Doing business in Thailand


Last edited: September 02, 2017 at 17:17:21

When it comes to doing business, Thailand is probably one of the worst countries in the world to do so, but in all fairness the problems that plague enterpreneurs in Thailand are probably more or less the same as in other developing countries.

Strengths Weaknesses Opportunities and Threats

In the end, every country has its own opportunities and threats, and you've got to take that into consideration when conducting your business. The good news is, that if you manage your business well, then you have a good chance to win over your competition, as your strength will outweigh most Thai competitors' weaknesses.

In general, Thai aren't very good businessmen: they aren't very diligent nor motivated, don't understand planning, don't organise well, don't follow up carefully, don't value long-term relationships but instead prefer short term gains, and aren't very creative in developing new business ideas. Instead, the typical Thai business model is: noticing that someone else is successful, then copy that entire concept and establish right nextdoor.

If you're able to find a niche market and do well on all those qualifications that Thai and any foreign enterprises don't, you'll be able to tap into a large market that for sure exists, but it couldn't find a good provider yet. There is a huge demand for nearly everything in Thailand, but businesses and consumers accept the lower standards of service and quality of goods simply because there isn't anything better.

The biggest potential however, could be in providing a service for western markets and getting paid in western currency, while taking advantage of lower labour and material costs in Thailand. The most successful businesses run by foreigners in Chiang Mai are often software companies or export companies.

The Thai economy and Thai-style doing business

The Thai economy in a way is a very strange economy, which resembles a true market economy but often isn't. There is a huge amount of unregistered money that isn't reflected in official figures but can dominate cash flows in certain businesses. Thai consumers aren't behaving rationally and are sometimes not reacting to market prices, they act according to a fictual price in their head. And a large part of the consumer market is on credit.
Normal 'rules of the game' and best practises don't always apply to Thai style doing business. For example, for small and even big Thai businesses there isn't such thing as goodwill, they change their name often for no apparent reason and even move a few blocks away.

Staffing

A major challenge, if not the largest, is to find and recruit skills and manage your staff. Even if you manage to find your niche and start up a business, the moment you have to work with Thai staff you'll be in trouble. First of all, there is a real shortage of skills and knowledge, partly due to poor overall education and partly due to low motivation. And if you find and employ staff, it's a real headache to manage them. In general, Thai staff are lazy, cut corners and aren't detail-minded. Also, they aren't very loyal so one day they may just walk out on you without any notice.
Of course, education and skills levels in Bangkok are higher than in other parts of the country, but overall most Thai businesses and staff lack a certain professionalism that you find in real business hubs, such as Singapore and Hong Kong.

If you intend to do business in Chiang Mai, you'll face the interesting mix of factors that on the one hand skills and education levels are lower here than in Bangkok, while on the other hand the labour supply that comes from the universities in Chiang Mai isn't able to find enough good jobs, so as an employer you'll be able to take advantage of that.

Managing Thai staff is one of the most difficult balancing acts to carry out and requires a delicate mix of soft pressure with a smile, never getting angry, and sufficient incentives to get the job done. Be too hard on them and they'll walk away, be too soft and the job will never be finished. Promise them a bonus and they'll be happy today, but forget about it tomorrow. Give them too much money and they'll skip a day of work because of getting drunk.
Thai staff in general are: kind, patient and polite, but don't learn fast or at all, and aren't loyal at all. Even in more challenging jobs requiring more education, be prepared to further train your staff because it won't be enough what they learned in university and they're not used to really follow up on jobs. Also, you need to check literally everything you tell them to do, because mistakes and forgetting things are a rule of law for Thai workers.

Official papers

The Thai government doesn't make it very easy for starting enterpreneurs in Thailand. In order to set up a business and get a work permit, on every foreigner with a work permit the business needs to employ at least 4 local Thai workers. This is why a lot of young enterpreneurs in Thailand and Chiang Mai prefer to start low profile on their own, for example using the internet and staying out of sight of the Thai authorities for the time being.
Unless your business is in one of the priority sectors designated by the Board of Investment (BOI), there are hardly any incentives or procedures to welcome foreign businesses.

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