HELP YOU<br />

<strong>UK</strong>TI provides a wide range of trade<br />

development services designed to help <strong>UK</strong><br />

companies succeed internationally. Some of<br />

these services are provided at zero or heavily<br />

subsidised cost. All are delivered by experts<br />

with extensive experience of overseas trade<br />

and detailed knowledge of the global<br />

marketplace. If you are considering doing<br />

business in <strong>Thailand</strong>, speak to <strong>UK</strong>TI about<br />

our range of services and how we can help<br />

you to achieve your business objectives.<br />

<strong>UK</strong>TI services include:<br />

Overseas Market Introduction Service<br />

(OMIS): a chargeable, tailored service to<br />

help companies access market and industry<br />

information, identify potential contacts<br />

and plan an event.<br />

Passport to Export: provides new and<br />

inexperienced exporters with the training,<br />

planning advice and ongoing support they<br />

need to succeed overseas.<br />

Gateway to Global Growth – where next?<br />

a free service to experienced exporters. It<br />

offers a strategic export review, planning<br />

advice and support to help companies<br />

build on their previous export successes<br />

and develop new overseas markets.<br />

Events and seminars: are held across the<br />

<strong>UK</strong> and <strong>Thailand</strong>. They include specific<br />

sector-based activities.<br />

<strong>Trade</strong> missions: organised by <strong>UK</strong>TI to<br />

help <strong>UK</strong> companies visit the marketplace<br />

they are interested in and talk face to face<br />

with prospective business partners. <strong>UK</strong>TI<br />

also organises inward missions to the <strong>UK</strong><br />

to allow overseas delegates to meet with<br />

potential partners or investors.<br />

<strong>Business</strong> opportunities: can be emailed<br />

directly to your inbox, highlighting sales<br />

leads in your chosen overseas market(s).<br />

Companies can register for this free service<br />

by visiting www.ukti.gov.uk<br />

Fiscal Stimulus Initiative: can help <strong>UK</strong><br />

companies of all sizes to identify the<br />

opportunities created by fiscal stimulus<br />

packages and major spending programmes<br />

around the world.<br />

Export Communication Review: assesses<br />

the way companies communicate with<br />

overseas customers and makes practical<br />

recommendations for improvement. The<br />

service is managed for <strong>UK</strong>TI by the British<br />

Chambers of Commerce.<br />

15


RESEARCHING THE MARKET<br />

HOW <strong>UK</strong>TI CAN HELP YOU (CONTINUED)<br />

Export Marketing Research Scheme: offers<br />

support, advice and grant funding to eligible<br />

companies wishing to research a potential<br />

export market. The service is managed for<br />

<strong>UK</strong>TI by the British Chambers of Commerce.<br />

FCO Country Updates: provide<br />

authoritative analysis of emerging markets<br />

and identify key issues relevant to <strong>UK</strong><br />

businesses. The updates are compiled by<br />

British embassies with access to high-level<br />

government and business contacts.<br />

16<br />

For more information about <strong>UK</strong>TI<br />

services please contact your local <strong>UK</strong><br />

International <strong>Trade</strong> Team.


MARKET ENTRY<br />

KEY BUSINESS LOCATIONS<br />

<strong>Thailand</strong> is divided geographically into four<br />

regions comprising 77 provinces. Bung Kan<br />

district, in Nong Khai, north-east <strong>Thailand</strong>,<br />

became the country’s seventy-seventh<br />

province in August 2010.<br />

• Central: location of Bangkok,<br />

the capital city.<br />

• North-east: the country’s most populous<br />

region and home to Nakhon Ratchasima<br />

(Korat), a main industrial city. The region<br />

is also a large source of rice and crops.<br />

• North: main cities include Chiang<br />

Mai and Chiang Rai, popular tourist<br />

destinations, particularly known for<br />

handicrafts.<br />

• South: well known for travel and<br />

tourism, with world-renowned beach<br />

resorts such as Phuket, Koh Samui, Hua<br />

Hin, Phang Nga and Krabi.<br />

As well as being the country’s capital and<br />

centre of government administration,<br />

Bangkok is also <strong>Thailand</strong>’s main economic,<br />

educational and training, and cultural hub.<br />

With a population of 9.3 million (over 9<br />

per cent of the national total), including<br />

neighbouring areas, it is the principal<br />

commercial entry point into <strong>Thailand</strong> for<br />

international traders and investors.<br />

The eastern seaboard of <strong>Thailand</strong> is the<br />

country’s industrial zone and a centre<br />

for Thai or foreign-owned industries<br />

such as petrochemicals, automotive,<br />

engineering, large-scale manufacturing<br />

and power generation. The area comprises<br />

the provinces of Chonburi, Chachoensao,<br />

Samut Prakan and Rayong, as well as the<br />

port of Laem Chabang, <strong>Thailand</strong>’s largest<br />

and one of the busiest in the world.<br />

17


MARKET ENTRY<br />

ESTABLISHING A PRESENCE<br />

Although you may be approached<br />

directly by Thai companies interested<br />

in purchasing your products on a<br />

non-regular basis, it is generally advisable<br />

to establish an in-country presence in<br />

order to gain a foothold in <strong>Thailand</strong>.<br />

Most <strong>UK</strong> companies successfully<br />

doing business in <strong>Thailand</strong> have local<br />

representation either by establishing their<br />

own offices or by appointing agents/<br />

distributors. Such a presence shows that<br />

companies are serious about the market<br />

and willing to provide local technical<br />

support to partners and customers. After<br />

pricing, technical support is the most<br />

important issue for prospective Thai buyers.<br />

<strong>UK</strong> companies looking to trade<br />

with <strong>Thailand</strong> should also be aware<br />

that many Thai businesspeople are<br />

likely to base decisions as much on<br />

perceptions as they would on objective<br />

consideration of business information.<br />

Agents and distributors<br />

An agent is a company’s direct<br />

representative in a market and is paid<br />

commission, whereas a distributor<br />

buys products from the manufacturer<br />

and sells them on to customers. The<br />

difference between the cost of purchasing<br />

products and selling them on (the<br />

profit) forms the distributor’s income.<br />

18<br />

Entering a market by working with an<br />

agent or distributor can have several<br />

advantages. It reduces time and costs, and<br />

companies gain the local knowledge and<br />

networks of the agent. However, there<br />

are some drawbacks, too. Employing a<br />

third party results in an additional cost<br />

to your products and you may also lose<br />

some control and visibility over sales/<br />

marketing. It also has implications for<br />

intellectual property rights protection,<br />

increasing the risk of your product<br />

being copied or counterfeited.<br />

Your local <strong>UK</strong>TI office will advise you on<br />

how to commission a tailored report for<br />

your specific needs and can also provide a<br />

list of the best potential partners. A visit<br />

to <strong>Thailand</strong> will enable you to meet some<br />

of them and appoint a local contact.<br />

Suggested questions to ask agents/<br />

distributors are listed below. You<br />

should also conduct due diligence to<br />

verify this information. Given these<br />

considerations, companies need<br />

to select agents and distributors<br />

carefully. Some of the frequently<br />

asked questions are in the following<br />

checklist. You should also conduct due<br />

diligence to verify this information.


Background<br />

• Company size, history and ownership<br />

(private or state owned)<br />

• Quality and quantity of the sales force<br />

• Customer feedback and trade/bank<br />

references<br />

Distribution channels<br />

• Regional coverage<br />

• Types of outlets covered<br />

and frequency of calling<br />

• Transportation and warehousing facilities<br />

Are they right for you?<br />

• Does the agent/distributor have<br />

a genuine interest in representing<br />

your product?<br />

• Can they benefit from actively promoting<br />

your interests (is it a win-win)?<br />

• Do they also represent any competing<br />

companies/products?<br />

• Can you communicate effectively with<br />

your counterpart?<br />

Once a working relationship is<br />

established, the agent/distributor<br />

needs to be managed actively by:<br />

• Visiting as regularly as is practicable at<br />

a senior management level. This shows<br />

interest in and commitment to the agent<br />

and the market. It will also provide you<br />

with an opportunity to learn about<br />

conditions in the market and see how<br />

your products are faring.<br />

• Working closely with the agent to show<br />

them how they can profit from your<br />

products.<br />

• Helping to prepare marketing and sales<br />

plans for the agent.<br />

• Providing regular training for the sales<br />

staff and after-sales training for the<br />

technical staff in the <strong>UK</strong>.<br />

• Linking performance to incentives and<br />

agreeing milestone targets.<br />

There is additional guidance on working<br />

with Thai partners in later sections<br />

of this <strong>Thailand</strong> <strong>Business</strong> <strong>Guide</strong>.<br />

19


MARKET ENTRY<br />

ESTABLISHING A PRESENCE (CONTINUED)<br />

Establishing a permanent presence<br />

Although it is possible to be represented<br />

through agents or distributors, companies<br />

can progress to the establishment of a<br />

permanent presence in <strong>Thailand</strong>. Having<br />

a permanent in-market presence can<br />

provide several possible benefits including:<br />

• demonstrating commitment,<br />

• cutting out the “middleman”, providing<br />

direct access to the end customer/supplier,<br />

• giving direct control over corporate<br />

strategy and activities, and<br />

• enabling trading in local currency and<br />

easing the conduct of business transactions.<br />

There are a number of structures in<br />

<strong>Thailand</strong> that allow foreign companies to<br />

conduct various business activities. These<br />

include representative offices, joint<br />

ventures and wholly foreign-owned<br />

enterprises. Each of these structures<br />

has unique advantages, restrictions and<br />

drawbacks and it is essential to choose the<br />

option best suited to your business aims.<br />

20<br />

Companies seeking to establish a permanent<br />

presence in <strong>Thailand</strong> must set up operations<br />

as an appropriate legal entity, depending on<br />

their intended business scope. They must<br />

also be compliant with Thai legal and tax<br />

requirements. It is usually more difficult to<br />

alter a business structure once a legal entity<br />

has been incorporated or established, so<br />

it is vitally important to seek professional<br />

advice on your investment structure during<br />

the early stages of planning. You must<br />

fully understand your intended business<br />

activities in <strong>Thailand</strong> (for the short and long<br />

term), whether they are practicable, if there<br />

are any legal and sector barriers to entry<br />

and what the suitable vehicle is for you.<br />

<strong>UK</strong>TI can offer dedicated one-to-one<br />

consulting and incorporation services to<br />

assist <strong>UK</strong> companies establishing various<br />

kinds of permanent presence in <strong>Thailand</strong>.<br />

Please contact us for more details.


