Thailand Business Guide - UK Trade & Investment
Thailand Business Guide - UK Trade & Investment
Thailand Business Guide - UK Trade & Investment
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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