Understanding Thailand

Cultural intelligence is key to achieving sustainable business outcomes. Being able to read cultural clues and respond appropriately helps develop relationships, communicate effectively and build trust. While cultural and communication norms are changing as virtual modes of engagement increase, core cultural values remain an important factor in business. Not understanding the particularities of doing business in Thailand can lead to missed opportunities, delays and lost engagements.

Communication

Relationships and mutual trust are key to business success in Thailand and in-person communication rather than phone or email is preferred for discussions related to business. A polite, personable approach to business receives the best response. While small talk is appreciated, frankness is not, and positive language is key while asking questions or delivering answers.

As is common throughout Southeast Asia, communication in Thailand can often be indirect, especially when dealing with conflict or negotiations. This means patience can often be required when reaching a business agreement or resolving a conflict. As open criticism or disagreement can cause a loss of face, it is important to remain calm, considered and diplomatic in commercial interactions.

Handshakes are the normal business greeting for exchanges with foreigners. However, Thais will often raise their hands as if in prayer to greet one another. Thai names can be long, so are often shortened to a nickname. It is preferred to use this name once introduced. The gender-neutral term ‘Khun’ is used before a given name when addressing someone.

Many Thais have a good grasp of written English, though their speaking and listening abilities will vary. It is essential to use clear, plain and jargon free English while speaking. Sometimes, the help of a translator may be necessary. Staying connected with Thai stakeholders through multiple communication channels is key to building relationships and understanding cultural context. Although in-person meetings are key, the use of instant messaging apps like Telegram, Line, WhatsApp and Messenger is widespread.

Navigating culture in business - the importance of core cultural values 

Relationships 

The strength of a business relationship can have a significant impact on commercial outcomes in Thailand. Although these can be more social and personal than in Australia, building relationships with Thai partners can take time. It is considered rude to begin business discussions without first engaging in small talk. Thais build business relationships by both entertaining and being entertained. Embrace invitations to eat and drink with counterparts and, when appropriate, reciprocate. The host will usually pay for everyone. Avoid pushing too soon or too hard to initiate serious business conversations as it is important to build the relationship first.

Thai companies are cautious and prefer long-term partnerships. Regular in-person contact is essential, and winning over the trust of a Thai company can entail repeat pitches. Be personable and talk about shared interests and important aspects of your business partner’s life, like children or hobbies. Being open and friendly is important, as Thai business culture values personal connections above potential profits or the bottom line.

Hierarchy 

Thailand follows a strong hierarchical structure both in society and the workplace, which is based on age, position and experience. Individuals adhere to this hierarchy and decision-making often follows a top down approach. Sensitive or difficult conversations are expected to be initiated by someone with higher authority and blame is often passed to those who are more senior in business settings. For foreign businesses, it is important to be aware of this social structure and show respect to those in positions of authority. Addressing people by their correct titles and using formal language is vital. Thai professionals will often judge someone’s position within a hierarchy based on age, experience, and role. Having a business card helps clearly state credentials and position and enables Thais to gauge a person’s rank in an organisation for smoother interactions. During a meeting, you should address the most senior person with whom you have a relationship. If senior officials are present, it is expected that they will meet with someone of a similar rank in the other organisation. Avoid filling in periods of silence as it is common for careful consideration to be made before a response is given in business discussions. These actions can help foreign businesses navigate Thailand’s often complex business landscape.

The importance of partnerships

Successfully navigating Thailand’s business landscape often requires local talent, knowledge and expertise, and partnerships form an important model for doing business. It is critical to find the right business partner in Thailand. Their local knowledge of business customs, costs of doing business, and business rules can help you successfully do business in Thailand.

Building a partnership requires having relationships in place that can facilitate introductions. After identifying a potential partner, it is essential to conduct due diligence. This includes understanding their customers and clients, their reach across Thailand, the support they can offer for product localisation and in-market reputation. It is essential to undertake reference checks and risk assessments before formalising any local partnerships. Australian businesses can review Thailand’s centralised Tax Identification Portal and the Department of Business Development as part of a comprehensive company background check.

The strength of a local partnership brings advantages across multiple aspects of a commercial operation, from procurement and contracting to gaining credit. Importantly, a local partner can often assist with bureaucratic requirements, including company and product-specific registration processes. Building a long term and sustainable partnership takes time and patience. Austrade and AustCham Thailand can help identify potential partners in Thailand (more details can be found in Section 5.2). For a more detailed understanding of business culture, business etiquette, and building long term and sustainable partnerships to deliver strong business outcomes visit the Asialink Business Academy.

Thailand offers significant opportunities for informed and well-prepared Australian businesses, but doing business in any new market can involve a range of uncertainties. These should be identified and mitigated as much as practicable – and managed carefully once business operations are established.

Risk factors in Thailand

Economic - including the potential for government default (sovereign risk), fiscal, monetary and exchange rate risk.

Thailand’s economic outlook is stable, and Fitch Ratings has defined the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB+’. S&P also rates Thailand at BBB+, with real GDP growth of 2.3 per cent in 2025 averaging 2.8 per cent to 2028.

Thailand’s ratings reflect its robust external finances and sound macroeconomic policy framework, balanced against some weaker structural features compared with ‘BBB’ category peers, including lower per capita income and World Bank governance scores.

Thailand uses a managed-float exchange rate regime. The Bank of Thailand supervises foreign exchange transactions and businesses relating to foreign means of payment to maintain exchange rate stability, help facilitate private sector operations, and develop the overall financial market and economy in Thailand.

Potential mitigations for foreign exchange risk include forward contracts, foreign currency options and utilising foreign bank accounts and loans to manage currency inflows and outflows. Seek advice on the level of currency risk and potential mitigations.

Political - including the potential for political instability and restrictive government policies.