Representative offices<br />

Representative offices are often the<br />

first step taken by foreign companies<br />

when establishing a permanent presence<br />

in <strong>Thailand</strong>. They provide a vehicle in<br />

which the foreign investor can engage in<br />

limited non-revenue-earning activities.<br />

These activities are restricted to:<br />

• searching for local sources of goods or<br />

services for its head office,<br />

• inspecting and controlling the quality<br />

and quantity of goods procured by its<br />

head office,<br />

• providing advice in various fields relating<br />

to products directly sold by its head<br />

office to local distributors or consumers,<br />

• disseminating information about new<br />

products and services offered by its<br />

head office, and<br />

• reporting to its head office on local<br />

business developments and activities.<br />

Joint ventures<br />

A joint venture (JV) is an organisation<br />

jointly owned by one or several Thai and<br />

foreign partners. A JV can be formed<br />

by way of equity contribution, where<br />

ownership, risk and profit are shared, based<br />

on each party’s monetary contribution.<br />

Alternatively, a JV can be incorporated,<br />

with liabilities and profit distribution<br />

being decided by contractual agreement.<br />

JVs can be beneficial in a number of ways.<br />

A good local partner may contribute market<br />

knowledge and strong marketing and<br />

distribution channels, and they may help<br />

reduce the costs and risk of market entry.<br />

The challenge of establishing and running<br />

a successful JV is to find and nurture<br />

the right partnership. Partners have to<br />

overcome issues such as mismatched<br />

expectations and differences in business<br />

culture and practices. The ability to<br />

maintain effective communication, and<br />

control where necessary, is also crucial. It<br />

is essential that you carry out corporate<br />

and financial due diligence before you<br />

sign up to any partnership. Companies<br />

should also plan an exit strategy and<br />

ensure that any contractual agreements<br />

include an appropriate opt-out provision.<br />

Wholly foreign-owned enterprises<br />

A wholly foreign-owned enterprise<br />

(WFOE) is a company incorporated in<br />

<strong>Thailand</strong> that is 100 per cent owned<br />

by a foreign organisation(s).<br />

WFOEs are often a popular option for<br />

foreign companies, as they give them<br />

complete control over their business<br />

entity, as well as allowing them to<br />

enjoy the full profit from its operation.<br />

Compared with a JV, WFOEs also<br />

generally give greater protection to the<br />

investor’s intellectual property rights.<br />

21


MARKET ENTRY<br />

GETTING TO THAILAND<br />

Visas<br />

In general, foreign nationals wishing to<br />

visit <strong>Thailand</strong> need a valid passport and<br />

must obtain an appropriate visa from<br />

their nearest Thai embassy or consulate.<br />

Under the Tourist Visa Exemption<br />

Agreement, British nationals do not<br />

require a visa to enter <strong>Thailand</strong> if the<br />

duration of the stay does not exceed<br />

30 days. However, each person has<br />

to have minimum living expenses of<br />

10,000 baht or 20,000 baht per family.<br />

More information on visa requirements<br />

can be found at www.mfa.go.th or from<br />

the Royal Thai Embassy in London.<br />

Royal Thai Embassy<br />

29-30 Queen’s Gate<br />

London SW7 5JB<br />

Tel: +44 (0)20 7589 2944<br />

Email: thaiduto@btinternet.com<br />

Website: www.thaiembassyuk.org.uk<br />

Office hours: Monday-Friday<br />

09.30-12.30 and 14.00-17.00<br />

Visa and Consular Section: 09.30-12.30<br />

22<br />

By air<br />

There are 78 international airlines that fly to<br />

Bangkok, four of which fly directly from the<br />

<strong>UK</strong> to the city’s Suvarnabhumi International<br />

Airport. They are British Airways (daily),<br />

Eva Airways Corporation (six days a week),<br />

Qantas Airways (daily) and Thai Airways<br />

International (twice daily).<br />

At the airport.<br />

Public taxis (24-hour service): There is a<br />

taxi counter on level 1, near entrances 3,<br />

4, 7 and 8. Public taxis are fitted with a<br />

meter and have a sign “TAXI-METER” on<br />

the roof. The minimum fare is 35 baht for<br />

a distance of no more than two kilometres.<br />

The taxi fare from the airport to the centre<br />

of Bangkok (Ploenchit Road, where the<br />

British Embassy is located) is approximately<br />

400 baht (£8), including toll road fees and<br />

a 50 baht airport surcharge.<br />

AOT airport limousine (24-hour service)<br />

The minimum service rates for transfer<br />

from the airport to Bangkok city centre are:<br />

sedan (2-3 passengers) 950 baht<br />

minibus (6-7 passengers) 1,200 baht


Air-conditioned buses offer fast<br />

connections between major cities.<br />

Tickets can be purchased from bus<br />

terminals or through travel agents and<br />

hotels. Most travel is overnight and<br />

includes at least one meal and services<br />

such as soft drinks and blankets. If you<br />

are travelling in a small group of people<br />

there are plenty of minibuses for hire.<br />

Trains, although slow, are cheap and<br />

comfortable. On long-haul journeys<br />

seats convert into sleeping bunks.<br />

Boats connect many parts of Bangkok<br />

through the city’s extensive network<br />

of waterways. River buses go up<br />

and down the city’s Chao Phraya<br />

River with reliable regularity.<br />

There are three kinds of taxi in <strong>Thailand</strong>.<br />

Firstly, those with a “taxi” sign on top<br />

and a meter inside; secondly, tuk-tuks<br />

which go shorter distances than taxis<br />

and where fares are negotiated in<br />

advance; and thirdly, motorcycle taxis.<br />

Bangkok’s Skytrain and underground are<br />

great ways of avoiding the city’s notorious<br />

traffic. Trains run from 6am to midnight.<br />

23


GETTING STARTED<br />

FINDING A CUSTOMER OR PARTNER<br />

Once you have identified<br />

the best market-entry option<br />

for your company in <strong>Thailand</strong>,<br />

the next step is to find<br />

potential customers<br />

or partners.<br />

24<br />

The following <strong>UK</strong>TI services can help<br />

you find potential customers, agents,<br />

distributors and partners in <strong>Thailand</strong>:<br />

• Overseas Market Introduction Service<br />

<strong>UK</strong>TI’s Overseas Market Introduction<br />

Service (OMIS) can be used to identify a<br />

tailored list of potential customers, agents,<br />

distributors or partners and arrange a<br />

programme of meetings with them when<br />

you visit <strong>Thailand</strong>. OMIS can also be used<br />

to engage <strong>UK</strong>TI to arrange a seminar or<br />

product introduction event in <strong>Thailand</strong> –<br />

which can be an effective way of getting<br />

your message across to a number of<br />

potential customers.<br />

• <strong>Trade</strong> shows and exhibitions<br />

Numerous trade shows and exhibitions<br />

take place in <strong>Thailand</strong> throughout the<br />

year and can be an excellent way to meet<br />

potential customers face to face. However,<br />

arranging appointments in advance to<br />

meet pre-identified contacts at niche<br />

industry events is essential if you want to<br />

make effective use of your time.<br />

• <strong>Trade</strong> missions<br />

<strong>UK</strong>TI supports a large number of trade<br />

missions to <strong>Thailand</strong>, organised by<br />

trade associations and local chambers<br />

of commerce. They provide an excellent<br />

opportunity for businesses to visit <strong>Thailand</strong><br />

to find out how business is done and<br />

generate valuable sales leads.


GETTING STARTED<br />

DUE DILIGENCE<br />

Many of the problems that foreign<br />

companies encounter when engaging in<br />

business transactions in <strong>Thailand</strong> could have<br />

been avoided by carrying out some due<br />

diligence at the outset.<br />

There are different levels of due diligence that<br />

are appropriate for different situations. If your<br />

sole interest is in exporting, the best proof<br />

of a Thai company’s ability to pay is whether<br />

it is able to raise a letter of credit from the<br />

bank. If a company can produce this you do<br />

not need to check its financial standing as<br />

the bank will have already done so.<br />

One simple piece of due diligence is to get<br />

a copy of a company’s business licence. This<br />

will tell you the following:<br />

• The legal representative of the company<br />

• The name and address of the company<br />

• The amount of registered capital which is<br />

also its limited liability<br />

• The type of company<br />

• The business scope<br />

• The date the company was established<br />

and the period covered by the licence<br />

You should check that the information<br />

contained in the business licence matches<br />

what you already know, and if it doesn’t find<br />

out why. You will have more security if you<br />

know who the legally responsible person is,<br />

so find out who you are dealing with.<br />

The shareholders of the company are<br />

responsible for the amount of liability stated<br />

as registered capital on the business licence.<br />

You can check whether or not the registered<br />

capital has been paid up by using a firm of<br />

accountants to get a Capital Verification<br />

Report.<br />

If you want to establish a business<br />

relationship in <strong>Thailand</strong> that goes beyond<br />

exporting, you will need to carry out further<br />

research. A thorough evaluation of your<br />

potential partner may be time-consuming<br />

and expensive, but doing so will greatly<br />

reduce the risk of serious problems in the<br />

future. However, it is not enough to obtain<br />

a copy of a company’s accounts as they<br />

may not be accurate. Accounts in <strong>Thailand</strong><br />

are unlikely to be audited to the standards<br />

routinely expected in the <strong>UK</strong>, and companies<br />

may have different sets of accounts for<br />

different audiences. It is therefore advisable<br />

to use such data in conjunction with<br />

information obtained elsewhere.<br />

Good quality consultancy and assistance<br />

is available from firms resident in <strong>Thailand</strong><br />

and the <strong>UK</strong>. These companies can carry out<br />

operational, financial, legal and technical<br />

due diligence checks, typically by looking<br />

at the actual operation of the business and<br />

building up a more accurate picture by<br />

carefully interviewing people who work in<br />

and with the firm. <strong>UK</strong>TI can provide lists of<br />

consultancies based in the <strong>UK</strong> and <strong>Thailand</strong><br />

