How to Do Business in Thailand
January 3, 2018
If you’ve never been to Thailand you probably have a few preconceived ideas. Like many other Asian countries it’s fast-paced, densely populated, and offers a lot of opportunities for an American small business. With a full understanding of Thai etiquette and customs, you can forge a long term relationship with a Thai supplier. Relationships in all parts of life are very important in Thailand and can often be the backbone of any trade deal or even the smallest discussion. These people want to know about you, where you are going, and if they can help. Yes, they really are that nice.
These people want to know about you, where you are going, and if they can help. Yes, they really are that nice.
All that said, if you’re taking a trip to make a contract with a supplier, this guide will help you do business in Thailand. Your time is precious, and so is your money. Small and medium sized business have fewer people, which often means one person is doing multiple jobs. We don’t need to explain to you how difficult it can be to learn about a new culture.
Strap in, we promise not to keep you too long.
Introduction to Thailand
The second largest economy in the Association of Southeast Asian Nations (ASEAN), Thailand has grown immensely in the last four years. Initially, investors would often avoid the country due to its political climate and lack of infrastructure, but it has made an incredible comeback.
In 2016 alone, export and import between the United States and Thailand averaged out to $40 billion worth of goods and services.
Thailand continues to thrive off of tourism and international export of electronics, machinery, vehicles and automotive parts. In 2016 alone, export and import between the United States and Thailand averaged out to $40 billion worth of goods and services. This provides the US with new opportunities to sell medical products, automotive accessories, agricultural equipment and chemicals, beauty products, food supplements, recreation equipment, and educational services. Thailand continues to be on the lookout for US exporters of aerospace and defense equipment, broadcast equipment, food processing, packaging equipment, and environment technologies. Many cities outside of the capital, Bangkok, rely on the sale of agriculture and surf and turf. Large amounts of feed are imported continually to support this vast farming community.
The government’s new-found drive to increase ecommerce and the use of digital payments, it’s the fastest-growing market in Asia and is estimated to increase by 22% annually until 2020.
Nevertheless, the Thai are definitely concentrating on attracting foreign direct investment to scale the value ladder of world trade. An obstacle for trade could be the rather high tariffs (can get as high as 80%), and its MFN (Most Favored Nation) rate averaging out to 10.7% in 2014. However, with the government’s new-found drive to increase ecommerce and the use of digital payments, it’s the fastest-growing market in Asia and is estimated to increase by 22% annually until 2020. Smartphones are becoming more common, and legislation has been put forth to establish nationwide broadband networks as a way to encourage an emarket.
Bangkok, Thailand’s City of Angels, the capital, and the hub of finance and commerce. Needless to say, it’s the best place for businesses to visit, as it holds the largest part of the country’s population and is easily accessible from other countries. This is where the majority of Thailand’s automotive exports come from, as well as computers and other electronics. Several of the major infrastructure big hitters are in this area: Bangkok International Trade and Exhibition Center, Queen Sirikit National Convention Center, Stock Exchange of Thailand and the IMPACT Exhibition and Convention Center.
The nerve center of tourism and hugs the coast of the river that runs through Thailand, Chao Phraya River, Samut Prakan is a must for any traveler. With nearly 400,000 inhabitants, it’s home to numerous historical sites and museums such as the Ancient City Muang Boran and the Naval Museum located in Bang Nag Keng. Businesses have begun to sprout up in this area and are ripe with market and intelligence jobs for the business nomad. This could be a good place to make some connections.
During the Vietnam War, Udon Thani received a surge of Vietnamese immigrants fleeing the battle-torn country. This created a swell in the economy of the city. Yet, it’s the continued prosperity that gives it such relevance. A crossroads for trade between Laos and Vietnam for Thailand, Udon Thani is home to some of the most diverse and elaborate shopping malls in the country. The construction of a railroad improved the trade and economics of the city thanks to power deals with Laos. It’s probable that this province will rise to the top alongside Bangkok.
The national currency is baht and one ฿ is equal to 0.031 US dollars. Unlike other countries, Thailand does not accept American cash nor any other form of currency besides baht. Average prices may show in hundreds or thousands but don’t worry, this is normal.
English isn’t prevalent in Thailand. With 14% of the population being Chinese, it’s unlikely you’ll have meetings in English outside of the capital.
English isn’t prevalent in Thailand. With 14% of the population being Chinese, it’s unlikely you’ll have meetings in English outside of the capital. While this does require some extra work, such as procuring a translator, don’t view this as a barrier to entry. With the growth in economy and ecommerce, more and more people are learning English to better suit foreign exchange. We do recommend that you find some local help before entering into a business venture. There are foreign embassy workers, funded by your tax dollars, to help with import and export negotiations.
