Doing Business in Thailand

Further information on opportunities for Australian businesses in Thailand is available in the Asialink Business Thailand Country Starter Pack.

Benefits of TAFTA for Australian businesses include:

• The elimination of 94 per cent of Thailand's tariff and quota barriers on imports from Australia as of 2010, with the remaining tariffs phasing to zero in 2015 or 2020 (with the exception of skim milk powder and liquid milk and cream, for which the tariff rate quotas will be eliminated in 2025).
• More open access for Australian companies to Thailand's services market and a commitment to liberalise two-way services trade in future.
• Increased access for Australian investors in Thailand, with majority Australian ownership permitted for businesses in certain sectors including mining, construction, restaurants and hotels, tertiary education institutions and maritime cargo services.
• More investment protection for Australian direct investors in Thailand, including the right to transfer their funds out of Thailand at any time, and the right to seek impartial resolution of any disputes with the Thai Government over their investments.
• Easing of visa and other requirements for the temporary entry of Australian business people to Thailand.

Thailand is broadly divided into 4 distinct regions comprising 77 provinces:

Central – The location of Bangkok. Bangkok stands as Thailand's principal entry point for international traders and investors, accounting for 44 per cent of the country's GDP. This commercial hub is a natural drawcard with its numerous industrial estates and gateway to important national markets.
Northeast – Encompasses the country's most populous region and is home to Nakhon Ratchasima (Korat), a major industrial city.
North – Takes in the cities of Chiang Mai and Chiang Rai.
South – Includes the popular coastal resorts of Phuket, Koh Samui, Hua Hin, Phang Nga and Krabi.

Thailand's eastern coastline contains a sweeping industrial zone and is home to Thai and foreign-owned industries that include automotive, engineering, large-scale manufacturing, petrochemicals and power generation. The industrial strip straddles the provinces of Chonburi, Chachoengsao, Samut Prakan and Rayong, and includes the leading port of Laem Chabang, Thailand's biggest and one of the world's most industrious.

Further information on business locations and regions in Thailand is available in the Asialink Business Thailand Country Starter Pack.

Hierarchy and rank are important, and senior officials and business people will usually expect to meet Australian representatives of similar seniority, not more junior staff. All correspondence should be addressed to the most senior person.

Negotiations in Thailand are generally more of a joint problem solving process and focused on compromise, even when there is no real need to do so. While Thailand has a pro-business attitude, business decisions can be slow and may involve several layers of authority before being finalised. Planning is usually short term.

Thais are unlikely to admit to having not understood you for fear of offending you. Likewise, they will generally avoid disagreeing openly and avoid appearing negative when answering questions. This can be frustrating – you may assume a deal or agreement has been struck, only to find nothing further eventuates. Having an interpreter who can help you to deduce meaning, as well as language, can help greatly.

When conducting business in Thailand, getting to grips with legal regulations and the practicalities of tax and employment laws, as well as other key provisions, is a fundamental challenge.  It is very important to familiarise yourself with the various laws and penalties, particularly those relating to bribery of foreign officials. It is important that you commit to the highest level of corporate behaviour so as to avoid pitfalls that can lead to grave consequences.

• When scheduling meetings, be aware that Thais prefer to work into the evening rather than early in the morning. Business is kept separate from home, while family comes first, ahead of business.
• Men say "Sawadee-khap" and women say "Sawadee-ka" when being introduced or greeting someone. The traditional form of greeting is known as the "wai", which is performed by placing the palms of the hands together, raising them to the face with the fingertips at eye level and inclining the head slightly. But generally Thais will shake hands with foreign business contacts.
• When addressing others verbally, Thais use "Khun" (pronounced koon, as in cook), which stands for Mr, Mrs, Ms or Miss. This is followed by a person's given name. For example: Khun John (rather than Khun Smith).
• Business cards in Thailand are valued highly and always presented when meeting someone for the first time. Ideally, your business cards should have a Thai language version printed on one side. Cards should be handed person to person using the right hand or both hands, and received in similar fashion. You should present your card to the most senior person first. When receiving a business card, it is important to take a few moments to read it.
• Appearance is very important and business people observe a dress code that dictates a certain formality. For meetings, businessmen should wear a shirt and tie and proper footwear (not sandals). Thai people will usually judge a person on their clothing and accessories, so good grooming and a bit of polish on shoes is worth the effort.

The challenge of building a customer base in Thailand will demand continual reassessment of your marketing strategy. Getting a foothold in a foreign market is just the beginning - trade shows and exhibitions are effective ways of identifying and reaching out to potential new customers in a bid to build your business. A key determinant of success can be how effectively a company adapts its product range to meet Thai tastes and cultural preferences, and to meet regulatory requirements. Getting the product mix and style right will vastly lift your chances of success. Thais are also very brand conscious - those with a recognised brand can look to capitalise with a concerted product launch or news conference to announce their arrival in Thailand.

Thailand imposes strict requirements regarding labelling and other product details. A local agent/importer can usually navigate these rules, help register a product and ensure labelling requirements are met. It is also wise to translate all sales and product literature and technical specifications into Thai.

More information on selling and marketing your product, labelling regulations and online sales is available in the Asialink Business Thailand Country Starter Pack.