that can provide due diligence checks on<br />

<strong>Thailand</strong> companies.<br />

25


GETTING STARTED<br />

EMPLOYING STAFF<br />

Recruitment channels<br />

There are several channels for recruiting<br />

staff in <strong>Thailand</strong>:<br />

• Online job services such as<br />

www.jobthai.com and www.jobbkk.com.<br />

• Classified adverts for jobs in <strong>Thailand</strong> are<br />

available from local Thai daily newspapers<br />

such as Thai Rath, Manager Daily and<br />

Krungthep Turakij.<br />

• Classified adverts for jobs in English<br />

are available from the Bangkok Post and<br />

The Nation. Both newspapers have daily<br />

circulation figures of around 60,000 copies.<br />

• Recruitment services companies: there<br />

are several experienced domestic and<br />

international recruitment firms operating<br />

in Bangkok.<br />

• Contacting the British Embassy/British<br />

Chamber of Commerce/educational<br />

institutes.<br />

Recruitment steps<br />

When you are recruiting in <strong>Thailand</strong>, make<br />

sure that you carry out all the normal steps<br />

that you would if recruiting in the <strong>UK</strong>.<br />

Ensure that candidates’ technical and<br />

linguistic capabilities match their claims<br />

and that you hire staff at the right level<br />

for the role. A recent MBA graduate<br />

returning to <strong>Thailand</strong> from overseas may<br />

not have the experience to navigate the<br />

complexities of setting up a company in<br />

<strong>Thailand</strong> without seeking professional advice,<br />

26<br />

and they may not have the capabilities to<br />

develop business at a senior level.<br />

Carry out due diligence<br />

To ensure that the staff you are hiring<br />

are right for your company it is essential<br />

to ensure thorough due diligence in<br />

recruitment, especially for senior managers.<br />

This includes conducting personal<br />

background checks and checking all<br />

references before offering them the position.<br />

Offer appropriate remuneration<br />

Once you have found the right staff you will<br />

need to give them good reason to stay with<br />

your company. You will need to provide a<br />

sufficient remuneration package to ensure<br />

that you recruit and retain the best employees.<br />

It is advisable to conduct some market<br />

research to get a clear idea of appropriate<br />

salary levels for the positions you wish to fill<br />

so that you can make an offer that is in line<br />

with current market rates.<br />

Average staff salaries in <strong>Thailand</strong><br />

can be viewed at the <strong>Thailand</strong><br />

Board of <strong>Investment</strong> website<br />

www.boi.go.th/english/how/labor_costs.asp.<br />

However, a company’s ability to attract and<br />

retain staff is considerably enhanced by<br />

tailoring remuneration packages to meet<br />

individual employee needs. Salaries are<br />

subject to a 4 per cent social security fund<br />

contribution and a 1 per cent workman’s


compensation contribution (for the first<br />

15,000 baht of salary per month).<br />

Offering employees the opportunity to<br />

train overseas is also very attractive at all<br />

levels, although make sure that in return<br />

for providing such training they make a<br />

commitment to stay with your company. In<br />

addition, be sure to invest in the mentoring<br />

of Thai management-level talent; this can be<br />

done by giving them experience of working<br />

around the organisation and grooming them<br />

for global corporate positions. A clearly<br />

defined career progression route is also<br />

attractive and will help to retain staff.<br />

A lot of smaller companies setting up an<br />

office in <strong>Thailand</strong> may well just employ<br />

one person to deal with all aspects of<br />

running the company. Although this may<br />

be convenient and cost-effective, it might<br />

not generate the best performance for your<br />

Thai operation. Staff selection will prove<br />

vital; although the individual may be very<br />

willing, honest and capable, they may not<br />

be adept or experienced in international<br />

business practices. If your employee is not<br />

familiar with the relevant Thai rules and<br />

regulations pertaining to the running of an<br />

international office or business in <strong>Thailand</strong>,<br />

then you may soon have to deal with issues<br />

of non-compliance, which could prove<br />

very costly. Moreover, having one person in<br />

control of all financial and legal aspects of<br />

the business is not prudent.<br />

Working hours<br />

Working hours in <strong>Thailand</strong> are:<br />

• Normal office hours:<br />

08.00-17.00 or 09.00-18.00<br />

• Government offices:<br />

08.30-16.30<br />

• Normal lunch break:<br />

12.00-13.00<br />

• Non-hazardous work:<br />

48 hours a week<br />

• Hazardous work:<br />

42 hours a week<br />

• Public holidays:<br />

13 days a year<br />

• Annual leave:<br />

not less than six days a year<br />

27


GETTING STARTED<br />

LANGUAGE<br />

Communication is crucial to the success of<br />

any company, yet business is all too often<br />

lost through simple misunderstandings<br />

that could easily have been avoided.<br />

When working across different time zones,<br />

cultures and languages, the chances<br />

for misunderstanding are multiplied<br />

considerably. It is therefore essential that<br />

you have an appropriate communications<br />

strategy in <strong>Thailand</strong>.<br />

There are four main Thai languages spoken<br />

in <strong>Thailand</strong> (Central Thai, Southern Thai,<br />

North-eastern Thai and Thai – which is<br />

used in Northern <strong>Thailand</strong> and Laos). The<br />

language referred to as “standard Thai” is<br />

close to Central Thai. As a foreigner, it is not<br />

easy to learn Thai, but if you make an effort<br />

this will be appreciated by Thai people.<br />

The use of English is widespread among<br />

larger companies, but proficiency is low<br />

among SMEs and the lower-tiered labour<br />

force. In this respect, <strong>Thailand</strong>’s language<br />

readiness trails regional competitors such<br />

as Malaysia, Singapore and the Philippines.<br />

Presentations, proposals and contracts can be<br />

produced in English, although it is important<br />

to use fairly simple and non-idiomatic<br />

language to avoid any misunderstandings.<br />

29


GETTING STARTED<br />

MARKETING<br />

To win over potential new customers in<br />

<strong>Thailand</strong> you will need to continually<br />

reassess your marketing strategy.<br />

Sales literature<br />

<strong>Trade</strong> shows and exhibitions have already been<br />

mentioned as ways of reaching potential new<br />

customers, but you still need to persuade them<br />

to buy your product. You will need to ensure<br />

that your sales literature is effective in English<br />

and, if possible, Thai and decide what kind<br />

of advertising is appropriate.<br />

Product and service adaptations<br />

You may need to adapt your product to<br />

meet Thai preferences or requirements in<br />

order to be able to sell it. Adapting to local<br />

regulations, tastes and cultural preferences<br />

vastly improves chances of success.<br />

Branding<br />

The Thai market for consumer products<br />

is brand conscious. New entrants to the<br />

market with a recognised brand may wish<br />

to consider some sort of product launch or<br />

press conference to announce their arrival<br />

in <strong>Thailand</strong>.<br />

Sales promotion<br />

Companies that appoint local partners can<br />

usually be guided by them with regard to the<br />

type of advertising and sales promotion that<br />

would suit the launch of their product(s).<br />

<strong>UK</strong>TI can advise on using the residence<br />

30<br />

of the British Ambassador in <strong>Thailand</strong> to<br />

announce the launch or presence of <strong>UK</strong><br />

goods and services in the country.<br />

Media<br />

Companies that can afford it may well<br />

wish to consider TV advertising as it still<br />

commands the widest reach to the mass<br />

market. Internet usage in <strong>Thailand</strong> is<br />

increasing rapidly, although penetration<br />

is still modest at 13 million internet users<br />

(against a population of 67 million), of<br />

whom just two million have broadband.<br />

Internet advertising and the use of the<br />

internet for purchasing goods are still in<br />

their infancy.<br />

Specialist consultancies can be appointed<br />

to develop a marketing strategy appropriate<br />

to your product and to the region of<br />

<strong>Thailand</strong> where it will be sold.<br />

Brochures and marketing campaigns<br />

should avoid religious symbols or satires<br />

of historically famous local figures, events<br />

or the local culture. Thai consumers are<br />

increasingly receptive to offbeat marketing<br />

campaigns and there has been a leap in the<br />

number of radically innovative advertising<br />

campaigns, but these should be conducted<br />

with caution.