Holidays and Traditions
Office hours in Thailand are very similar to those of the rest of the world. Offices are largely open between the hours of 8 am to 5 pm Monday through Friday and are closed on Saturdays and Sundays. Commercial sectors are open earlier in the day and sometimes even on weekends. It should be noted that if a holiday falls on a weekend, the following work day will be considered the observance day to make up for it. A few of their holidays correspond with Western ones, but due to their past ties to a monarchy, there are some you should be aware of.
|New Year's Day||January 1||Nationwide|
|New Year's||January 2||Nationwide|
|Makha Bucha (Means “to honor.”)||February 11||Nationwide|
|Chakri Day||April 6||Nationwide|
|Labor Day||May 1||Nationwide|
|Royal Ploughing Ceremony||May 11||Nationwide|
|Visakha Bucha||May 29||Nationwide|
|Asalha Bucha||July 27||Nationwide|
|Buddhist Lent Day||July 27||Nationwide|
|King Maha Vajiralongkorn’s Birthday||July 30||Nationwide|
|Queen Sirikit’s Birthday||August 14||Nationwide|
|Anniversary of the Death of King Bhumibol||October 15||Nationwide|
|Chulalongkorn Day||October 23||Nationwide|
|Cremation of King Bhumibol||October 26||Nationwide|
|King Bhumibol’s Birthday||December 5||Nationwide|
|Constitution Day||December 10 - 11||Nationwide|
|New Year’s Eve||December 31||Nationwide|
Communication From the US
Ordinarily, landline numbers in Thailand are seven-digits long and mobile numbers are eight-digits long. You may also find that there are six and nine-digit numbers too. To make an international call to Thailand, first dial 00 (IAC, International Access Code) then +66, then the area code and the phone number.
Traveling to Thailand
Now that you know the basics about Thailand, you can make that travel plan. Making your way to this Asian crossroads is a lot easier than you would think:
Getting a visa for any type of visit to Thailand is extremely easy and reasonably priced. Some countries will force you to leave and come back if you wish to extend your stay, but in Thailand you can simply pay to stay longer. There are three different types of visas based on the purpose of your visit: tourist visa, transit visa, and a nonimmigrant visa.
Getting a visa for any type of visit to Thailand is extremely easy and reasonably priced. Some countries will force you to leave and come back if you wish to extend your stay, but in Thailand you can simply pay to stay longer.
The one most important to those wishing to do business is the nonimmigrant visa. There are 10 different types of nonimmigrant visas which seems overwhelming, but the category “B” is probably the only one you’ll need. It grants you the ability to work in country with an initial stay of 90 days. It’ll cost ฿ 2,000, which is around $61.40 USD.
For more information on registration, you can check out the Royal Thai Embassy website.
|Bangkok Gems & Jewelry Fair||Bangkok||Winter||Gemstones, Jewelry, Equipment and Boxes.|
|SETA||Bangkok||Winter||International Sustainable Energy & Technology in Asia.|
|GRITE||Bangkok||Winter||International Exhibition for Rubber, Latex & Tire Industries|
|Victam Asia||Bangkok||Spring||Feed Industry Conference and Exhibition|
|Thailand Auto Parts & Accessories||Bangkok||Spring||Vehicle Parts & Components, Accessories, Machinery, and Service & Repair|
|Tuna||Bangkok||Spring||Fishing Industry Expo & Conference.|
As the famous saying goes: time is everything. No one likes to be held up for something, no matter the reason. Thai people prefer someone who is on time, especially those who make appointments a month in advance. This shouldn’t be too hard considering you already have your travel plan set up, right?
In order to do a proper Thai greeting, you must first know how to do the wai gesture. Place your hands in front, as if in prayer, and bow your head to the point where your nose touches your thumb. Typically, if the person you are greeting is older you would bow deeper and raise your hands higher. If this person is a friend, you can merely touch your forehead to your hands. Note that this gesture can be used as a greeting, a thank you, and a goodbye.
Unlike the typical American who says exactly what they mean, Thai people have a very different approach to professional relationships. They would rather develop a more personal connection before they start a business relationship. That’s why a 90-day visa will come in handy; it’s doubtful you’ll use the 3 months, but don’t expect to make the deal on the first meeting. There will be drinking, food, and lots of relaxed conversation. Use this time to promote yourself and your company. They will love hearing about you.