Political risk in Thailand is moderate. Thailand’s democracy status is considered weak according to BTI’s Political Transformation Index, which measures a country’s state of political transformation on five criteria. It has a weak rule of law and a higher government monopoly on the use of force. Thailand’s overall ranking on the political transformation index is 93 out of 137 countries. The political environment is characterised by tensions between establishment and progressive actors. Thailand has a long history of military coups and there is risk of political violence.

Consider performing political risk due diligence for any major investments and be mindful of political affiliations of potential partners. For significant investments, political risk insurance may provide potential mitigation.

Corruption - including the potential for bribery, embezzlement and conflicts of interest.

Thailand scores a low 34 out of 100 in Transparency International’s Corruption Perceptions Index. Government integrity ranks 38.4 according to the Heritage Foundation’s Index of Economic Freedom, which is on par with Vietnam and Indonesia. Public corruption remains a challenge in Thailand. 

Corruption in the judiciary is a high risk for businesses operating in Thailand. Businesses indicate that irregular payments and bribes are commonly made to obtain favourable judicial decisions.

The Office of the National Anti-Corruption Commission (NACC) is Thailand’s principal agency for corruption prevention and suppression. The NACC’s National Corruption Deterrence Center (CDC) reported 1,553 corruption cases with project values totalling over AUD 6.3 billion (THB 140 billion) between January 19, 2022, and the end of January 2024.

You should familiarise yourself with Australia’s foreign corruption and bribery legislation, and ensure you have a robust anti-corruption strategy.

Regulatory - including the potential for regulations that increase the cost of doing business, reduce the attractiveness of an investment or change the competitive landscape.

Thailand scores 60^th in its economic freedoms according to the Heritage Foundation’s International Index of Economic Freedom, which is classified as mostly unfree. The country ranks 84 out of 176 countries on the overall index, below its Southeast Asian neighbours Singapore, Brunei, Malaysia, Indonesia and Vietnam.

Within the Index’s categories, Thailand’s business and trade freedom is moderate and indicates an open trade approach with other countries. The country scored 70.9 in business freedom and 72.4 in trade freedom. Thailand’s investment freedom is also moderate at 55, which indicates that there are regulatory restrictions on foreign investments in the country. This ranks below Malaysia, Singapore and Vietnam but above Indonesia.

A trusted local partner can help you understand, navigate and secure complex regulatory processes.

Intellectual property (IP) - including the potential for weak or underdeveloped IP protections and enforcement mechanisms.

Thailand scores a low 36.1 per cent in the U.S. Chamber of Commerce International IP Index. It ranks in the lower quartile of countries in the index. Thailand’s IP weaknesses include inadequate patent protection and gaps in patentability for high-tech arts, including life sciences and CIIs; and high physical counterfeiting and digital piracy rates; software piracy is estimated at 64 per cent.

In recent years, Thailand has taken proactive efforts to combat intellectual property infringement, which has demonstrated visible improvements. The 2022 Copyright Act amendments introduced a notice-and takedown scheme and additional remedies for the circumvention of technological protection measures, including the manufacture, sale, rental, or importation of circumvention devices. The 2022 Thailand Research and Innovation Utilization Promotion Act improves the technology transfer environment.

Registration for patents, trademarks and copyrights can help mitigate IP risk. Continual product development and brand updates can deter counterfeiting. Technology solutions such as RFID tags and QR codes to authenticate products can add an extra layer of protection.

Geopolitical - including the potential for trade relationships, security partnerships and territorial disputes to impact business activities.

Thailand skilfully navigates US-China tensions through strong relationships with both countries and by adhering to ASEAN centrality. The ongoing conflict in neighbouring Myanmar has so far had little impact on Thailand. Like many trade exposed countries, geopolitical tensions can increase the risk of higher commodity prices and impact the government’s balance sheet.

Boards and leadership teams should familiarise themselves with geopolitical issues that may impact a business and, if relevant, develop plans in response to potential scenarios. Companies may also wish to seek external advice.

Supply chain - including the quality of infrastructure, levels of corruption, corporate governance, supply chain visibility and timeliness.

Supply chain risk is moderate with Thailand ranking 66 out of 130 countries in the FM Global Resilience Index 2025. This indicates that the country has quality infrastructure and logistics. In the last decade, the government invested close to AUD 181.49 billion (THB 4,000 billion) in infrastructure. According to the World Bank, investment in PPP infrastructure projects in Thailand amounted to AUD 45.3 billion (THB 1.0 trillion) over the past two decades. However, Thailand still faces an infrastructure gap. The Global Infrastructure Hub estimates there will be an infrastructure spending gap of up to AUD 163 billion (THB 3.59 trillion) by 2040, if infrastructure investment does not accelerate.

Potential mitigations include supplier diversification, holding additional inventory, and implementing new operating models and processes. Technology is also providing improved analytics, sensors and automation.

Climate - including the potential for extreme weather events and rising sea levels to impact trade routes, supply chains and infrastructure.

Thailand ranks as the 80^th most vulnerable country out of 185 nations in the University of Notre Dame ND-Gain Index. Thailand is developing policies to respond to climate change but its adaptation needs and urgency to act are high.

Floods are the greatest natural hazard facing Thailand in terms of the economic and human impact from climate change according to the World Bank Climate Risk Report. Thailand is cited as one of the ten most flood-affected countries in the world. Drought and cyclone also represent major hazards. All may intensify in future climate scenarios.

Thailand placed climate change at the highest policy level in its 20-Year National Strategy (2018-2037) and has also developed a Climate Change Master Plan (2015-2050), which aims to make Thailand resilient to the impacts of climate change and achieve low carbon growth through sustainable development.

Identifying and mitigating climate change risks should be embedded in all elements of a company’s strategy and operating model.

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