GETTING STARTED<br />

DAY-TO-DAY COMMUNICATIONS<br />

Once you have made contact with a Thai<br />

company, it is likely that your day-to-day<br />

phone and email communication will be<br />

in English with one of the company’s<br />

English-speaking members of staff.<br />

If the standard of English in the Thai<br />

company is not satisfactory, it is<br />

advisable to ask for parallel Thai texts<br />

and obtain translations to ensure proper<br />

understanding.<br />

If you are going to sign anything –<br />

as obvious as it sounds – make sure<br />

you get it translated first, and by an<br />

independent translator. Do not rely on<br />

your supplier’s translation and do not<br />

be pressured into signing anything<br />

that you do not fully understand. Most<br />

failures occur in relationships because of<br />

fractured communications and mutual<br />

misunderstandings. Document verbal<br />

discussions with a written record to confirm<br />

understanding for important meetings.<br />

If <strong>Thailand</strong> is likely to become a significant<br />

part of your business you may wish to<br />

consider hiring a Thai-speaking member<br />

of staff. You might also consider taking up<br />

the challenge of learning Thai yourself –<br />

even having a basic level of communication<br />

will create a positive impression.<br />

31


GETTING STARTED<br />

INTERPRETERS<br />

If language proves a problem when<br />

attending meetings in <strong>Thailand</strong> it is<br />

recommended to use interpreters.<br />

A good interpreter can be the key to<br />

successful communication. If they have<br />

not understood what you have said, your<br />

message will be lost on your audience.<br />

There are two forms of interpreting.<br />

Consecutive interpreting means you speak<br />

and then your interpreter speaks: this is the<br />

usual form for meetings, discussions and<br />

negotiations. Simultaneous interpreting<br />

involves the immediate translation of your<br />

words as you speak them. This requires<br />

special equipment and can be expensive.<br />

It is generally used only for large seminars<br />

and conferences. Interpreting is a skill<br />

requiring professional training. Just<br />

because someone is fluent in English and<br />

Thai, it does not necessarily mean that<br />

they will make a good interpreter.<br />

If you are giving a speech or presentation<br />

remember that the need to interpret<br />

everything will cut your speaking time<br />

approximately in half (unless using<br />

simultaneous interpreting). It is essential<br />

to make sure that the interpreter can cope<br />

with any technical or specialist terms in<br />

the presentation. It is better to be slightly<br />

restricted and stick closely to a script than<br />

to fail to sell yourself. If you are giving a<br />

speech give the interpreter the text well in<br />

advance and forewarn them of any changes.<br />

32<br />

Remember: there are four different Thai<br />

languages spoken in <strong>Thailand</strong>. Ensure that<br />

your interpreter can speak and understand<br />

the form of language specific to the region<br />

that you are visiting.<br />

To get the best out of your interpreter:<br />

• Hire a well-briefed professional<br />

interpreter. Though this is likely to be<br />

expensive, it will be money well spent.<br />

• Have your own interpreter available, even<br />

if your Thai counterparts have one for<br />

their side. One interpreter working for<br />

both sides may become tired and start<br />

missing the meaning or the detail of what<br />

is being said. With your own interpreter<br />

you should also have some feedback<br />

afterwards on the nuances behind what<br />

was said (and – just as importantly –<br />

not said) during the meeting.<br />

• Try to involve your interpreter at every<br />

stage of your pre-meeting arrangements.<br />

The quality of interpretation will improve<br />

greatly if you provide adequate briefing<br />

on the subject matter. Ensure your<br />

interpreter understands what you are<br />

trying to achieve.