Business Etiquette Do’s and Don’ts
Although the meetings and communications can be less formal, that doesn’t mean there aren’t things you should be aware of. Here’s a list of some of the basics that will help you avoid awkward situations:
- Introductions. Now that you’ve mastered your wai technique, it’s time to talk a little hierarchy. Customarily, the person with the most seniority is introduced last; it’s worth it to do the same for yourself and your associates.
- Addressing someone. “Khun” is the Thai form of saying Ms., Mrs., Mr. and so on. It is used before someone’s family name in a sentence when addressing them.
- The little things. Avoid wearing black. This color is reserved for funerals and events that respect the dead. Also, shine those shoes! You may think that your hosts won’t notice that slight scuff on your oxfords, but think again.
- Entering a home. Make sure to remove your shoes before entering a home. Restaurants and other public places may have this policy too so keep an eye out by that front door. Also, when stepping into a building, whether it be a public or private one, step over the threshold and not onto it. The threshold houses the spirit guardian and is used as protection against evil spirits.
- Respect the Monarchs. Although Thailand is going through some political changes, a lot of the national holidays are the birthdays of kings and queens. There are still a number of people who support the royal family, so don’t criticize Thai royalty.
- Be animated. Thai people are attentive to facial expressions and body language. Make eye contact and nod along when they speak. It’s a way to let them know you’re listening, even if you don’t speak the language.
Now that you’re a pro at the intricacies of Thai customs and social etiquettes, it’s time to get down to the reason you came: the deal. There are a couple things to know before going in:
As we said before, the Thai society is hierarchical. It’s normal for Thai people to ask you about your personal life. They are trying to understand where you are in the hierarchy and, with that in mind, you can use this to your advantage. Be colorful about yourself and your company. Of course, be modest and not over the top, but make it your moment to sell yourself to them in an informal manner.
A Vague Answer Can be a “No”
The Thai people do not like confrontation. Rather than saying 'no' to someone, they will say something like 'maybe later' or 'we are not able to do that at this time.'
The Thai people do not like confrontation. Rather than saying “no” to someone, they will say something like “maybe later” or “we are not able to do that at this time.” Pushing them for a straight answer will probably get you nowhere. At this point, you should realize a maybe is a no.
An Inside Man
The best way to understand any infrastructure in any country is to have a connection with someone who lives there. Having a translator is one thing, but a guide to help you navigate the corporate world of Thailand is key. Good thing you know about the paid financial aids at the US embassy in Thailand. They may not be the full-on support you need, but they can certainly give you great advice.
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Thailand has been through a lot in recent years with the military taking control of the government in a coup d’état back in May of 2014. A new constitutional referendum has been put into place and they are stabilizing, but there are still things to be aware of:
Low Prices, and Just For YOU!
This is one you hear about a lot from travelers in many countries. It starts out in the form of a good Samaritan directing you to that nice store in the market with insane discounts. When you get there, the shopkeeper will tell you that the product is worth a lot more than the price they are selling it to you for, and that this is a sale catered to you. But, of course it rarely is. Remember that if something seems too good to be true, it likely is.
With the slow transition to chip technology in Thailand, ATM skimming attacks and card fraud has become an issue. The rapidly growing economy and ecommerce will increase the chances of these problems. Up to 70% of ATMs are unable to read chip cards. Many banks are looking to adopt chip and PIN technology within the coming years to prevent this.
Before the coup there were definite signs of corruption in multiple sectors of the government. At the start of 2017, there was suspicion that it continued, if not worsened.
It was uncovered that officials and corporations were bribing judiciaries in order to gain a favorable ruling. Customs had ongoing instances of businesses being exploited as they tried to export and import in and out of Thailand. The government announced that it was putting together a plan to crack down hard on corruption in all forms.
Now that you’ve navigated through the etiquettes, the numbers, and the benefits of doing business in Thailand, it’s time for that cash to flow. Thailand businesses tend to deal in wire transfers or letters of credit, but only because they’re used to it. As their emarket grows, they are quickly catching up with Europe and the West.
Never ending trips to the bank, unnecessary fees, and a lack of awareness or sympathy for your business.
People are becoming tired of a system that’s inexplicably expensive and tedious. Never ending trips to the bank, unnecessary fees, and a lack of awareness or sympathy for your business.
Veem allows businesses to make international payments with only a few clicks. After registering into our system and filling out banking information, you can make your B2B payment. We send it off, and you know where it is at all times. No hidden fees, and no hassle. Let us help you take charge of your money, your time, and your business.