• Speak clearly and evenly with regular<br />

breaks for interpretation. Don’t speak<br />

for several paragraphs without pause.<br />

Your interpreter will find it hard to<br />

remember everything you have said,<br />

let alone interpret all your points.<br />

Conversely, don’t speak in short<br />

phrases and unfinished sentences. Your<br />

interpreter may find it impossible to<br />

translate the meaning if you have left<br />

a sentence hanging.<br />

• Avoid jargon, unless you know your<br />

interpreter is familiar with the terminology.<br />

• Listen to how your interpreter interprets<br />

what you have just said. If you have<br />

given a lengthy explanation but the<br />

interpreter translates it into only a few<br />

Thai words, it may be that they have not<br />

fully understood. Or they may be wary of<br />

passing on a message that is too blunt and<br />

will not be well received by the audience.<br />

• Make sure that your message is getting<br />

through clearly and is delivered in a tone<br />

that will not cause resentment.<br />

A list of translators and interpreters in<br />

<strong>Thailand</strong> is available on request from the<br />

<strong>UK</strong>TI team in Bangkok.<br />

33


GETTING STARTED<br />

INTERPRETERS (CONTINUED)<br />

Basic Thai<br />

Key phrases/greetings<br />

Hello Sawasdee (krup/ka)<br />

How are you? Sabai dee mai?<br />

I’m fine Sabai dee<br />

Pleased to Dee jai thee dai<br />

meet you<br />

phob koon<br />

Thank you Khap koon (krup/ka)<br />

Never mind Mai pen rai<br />

Sorry Kor thoad (krup/ka)<br />

I cannot speak Thai Phoot Thai mai dai<br />

Please speak slowly Prohd photo cha-cha<br />

I don’t understand Mai kao jai<br />

Good luck Kor hai chok dee<br />

Does anyone Mee krai pood pasa<br />

speak English? ang-grit dai bangmai<br />

Do you understand? Kao jai mai?<br />

May I take a<br />

photograph?<br />

Kor tai ruup dai mai?<br />

Where is the toilet? Hong nam yoo nai?<br />

How much does Nee tao-rai<br />

this cost?<br />

(krup/ka)?<br />

What is this? Nee aria?<br />

Very expensive Paeng maag<br />

Do you have Mee tuuk gwaa<br />

something cheaper? nee mai?<br />

The bill please Gep taang (krup/ka)<br />

Goodbye La gon<br />

See you again Laew phob gan mai<br />

Places<br />

Airport Sanam bin<br />

Bus station Sa-tanee rot mae<br />

Railway station Sa-tanee rot fai<br />

Police station Sa-tanee tum-ruad<br />

Hotel Rang-raem<br />

Embassy Sa-tantoot<br />

Hospital Rong-payabaan<br />

Post office Prai-sanee<br />

Market Ta-lad<br />

Directions<br />

I want to go… Yaak ja pai…<br />

Where is…? Yoo thee nai…?<br />

Turn left Leeo sai<br />

Turn right Leeo kwaa<br />

Go straight Trong pai<br />

Stop here Yuut te nee<br />

Slow down Cha-cha<br />

35


BUSINESS ISSUES AND CONSIDERATIONS<br />

Although it presents numerous<br />

opportunities the Thai market can<br />

pose significant challenges for foreign<br />

companies. Whether buying, selling or<br />

investing, whether dealing in physical<br />

products or knowledge, it is important<br />

to be aware of the complexities and risks.<br />

Outdated or overlapping regulations<br />

are common challenges in <strong>Thailand</strong>, as<br />

businesses have become more sophisticated<br />

and outpaced the original domains covered<br />

by tax codes and regulations. None are<br />

insurmountable, but they do require time<br />

and resources. Grey areas cannot always<br />

be clarified, and should be recognised as<br />

a potential risk element.<br />

36


BUSINESS ISSUES AND CONSIDERATIONS<br />

INTELLECTUAL PROPERTY RIGHTS (IPR)<br />

As a member of the World <strong>Trade</strong><br />

Organization (WTO), <strong>Thailand</strong> is committed,<br />

under the auspices of the <strong>Trade</strong>-Related<br />

Aspects of Intellectual Property Rights<br />

(TRIPs) agreement, to provide the effective<br />

and appropriate enforcement of IPR. The<br />

Thai Government has been taking systematic<br />

measures to reduce IPR violation in every<br />

sphere of business activity, including<br />

producing, distributing, selling, importing<br />

and exporting.<br />

<strong>Trade</strong>marks<br />

<strong>Trade</strong>mark protection in <strong>Thailand</strong> is<br />

regulated through the <strong>Trade</strong>mark Act BE<br />

2534 (1991), which came into force on<br />

13 February 1992. There are four options<br />

for submitting an application for the<br />

registration of a trademark in <strong>Thailand</strong>.<br />

They are:<br />

1. The Application Request Service and<br />

Examination Division, <strong>Trade</strong>mark Bureau,<br />

the Department of Intellectual Property.<br />

2. The Provincial Commercial Offices.<br />

3. Via registered mail to the <strong>Trade</strong>mark<br />

Registrar, the Department of Intellectual<br />

Property, with a payment of the<br />

fee by money order, payable to the<br />

<strong>Trade</strong>mark Registrar.<br />

4. Via the internet at the online trademark<br />

service: www.ipthailand.go.th/ (only<br />

available in the Thai language at present).<br />

The process of registering a trademark<br />

in <strong>Thailand</strong> can take up to nine months.<br />

It is valid for ten years from the date of<br />

registration and may be renewed within<br />

90 days prior to expiry for a further period<br />

of ten years.<br />

<strong>Thailand</strong>’s trademark registration<br />

procedures in English can be found at<br />

www.ipthailand.go.th/ (only available in the<br />

Thai language at present).<br />

Patents, petty patents and designs<br />

In <strong>Thailand</strong>, inventions and product<br />

designs can acquire a protection under the<br />

Patent Act BE 2522 (1979), later amended<br />

by the Patent Act (No.3) BE 2542 (1999).<br />

Detailed information on the Patent Act<br />

and application procedures in English can<br />

be found at www.ipthailand.go.th/ (only<br />

available in the Thai language at present).<br />

It can sometimes take up to one year for<br />

the application of protection to be granted.<br />

Duration of protection:<br />

• Patents are valid for 20 years<br />

• Petty patents are valid for six years<br />

(although they can be renewed twice,<br />

with each renewal lasting for two years.<br />

Therefore the maximum duration is<br />

ten years).<br />

•<br />

Designs are valid for ten years.<br />

37


BUSINESS ISSUES AND CONSIDERATIONS<br />

INTELLECTUAL PROPERTY RIGHTS (IPR)<br />

(CONTINUED)<br />

Copyright<br />

In 1931 <strong>Thailand</strong> became a member of the<br />

Berne Convention for the Protection of<br />

Literary and Artistic Works, an international<br />

agreement governing copyright.<br />

Copyright protection in <strong>Thailand</strong> is<br />

provided through the Copyright Act BE<br />

2534 (1994), which was promulgated on<br />

21 December 1994 and became effective<br />

on 22 March 1995.<br />

In <strong>Thailand</strong> the period of validity for<br />

copyright in a work which is created in<br />

the course of employment, instruction or<br />

control, endures for 50 years from creation.<br />

If the work is published during this period,<br />

copyright endures for 50 years from<br />

first publication.<br />

Computer programs in <strong>Thailand</strong> are protected<br />

as literary works under the Copyright Act.<br />

For more information contact:<br />

Department of Intellectual Property<br />

44/100 Nonthaburi 1 Road<br />

Bangkrasow<br />

Muang Nonthaburi 11000<br />

<strong>Thailand</strong><br />

Tel: +66 (0)2547 4621-25<br />

Fax: +66 (0)2547 4891<br />

Email: osdip@moc.go.th<br />

Website: www.ipthailand.go.th/ (only<br />

available in the Thai language at present)<br />

38


BUSINESS ISSUES AND<br />

CONSIDERATIONS<br />

PROCUREMENT<br />

Since 2005 Thai government procurement<br />

over 2 million baht (£40,000) has been<br />

conducted through an electronic auction.<br />

The responsible organisation is the<br />

Thai Government Procurement Office<br />

(www.gprocurement.go.th – only available<br />

in the Thai language at present). Normally,<br />

large private companies/state enterprises/<br />

government organisations advertise their<br />

invitation to bid in the Bangkok Post and<br />

The Nation, two local English-language<br />

daily newspapers.<br />

The <strong>UK</strong>TI team in Bangkok publishes details<br />

of tenders received directly from state<br />

enterprises or government organisations<br />

on the <strong>UK</strong>TI website (www.ukti.gov.uk)<br />

under “<strong>Business</strong> opportunities”.<br />

39


BUSINESS ISSUES AND CONSIDERATIONS<br />

REGULATIONS AND STANDARDS<br />

<strong>Investment</strong> rules and incentives<br />

Two governmental organisations have the<br />

authority to grant investment incentives in<br />

order to encourage both foreign and local<br />

investment in <strong>Thailand</strong>. They are:<br />

• <strong>Thailand</strong> Board of <strong>Investment</strong> (BOI):<br />

may grant general investment<br />

privileges. These are based on the<br />

location of the enterprise. Presently,<br />

there are three general regional zones,<br />

to which are allocated different levels<br />

of investment privileges.<br />

• Industrial Estates Authority of <strong>Thailand</strong><br />

(IEAT): has the authority to grant<br />

investment privileges to enterprises that<br />

are located specifically within industrial<br />

estates that have been developed<br />

either by the IEAT, or as a joint venture<br />

between the IEAT and a private entity.<br />

While the BOI provides valuable incentives<br />

many Thai and foreign companies establish<br />

businesses without BOI assistance.<br />

Accordingly, investors should carefully<br />

consider the advantages of seeking BOI<br />

incentives before making an application.<br />

Foreign ownership<br />

The Foreign <strong>Business</strong> Act 1999 allows<br />

foreign ownership of businesses in <strong>Thailand</strong><br />

according to a classification on three lists.<br />

List 1 allows for no foreign ownership,<br />

List 2 allows very restricted foreign<br />

ownership and List 3 allows up to 49 per<br />

cent foreign ownership. However, foreign<br />

investors often wish to own all or at least<br />

a majority interest in their subsidiaries<br />

established abroad. Where such a subsidiary<br />

in <strong>Thailand</strong> seeks BOI privileges, the BOI<br />

may allow it to be majority or 100 per cent<br />

foreign owned, subject to conditions.<br />

In 2007 the Thai Government considered<br />

further amendments to the Foreign<br />

<strong>Business</strong> Act which would have made it<br />

more difficult for foreign companies to<br />

own a majority shareholding in a business<br />

in <strong>Thailand</strong>. The initiative lost momentum<br />

after the return to power of civilian<br />

government in 2008. However, <strong>UK</strong> companies<br />

thinking of investing in <strong>Thailand</strong> should<br />

ensure they have the relevant and up-to-date<br />

information before making any decisions.<br />

Comprehensive information and guidance are<br />

available on the BOI website (www.boi.go.th)<br />

and from the <strong>UK</strong>TI team in Bangkok.<br />

41


BUSINESS ISSUES AND CONSIDERATIONS<br />

REGULATIONS AND STANDARDS (CONTINUED)<br />

Customs duties<br />

The majority of imported articles in<br />

<strong>Thailand</strong> are subject to two different<br />

taxes: tariff duty and VAT. The Customs<br />

Tariff Decree also contains a section on<br />

goods that are exempt from duty. Foreign<br />

trade transactions are subject to certain<br />

provisions of the exchange control law and<br />

various licensing requirements:<br />

• Import duty: The majority of goods<br />

imported by businesses in <strong>Thailand</strong> are<br />

subject to duty rates of between 0 per<br />

cent and 100 per cent.<br />

• Value added tax (VAT): VAT was<br />

introduced in <strong>Thailand</strong> on 1 January<br />

1992, replacing business tax. The current<br />

rate of VAT is 7 per cent, down 3 per<br />

cent from when it was first introduced.<br />

Export goods are not subject to VAT.<br />

• Excise tax: Import goods in <strong>Thailand</strong><br />

subject to excise tax are petroleum<br />

products; beverages; electrical equipment;<br />

perfume and cosmetics; crystalware or<br />

other types of crystal products; passenger<br />

cars and vehicles seating not more than<br />

ten people; and yachts.<br />

• Export duty: Export duties apply to<br />

42<br />

seven items – rice; scrap metal; raw<br />

or tanned hides of bovine animals;<br />

rubber; wood; raw silk and silk yarn; and<br />

powdered fish.<br />

• Exchange controls: Most imports valued<br />

at over 500,000 baht can be cleared only<br />

upon presentation of a certificate issued<br />

by a commercial bank demonstrating<br />

that the import has been reported to the<br />

Bank of <strong>Thailand</strong>.<br />

• Exports exceeding 500,000 baht in<br />

value: Before these can be cleared, the<br />

exporter must present a Certificate of<br />

Exportation to the Customs officer.<br />

Normally, export proceeds must be<br />

brought into <strong>Thailand</strong> within 180 days<br />

and converted to baht or deposited in<br />

a foreign currency account in <strong>Thailand</strong><br />

within 15 days of receipt.<br />

• Duty refund: Goods such as raw<br />

materials used in producing, processing<br />

or packaging items for export may<br />

be imported under a system allowing<br />

for duties paid to be refunded or for<br />

a guarantee to be posted. The items<br />

imported must be re-exported within<br />

the time stipulated under Customs<br />

regulations. Imported goods which are not<br />

processed in any way and are not kept<br />

in a bonded warehouse are eligible for a<br />

partial duty refund equal to 90 per cent<br />

of the duty paid or the entire duty paid in<br />

excess of 1,000 baht, whichever is higher.<br />

• Exceptions: Custom duty exceptions<br />

apply to the importation of machinery,<br />

equipment and materials for use by<br />

oil and gas concessionaires, their<br />

contractors, and certain companies<br />

promoted by the BOI.


• <strong>Business</strong>people relocating to <strong>Thailand</strong><br />

may import their household effects, but<br />

the Customs Department requires that a<br />

work permit be submitted before they are<br />

released free of duty.<br />

• ASEAN agreement: <strong>Thailand</strong>, as a<br />

member of ASEAN, is subject to the<br />

agreed plan for the reduction of import<br />

duties that applies to trade between<br />

all the ASEAN countries. <strong>Thailand</strong>,<br />

which is also a member of the World<br />

<strong>Trade</strong> Organization (WTO) and General<br />

Agreement on Tariffs and <strong>Trade</strong> (GATT),<br />

currently has free trade agreements<br />

(FTAs) with four countries: China (signed<br />

under ASEAN), Australia, New Zealand<br />

and India. FTA negotiations with other<br />

countries are under way.<br />

More detailed advice on Thai customs duties<br />

can be found at www.customsclinic.org.<br />

Import controls<br />

Certain goods entering <strong>Thailand</strong> are subject<br />

to import controls. They include:<br />

• Drugs, foods and supplementary<br />

products: require prior licensing from<br />

the Food and Drug Administration at<br />

<strong>Thailand</strong>’s Ministry of Public Health.<br />

• Antiques/works of art: require<br />

permission from the Fine Arts Department.<br />

• Weapons, ammunition, explosives,<br />

fireworks and real or replica firearms<br />

require an appropriate licence from<br />

the Ministry of Interior. Weapons such<br />

as electric-shock devices must also be<br />

declared. Some of these items may<br />

require a permit before importation.<br />

• Cosmetics: <strong>Thailand</strong>’s Cosmetic Act<br />

stipulates that, for the purpose of<br />

protection of public health, any importer<br />

of controlled cosmetics must provide<br />

the name and location of the office and<br />

the place of manufacture or storage of<br />

the cosmetics, the category or kind of<br />

cosmetics to be imported and their major<br />

components.<br />

• Wild fauna, flora, fish and other<br />

aquatic fauna: Depending on the<br />

goods being imported, permission is<br />

required from the National Park, Wildlife<br />

and Plant Conservation Department,<br />

the Department of Agriculture or the<br />

Department of Fisheries.<br />

43


BUSINESS ISSUES AND CONSIDERATIONS<br />

REGULATIONS AND STANDARDS (CONTINUED)<br />

Customs documentation<br />

When goods arrive in or leave <strong>Thailand</strong><br />

the importer/exporter is required to file<br />

a goods declaration and supporting<br />

documents to Customs to enable cargo<br />

clearance. To speed up and facilitate the<br />

flow and movement of legitimate cargo<br />

the Thai Customs Department provides two<br />

clearance systems: manual and electronic<br />

data interchange (EDI).<br />

The procedure works as follows:<br />

1. Importer/exporter files a goods<br />

declaration (Customs Form No. 101<br />

or No. 101/1).<br />

2. Importer/exporter prepares the following<br />

supporting documents:<br />

• Invoice<br />

• Packing list<br />

• Foreign transaction form if the<br />

free on board (FOB) value exceeds<br />

500,000 baht<br />

• Export/import licence (if applicable)<br />

• Other relevant documents (if applicable)<br />

3. Customs checks the declaration and<br />

supporting documents.<br />

4. Customs collects export duties and taxes.<br />

5. Customs inspects and releases cargo.<br />

44<br />

Labelling and packaging<br />

The labelling of products in <strong>Thailand</strong> is<br />

regulated by the Consumer Protection Act<br />

BE 2522 (1979), which is administered by<br />

the Consumer Protection Committee (CPC).<br />

The CPC in turn delegates its authority to<br />

individual committees on advertising, labels<br />

and contracts.<br />

Generally, goods that are manufactured<br />

(by the factories covered by the law<br />

on factories and goods) and ordered<br />

or imported into <strong>Thailand</strong> for sale are<br />

designated as label-controlled goods.<br />

However, the Committee on Labels also<br />

has the power to designate the following<br />

goods as controlled for the purpose<br />

of labelling:<br />

1. Goods whose nature or usage may<br />

endanger physical or mental health.<br />

2. Goods that are regularly used by the<br />

public and where labelling would benefit.<br />

Labels on controlled goods must contain<br />

truthful statements. They must not include<br />

any statements which could lead to<br />

misunderstanding as to the material facts<br />

concerning the goods in question.<br />

They must also feature:<br />

• The name or trademark of the<br />

manufacturer or importer.


• The place of manufacture or the place of<br />

operating import business.<br />

• Statements indicating the nature of the<br />

goods.<br />

• The name of the manufacturing country,<br />

in the case of imported goods.<br />

• Price, quantity, usage, recommendations,<br />

caution and expiry date.<br />

In no circumstances may the Committee<br />

on Labels force business operators to reveal<br />

their manufacturing secrets, unless such<br />

information is essential to the health and<br />

safety of consumers. All products sold in<br />

<strong>Thailand</strong> must have a Thai label.<br />

For further information please contact:<br />

Division of Consumer Protection<br />

on Labelling<br />

Office of the Consumer Protection Board<br />

The Government Complex<br />

5th Floor, Building 5<br />

Chaengwattana Road<br />

Laksi, Bangkok 10210<br />

<strong>Thailand</strong><br />

Tel: +66 (0)2 143 0384<br />

Fax: +66 (0)2 143 9768<br />

Email: consumer@ocpb.go.th<br />

Website: www.ocpb.go.th<br />

Standards and technical regulation<br />

Standardisation policies in <strong>Thailand</strong> come<br />

under the remit of the Thai Industrial<br />

Standards Institute (TISI) (www.tisi.go.th),<br />

part of the Ministry of Industry.<br />

GETTING YOUR GOODS<br />

TO THAILAND<br />

• Sea freight: Goods can be sea<br />

freighted in consolidated containers<br />

to Bangkok Port and Laem Chabang<br />

Port. The average delivery time<br />

from <strong>UK</strong> seaports to <strong>Thailand</strong> is<br />

30-35 days.<br />

• Air freight: Goods normally<br />

arrive within two to three days.<br />

Consolidated air freight (which is<br />

cheaper) takes between seven and<br />

ten days.<br />

• Courier: Several courier companies<br />

operate in <strong>Thailand</strong>, including DHL,<br />

FedEx, TNT, UPS and OCS.<br />

• Postal parcel/express mail service:<br />

The Thai service provider is <strong>Thailand</strong><br />

Post (www.thailandpost.co.th)<br />

45


BUSINESS ISSUES AND CONSIDERATIONS<br />

GETTING PAID AND FINANCIAL ISSUES<br />

Since 1997, 100 per cent advanced<br />

payment through wire transfer is commonly<br />

used by traders in <strong>Thailand</strong> instead of<br />

an open account. Necessary details such<br />

as bank name, account name, account<br />

number, bank address and swift code have<br />

to be given to clients. Bank drafts are used<br />

for smaller purchases.<br />

For a middle-term customer, 50 per cent<br />

pre-payment and 50 per cent payment after<br />

invoice date can be agreed upon. The normal<br />

credit term is 30 days. For a long-term<br />

customer this can be extended to 120 days.<br />

Irrevocable Letters of Credit would be<br />

used if the total sale amount exceeds<br />

1 million baht (£20,000).<br />

Financial assistance<br />

There are 32 commercial banks in the<br />

Thai banking system – 14 Thai commercial<br />

banks, two retail banks, one subsidiary<br />

bank and 15 branches of foreign<br />

commercial banks. They include the <strong>UK</strong>’s<br />

HSBC (www.hsbc.co.th) and Standard<br />

Chartered Bank (Thai) Public Co Ltd<br />

(www.standardchartered.co.th).<br />

46<br />

As of 24 February 2008, foreign currency<br />

brought into or taken out of <strong>Thailand</strong><br />

above the value of US$20,000 must be<br />

declared at the Thai Customs Office. Thai<br />

currency over the amount of 50,000 baht<br />

must also be declared. People travelling to<br />

one of <strong>Thailand</strong>’s neighbouring countries<br />

are not allowed to take out more than<br />

500,000 baht of Thai currency.<br />

Non-residents are allowed to open foreign<br />

currency accounts with any commercial<br />

bank in <strong>Thailand</strong>. As a special gesture to<br />

non-residents no restrictions are imposed<br />

on the maintenance of and withdrawal<br />

from the account, as long as the funds<br />

originate from abroad.<br />

Travellers cheques in US dollars can be<br />

cashed at provincial banks and authorised<br />

money changers, but the best rates can<br />

be obtained in Bangkok. Hotel rates are<br />

usually lower than those offered by banks<br />

and authorised money changers.<br />

Bank working hours<br />

Main offices and branches:<br />

08.30-15.30 (Monday-Friday)<br />

Branches operated in department stores:<br />

10.00-20.00 (Monday-Sunday)


BUSINESS ISSUES AND CONSIDERATIONS<br />

INSURANCE<br />

The private sector in the <strong>UK</strong> provides<br />

credit insurance for exports of consumer<br />

products, raw materials and other similar<br />

goods. Speak to your banker or insurance<br />

broker for more information or contact the<br />

British Insurance Brokers’ Association for<br />

impartial advice.<br />

British Insurance Brokers’ Association<br />

Tel: +44 (0)870 950 1790 (consumer helpline)<br />

Email: enquiries@biba.org.uk<br />

Website: www.biba.org.uk<br />

Private-sector insurance has some limitations,<br />

particularly for sales of capital goods,<br />

major services and construction projects<br />

that require longer credit packages or<br />

are in riskier markets. The Export Credits<br />

Guarantee Department (ECGD), a separate <strong>UK</strong><br />

government department that reports to the<br />

Secretary of State for <strong>Business</strong>, Innovation<br />

and Skills, provides a range of products for<br />

exporters of such goods and services.<br />

Export Credits Guarantee Department<br />

Tel: +44 (0)20 7512 7000<br />

Email: help@ecgd.gsi.gov.uk<br />

Website: www.ecgd.gov.uk<br />

47


BUSINESS ISSUES AND CONSIDERATIONS<br />

MANAGEMENT<br />

CONTROL AND<br />

QUALITY ASSURANCE<br />

<strong>UK</strong> companies use a variety of quality<br />

assurance and management control<br />

techniques in <strong>Thailand</strong>. These include<br />

extensive travelling by <strong>UK</strong> personnel, a<br />

controlling or liaison presence in <strong>Thailand</strong><br />

or providing extensive training and<br />

management for Thai staff. It is important<br />

not to allow milestones to slip by, whether<br />

these are attending a board meeting in a<br />

joint venture or arranging a quality audit<br />

with a supplier.<br />

Particular attention to detail should be paid<br />

when sourcing products from <strong>Thailand</strong>.<br />

Specifications can be misunderstood, so<br />

they need to be very clearly explained<br />

and agreed, and a quality management<br />

system put in place with the Thai company.<br />

Consultancies can undertake all or part of<br />

this process on your behalf.<br />

48<br />

BRIBERY AND<br />

CORRUPTION<br />

Corruption remains an issue in <strong>Thailand</strong>.<br />

Anyone doing business in the country is<br />

likely to encounter or hear of corruption<br />

in one form or another. Practices such as<br />

facilitation payments, bribes and the giving<br />

and receiving of expensive gifts in order<br />

to develop business relationships are still a<br />

problem in certain places.<br />

Our advice to companies encountering<br />

corruption is simple – don’t get involved.<br />

Not only are there issues of business integrity<br />

to bear in mind, but it is also, of course,<br />

illegal. Companies should ensure that all<br />

their commercial activities in <strong>Thailand</strong> are<br />

compliant with the <strong>UK</strong> Bribery Act which is<br />

set to come into force in April 2011.<br />

In 2010 <strong>Thailand</strong> was ranked 78th<br />

out of 178 nations in the Corruption<br />

Perceptions Index compiled by<br />

Transparency International. By way of<br />

comparison to other Southeast Asian<br />

nations, Malaysia ranked 56th, Indonesia<br />

110th and the Philippines 134th.


BUSINESS CULTURE<br />

In a highly competitive commercial<br />

environment it is more important than<br />

ever for us to comprehend the business<br />

culture of our target markets. This helps us<br />

to understand, anticipate and respond to<br />

unexpected behaviour, as well as enabling<br />

us to behave in an acceptable way and<br />

avoid misunderstandings<br />

49


BUSINESS CULTURE<br />

MONARCHY<br />

Thai people have a deep, traditional<br />

reverence for their monarchy, and a<br />

visitor to <strong>Thailand</strong> should be careful to<br />

show respect for the King, the Queen and<br />

members of the Royal Family.<br />

The current monarch of <strong>Thailand</strong> is His<br />

Majesty King Bhumibol Adulyadej. He has<br />

reigned since 9 June 1946, making him the<br />

world’s longest reigning current monarch<br />

and the longest serving head of state.<br />

Most of the King’s powers are exercised<br />

by his elected government in accordance<br />

with the constitution of the day. However,<br />

he is head of the Royal Thai Armed Forces<br />

and holds the prerogative of royal assent<br />

and the power of pardon. He is also the<br />

defender of the Buddhist faith, <strong>Thailand</strong>’s<br />

predominant religion.<br />

It is a criminal offence to make critical<br />

or defamatory comments about the King<br />

or other members of the Royal Family in<br />

<strong>Thailand</strong>. This is known as “lèse majesté”<br />

and is punishable by a sentence of three to<br />

15 years or longer.<br />

50<br />

BUSINESS CULTURE<br />

RELIGION<br />

The predominant religion of <strong>Thailand</strong><br />

is Theravada or Hinayana Buddhism.<br />

However, there is total religious freedom,<br />

with Islam, Christianity, Hinduism and<br />

other faiths practised and protected by the<br />

Thai constitution. Buddhism is the faith<br />

of 95 per cent of the Thai population,<br />

while 4 per cent are Muslims, 0.5 per cent<br />

Christians and the remainder Hindus, Sikhs<br />

and others. Despite the fact that Buddhism<br />

is the faith of the majority, both the Thai<br />

King and the Government uphold and<br />

support all the religions accepted by the<br />

people. Amidst this rich diversity of beliefs<br />

the Thai people have always lived together<br />

in peace and harmony.<br />

Buddhist monks are highly respected and<br />

revered members of Thai communities.<br />

They have special areas reserved for them<br />

at airports and on buses and receive<br />

alms from the public as a sign of giving<br />

and devotion. In towns and villages the<br />

temple (wat) is the heart of social and<br />

religious life.<br />

Visitors should dress neatly when visiting<br />

religious places. Women should not wear<br />

sleeveless tops and short trousers, sandals<br />

or other unsuitable attire. Never sit in a<br />

position where your feet are stretched out<br />

in the direction of a Buddha image.


BUSINESS CULTURE<br />

INTRODUCTIONS<br />

AND GREETINGS<br />

The formal term of address for Thai people,<br />

men or women, is Khun, followed by<br />

the first name. It is commonly used for<br />

addressing somebody, both orally and in<br />

writing, whether they be Thai or foreign.<br />

Thai surnames are long, hence seldom used<br />

except in formal introductions. Most Thais<br />

have nicknames, which are often much<br />

shorter than their first names, and like to be<br />

called by them. However, you should always<br />

ask for their preference first.<br />

Thais greet one another with a Wai, putting<br />

two hands together close to the body at<br />

chest level and bending their heads down<br />

to the hands. Generally, the younger<br />

person Wais the older, who then returns it.<br />

The lower the head is bent down in this<br />

greeting, the more respect is signalled.<br />

Handshakes are common when Thais greet<br />

foreigners, and are an accepted norm.<br />

However, since body contact in Thai culture<br />

is kept to a minimum, handshakes tend to<br />

be brief and not especially firm, especially<br />

with women.<br />

In making introductions, the younger or<br />

junior person is always introduced to the<br />

senior one.<br />

The safe dress code is to go formal and<br />

stick to conservative colours. Your potential<br />

business partner will see this as conveying a<br />

more serious level of commitment.<br />

BUSINESS CULTURE<br />

MAKING<br />

CONVERSATION<br />

Age, seniority and rank are taken seriously<br />

in Thai culture and have an influence on<br />

conversation and dialogue. The less senior<br />

person is expected to show restraint, and<br />

will rarely openly disagree with superiors as<br />

this goes against culture. As this impedes<br />

the flow of good communication, one may<br />

need to have additional conversations with<br />

other counterparts or in other settings, to<br />

confirm understanding.<br />

51


BUSINESS CULTURE<br />

ENTERTAINMENT<br />

<strong>Business</strong> lunches in <strong>Thailand</strong> tend to be<br />

strictly work-related, while dinners usually<br />

signify a more relaxed informal meeting<br />

between closer business acquaintances.<br />

Receiving an invitation to a dinner may<br />

indicate that your business relationship<br />

with the host is moving to a higher<br />

level. The host should arrive earlier than<br />

the guest. Bangkok’s notorious traffic<br />

conditions often prohibit punctuality;<br />

therefore a 15-30 minute delay in arrival<br />

can still be considered acceptable.<br />

<strong>Business</strong> lunches and dinners almost always<br />

take place at a restaurant rather than in<br />

the home.<br />

A typical seating configuration usually<br />

features senior individuals at the head or<br />

centre (of long tables) or allows for higherranked<br />

personnel to choose their seat first,<br />

if the setting does not make this obvious.<br />

Other members of the team should be in<br />

close proximity to facilitate discussion.<br />

Particularly junior personnel may be seated<br />

at a different table.<br />

Very senior figures often prefer to have their<br />

managers or interpreters seated close by<br />

to provide details in response to questions<br />

which may arise during the meeting.<br />

Drinking alcohol is a normal part of<br />

social activity for men and is accepted<br />

for women. Cigarette smoking is common<br />

among both sexes.<br />

52<br />

BUSINESS CULTURE<br />

GIFTS<br />

It is common practice in <strong>Thailand</strong> to<br />

give government officials and VIPs a gift<br />

if they are the guests of honour at an<br />

official event.<br />

Neckties, scarves, handkerchiefs, food/fruit<br />

baskets, books, moderately valued office<br />

items (pens, bags) carrying your company<br />

logo or lunch/fitness gift vouchers are<br />

all acceptable as gifts. Guest speakers at<br />

events almost always receive gifts, offering<br />

opportunities for the host and speaker to<br />

pose together for PR photos.


BUSINESS CULTURE<br />

BODY LANGUAGE<br />

AND GESTURES<br />

Avoid pointing with your finger to a<br />

person and never snap your fingers to get<br />

someone’s attention. It is considered rude<br />

to point your foot at a person or an object,<br />

while sitting with your feet up against<br />

parts of furniture is not acceptable. It is<br />

also disrespectful to touch someone’s head<br />

or pass something over someone’s head.<br />

Women expect men to maintain a<br />

reasonable distance, while unrestrained<br />

behaviour or emotions tend to be frowned<br />

upon as immature or a call for attention.<br />

These include raising your voice, showing<br />

excessive frustration/joy and public displays<br />

of affection between men and women.<br />

BUSINESS CULTURE<br />

MEETINGS AND<br />

PRESENTATIONS<br />

Organise appointments before you<br />

depart the <strong>UK</strong>. Follow up with telephone<br />

calls on arrival to confirm availability.<br />

Meetings can be arranged for over<br />

breakfast, lunch and dinner as well as<br />

during normal office hours.<br />

English is commonly used at meetings and<br />

presentations in <strong>Thailand</strong>. Presentations<br />

are most effective when delivered formally<br />

and follow commonly accepted formats.<br />

However, more informal Q&A sessions will<br />

often encourage participation, as Thais<br />

are normally not keen to exchange views<br />

in formal settings or large meetings where<br />

there is a mixture of differently ranked<br />

53


BUSINESS CULTURE<br />

MEETINGS AND<br />

PRESENTATIONS<br />

(CONTINUED)<br />

individuals. To encourage the audience<br />

to be more forthcoming with questions<br />

you might wish to consider deploying<br />

mechanisms such as allowing participants<br />

to submit anonymous questions on pieces<br />

of paper.<br />

During a meeting or presentation it is<br />

normal behaviour for Thais to speak to<br />

each other in Thai. This is not meant to be<br />

rude or a sign they are bored, but rather<br />

an attempt to seek confirmation that they<br />

have understood something correctly.<br />

Always take plenty of business cards and<br />

corporate literature along to meetings/<br />

presentations. If possible, have the reverse<br />

of your business card translated into Thai.<br />

It usually creates a very good first impression.<br />

Follow up meetings by letter/email on<br />

your return to the <strong>UK</strong>. If possible, keep the<br />

Embassy informed of progress.<br />

54<br />

BUSINESS CULTURE<br />

NEGOTIATING<br />

TECHNIQUES<br />

Building good relationships is a vital<br />

part of the business and negotiation<br />

process in <strong>Thailand</strong>. Thais place great<br />

importance on establishing the right<br />

chemistry with their business partners,<br />

and if this is achieved the subsequent<br />

relationship will benefit significantly.<br />

Getting business agreement can be a<br />

lengthy process. Thais are not generally<br />

quick decision-makers – they prefer to<br />

consult with several people before making<br />

decisions. Do not expect to do business<br />

immediately or necessarily on the first visit.<br />

Signs of impatience should be avoided.


<strong>UK</strong> SUCCESS STORIES<br />

BG Group: has a major investment in<br />

the Gulf of <strong>Thailand</strong>. This is focused on<br />

upstream activities, including an interest<br />

in the large offshore Bongkot field, which<br />

supplies approximately 15 per cent of<br />

<strong>Thailand</strong>’s gas demand.<br />

Boots: With annual sales of some<br />

£51 million and nearly 200 stores<br />

nationwide, Boots’ retail operation in<br />

<strong>Thailand</strong> is its biggest in overseas markets.<br />

Pipe Supports Ltd: recently opened<br />

its third factory in <strong>Thailand</strong>. Located<br />

near Bangkok, Pipe Supports Asia Ltd<br />

supplies the complete range of the<br />

Group’s pipe support products, including<br />

constant and variable supports, dynamic<br />

restraints, clamps, slide bearings and<br />

cryogenic support systems. The company<br />

manufactures a significant proportion<br />

of the Group’s products for distribution<br />

mainly in Asia and the Middle East.<br />

Reckitt Benckiser: has a licence to sell<br />

Strepsils throat lozenges into Thai grocery<br />

outlets. It recently expanded in <strong>Thailand</strong><br />

with help from <strong>UK</strong>TI.<br />

Standard Chartered Bank: has 42<br />

branches in <strong>Thailand</strong> offering the full<br />

range of consumer, corporate and financial<br />

institution products. Standard Chartered<br />

has been in <strong>Thailand</strong> since 1894.<br />

Tesco: Tesco is the largest <strong>UK</strong> investor in<br />

<strong>Thailand</strong> with over 660 stores across the<br />

country. 1998 saw the establishment of<br />

hypermarket Tesco Lotus in <strong>Thailand</strong>,<br />

a joint venture between Tesco and the local<br />

Charoen Pokphand Group. This partnership<br />

was dissolved in 2003 when Charoen<br />

Pokphand sold its shares to Tesco.<br />

Tesco Lotus sells a diverse range of<br />

products and services, including food,<br />

electronics and personal finance.<br />

Triumph Motorcycles: in September 2008<br />

Triumph Motorcycles announced that it<br />

was expanding one of its Thai factories<br />

to increase capacity to over 130,000<br />

motorcycles. Triumph’s first factory in<br />

<strong>Thailand</strong> was opened in May 2002 and<br />

was established for the manufacture of<br />

motorcycle components including frames,<br />

fuel tanks, header systems, swinging arms,<br />

engine covers and chrome-plated parts.<br />

A second factory was opened in 2006<br />

where a wet painting facility and assembly<br />

line have been established. A third factory,<br />

opened in 2007, includes high-pressure<br />

diecasting and machining. The company<br />

now employs approximately 800 staff<br />

in <strong>Thailand</strong>.<br />

55


<strong>UK</strong> SUCCESS STORIES<br />

(CONTINUED)<br />

Rolls-Royce: Rolls-Royce has major<br />

contracts for its Trent range of engines<br />

with Thai Airways International and<br />

Bangkok Airways. In addition to its<br />

success with local airlines, Rolls-Royce<br />

is already an established supplier<br />

to <strong>Thailand</strong>’s oil and gas sector, the<br />

Royal Thai Armed Forces and merchant<br />

vessel operators.<br />

Ewen McDonald, Regional Director,<br />

Rolls-Royce <strong>Thailand</strong>, said:<br />

“The Kingdom of <strong>Thailand</strong> is very<br />

important to Rolls-Royce. Thai Airways<br />

International and Bangkok Airways are<br />

valuable customers and recent additional<br />

orders will expand the Trent aero engine<br />

presence in the region.<br />

“They also offer a significant opportunity<br />

to strengthen further the partnership<br />

between the <strong>UK</strong> and <strong>Thailand</strong>, with the<br />

support of the <strong>UK</strong>TI team in Bangkok<br />

which has provided assistance to<br />

Rolls-Royce whenever appropriate.”<br />

56<br />

CONTACTS<br />

If you have a specific export enquiry about<br />

the Thai market which is not answered by<br />

the information contained in this report<br />

please contact:<br />

<strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> Enquiry Service<br />

Tel: +44 (0)20 7215 8000<br />

Fax: +44 (0)141 228 3693<br />

Email: enquiries@ukti.gsi.gov.uk<br />

<strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> South East Asia Unit<br />

1 Victoria Street<br />

London<br />

SW1H 0ET<br />

<strong>UK</strong><br />

Tel: +44 (0)20 7215 8000<br />

Alternatively, you can contact the <strong>UK</strong>TI<br />

team in <strong>Thailand</strong> directly:<br />

<strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong>, Bangkok<br />

British Embassy<br />

14 Wireless Road, Lumpini, Pathumwan<br />

Bangkok 10330<br />

<strong>Thailand</strong><br />

Tel: +66 (0)2 305 8333<br />

Fax: +66 (0)2 255 8619<br />

Email: dl.bangkokcommercial.protect<br />

@fco.gov.uk<br />

Website: http://ukinthailand.fco.gov.uk<br />

The <strong>UK</strong>TI team in Bangkok comprises 12 staff<br />

who help <strong>UK</strong>-based companies grow<br />

their business in <strong>Thailand</strong> and assist Thai<br />

companies in bringing their high-quality<br />

investment to the <strong>UK</strong>.


RESOURCES/USEFUL LINKS<br />

Country information<br />

BBC website<br />

http://news.bbc.co.uk/1/hi/country_profiles/<br />

default.stm<br />

Foreign and Commonwealth Office<br />

country profile<br />

www.fco.gov.uk/en/travel-and-living-abroad/<br />

travel-advice-by-country/country-profile<br />

Culture and communications<br />

CILT (National Centre for Languages)<br />

Regional Language Network in your area<br />

www.cilt.org.uk/workplace/employer_<br />

support/in_your_area.aspx<br />

Customs and regulations<br />

HM Revenue & Customs<br />

www.hmrc.gov.uk<br />

Economic Information<br />

The Economist<br />

www.economist.com/countries<br />

Export control<br />

Export Control Organisation<br />

www.bis.gov.uk/exportcontrol<br />

Export finance and insurance<br />

Export Credits Guarantee Department<br />

www.ecgd.gov.uk<br />

Intellectual property<br />

Intellectual Property Office<br />

www.ipo.gov.uk<br />

Market access<br />

Market access database for tariffs<br />

(for non-EU markets only)<br />

http://mkaccdb.eu.int/mkaccdb2/<br />

indexPubli.htm<br />

SOLVIT – Overcoming trade barriers<br />

(EU markets only)<br />

www.bis.gov.uk/EUMarketAccessUnit<br />

Standards and technical regulations<br />

British Standards Institution (BSI)<br />

www.bsigroup.com/en/sectorsandservices/<br />

Disciplines/ImportExport<br />

National Physical Laboratory<br />

www.npl.co.uk<br />

Intellectual Property Office<br />

www.ipo.gov.uk<br />

57


<strong>Trade</strong> statistics<br />

National statistics information<br />

www.statistics.gov.uk/hub/index.html<br />

<strong>UK</strong> <strong>Trade</strong> information<br />

www.uktradeinfo.com<br />

Travel advice<br />

Foreign and Commonwealth Office<br />

www.fco.gov.uk/en/travel-and-living-abroad<br />

NHS<br />

www.nhs.uk/nhsengland/Healthcareabroad<br />

Travel health<br />

www.travelhealth.co.uk<br />

British Chamber of Commerce <strong>Thailand</strong><br />

www.bccthai.com<br />

© Crown Copyright 2011<br />

You may reuse this information (not including logos, images and case studies) free of charge in any format<br />

or medium, under the terms of the Open Government Licence. To view this licence visit<br />

www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team,<br />

The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk<br />

Any enquiries regarding this publication should be sent to our Enquiry Service by email:<br />

enquiries@ukti.gsi.gov.uk or telephone: + 44 (0)20 7215 8000 (Monday – Friday 09.00-17.00)<br />

This publication is also available from our website at www.ukti.gov.uk<br />

58


HELPING YOUR BUSINESS GROW INTERNATIONALLY<br />

A range of <strong>UK</strong> Government support is available from a portfolio of initiatives called<br />

Solutions for <strong>Business</strong> (SfB). The “solutions” are available to qualifying businesses,<br />

and cover everything from investment and grants through to specialist advice,<br />

collaborations and partnerships.<br />

<strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> is the Government Department that helps <strong>UK</strong>-based companies<br />

succeed in the global economy, and is responsible for the delivery of the SfB product<br />

“Helping Your <strong>Business</strong> Grow Internationally”.<br />

We also help overseas companies bring their high-quality investment to the <strong>UK</strong>’s dynamic<br />

economy – acknowledged as Europe’s best place from which to succeed in global business.<br />

<strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> offers expertise and contacts through its extensive network of<br />

specialists in the <strong>UK</strong>, and in British embassies and other diplomatic offices around the world.<br />

We provide companies with the tools they require to be competitive on the world stage.<br />

Other South-East Asia <strong>Business</strong> <strong>Guide</strong>s are available for Indonesia, Malaysia,<br />

the Philippines and Vietnam.<br />

For further information please visit www.ukti.gov.uk or telephone +44 (0)20 7215 8000.<br />

Whereas every effort has been made to ensure that the information given in this document is accurate, neither<br />

<strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong> nor its parent Departments (the Department for <strong>Business</strong>, Innovation and Skills, and the<br />

Foreign and Commonwealth Office) accept liability for any errors, omissions or misleading statements, and no<br />

warranty is given or responsibility accepted as to the standing of any individual, firm, company or other<br />

organisation mentioned.<br />

The paper in this document is made from 50 per cent recycled waste pulp with 50 per cent pulp from<br />

well-managed forests. This is a combination of Totally Chlorine Free and Elemental Chlorine Free.<br />

The inks are vegetable oil-based and contain resins from plants/trees and the laminate on the cover<br />

is sustainable, compostable and can be recycled.<br />

Published March 2011 by <strong>UK</strong> <strong>Trade</strong> & <strong>Investment</strong><br />

© Crown Copyright<br />

URN 11/690

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