Thai Biz 101 - Doing Business in Thailand

With competition flooding the market and with more goods and services causing a surplus in supply, some businesses are bound to get left in the dust. This unfortunate but necessary part of a market economy can cause great stress upon a business owner. However as a business owner it is necessary and required to shut down a business as legally as possible to ensure that there is no legal blowback on top of the financial impact that has already occurred. The three most important steps to shutting down a business are as follows, pre-dissolution, dissolution, and liquidation.

The Sutlet Group are pleased to announce the expansion of their Thailand operations with the opening of a new branch office in Pattaya.

For most, Thailand is a complicated place to do business. The Sutlet Group makes it simple.

This new office will cover both Pattaya City and the Eastern Seaboard areas allowing us to offer our “Business Solutions in Thailand” to all companies in this area, probably the biggest growing business community anywhere in Thailand.

Formed in 1998, the Sutlet Group consists of hand-picked member companies that work together to simplify business for our clients. We offer professional business support services for expatriates and organisations in Thailand, serving a wide range of clients from all industries and nationalities.

Services include:

*Accounting, auditing and payroll
*Company registration, work permits and visa management (applications and renewals)
*General business consulting in HR, marketing and operations.

The office will be managed by Mr Richard Prouse (recently appointed Business Development Manager) who says “This is perfect timing to bring the expertise of the Sutlet Group to the Eastern Seaboard, the area seems to be expanding in a way not seen anywhere else at present and I very much look forward to the challenges it will bring”.

With a focus on customer service, problem solving and providing clear, logical advice for real world situations, our team is well equipped to meet the needs of your business. We take great care in our processes and can assist you from start-up through to ongoing operational support and the future growth of your business.

For more details please contact us at richard.p@sutletgroup.com or 038 421 956.
Or check the web site for more information www.sutletgroup.com

Alternatively why not come in and talk to us 8.30 to 5.30 any day Monday to Fridays at 194/197 M.9, Paniad Chang Soi 11, off Paniad Klang.

Please check our newest November entries on the following blogs:

Thailand HR:  Recruitment in Thailand

Siam Trading: Beware, it’s in the Detail

Thailand Accounting & Finance: Ethical Investing - part 2

Thailand Legal Services: Is your work permit or visa legal?

Thailand Marketing: Is your website bringing you customers?

Please feel free to post a comment on any of the blogs giving feedback, insightful opinions, or constructive criticism!

All these blogs are written and compiled by The Sutlet Group Co., Ltd.

Also, the Sutlet Group has officially opened it’s Pattaya Branch with Richard Prouse at the helm at:

194/184 Moo 9

Paniadchang Soi 11

Nongprue, Banglamung

Chonburi 20150

Don’t hesitate to contact us at info@sutletgroup.com

Please check our newest entries on the following blogs:

Thailand HR:  Finding the best Thai staff for your SME

Siam Trading: Sugar - how sweet it isn’t!

Thailand Accounting & Finance: Thailand moves up 4 positions in Corporate Governance Asian table

Thailand Legal Services: International marriage in Thailand - blessing or bureaucratic nightmare?

Thailand Marketing: Utilising the Chambers of Commerce in Thailand

Please feel free to post a comment on any of the blogs giving feedback, insightful opinions, or constructive criticism!

All these blogs are written and compiled by The Sutlet Group Co., Ltd.

Don’t hesitate to contact us at info@sutletgroup.com

The following article is the first of a regular contribution by TICON Industrial Connection, focusing on factories in Thailand.

What advantages does Thailand have as a manufacturing location? From our 20-year experience of providing factories to manufacturers in Thailand, we would suggest the following, more or less in order of importance:

Established Clusters

The majority of manufacturers coming to Thailand are not independent manufacturers of end-user products for export, but rather component suppliers to the larger manufacturers here (who are likely to be end-user product makers, primarily for export). Component manufacturer will therefore come to Thailand in order to supply their customers here, and the customers will be keen to see them close to their plants to ensure an unbroken supply chain. These component suppliers, mainly in the electronics and auto sector, have little choice, if they want that business, other than to set up in Thailand. The benefit of this cluster effect extends beyond suppliers to new end-user producers. A car assembler would be more likely to set up in Thailand, where there are a multitude of suppliers, and where workers have acquired the skills required by the industry, rather than a country like Vietnam or Indonesia without such critical mass.

Good Regional Location

Thailand’s central position within ASEAN is a natural advantage as a manufacturing location as compared to some of the more remote countries, where logistics costs are higher. Looking outside ASEAN to the broader Asian market – a market that is continually growing in consumer importance for most manufactured goods – Thailand’s location is also attractive. Of equal importance is the benefit derived through Thailand’s participation in a number of trade pacts.

Labour Availability

Thailand as a country could do a lot more to provide potential workers with the specialist vocational training, and appears to rely on the employer to provide the training. However, Thai workers are seen to be diligent and keen to learn and, at a time when labour in other markets, such as China, is in a state of flux, Thai workers are seen as more reliable. There is a reasonable availability of workers, and whilst other markets can out-compete Thailand in wage rates for labour-intensive manufacturing such as textiles and garments, the Thai rates are not expensive for electronics and auto producers.

Infrastructure and its costs

Thailand has a good balance of availability and reliability of infrastructure as compared with the cost. Roads, seaports and airports work reasonably efficiently. Power is relatively cheap and, unlike in some lower-cost locations, the supply can be relied upon.

Regulatory Ease of Operation

Whilst bureaucracy is generally problem in Thailand, and protectionism is a major obstacle to investment, this is mainly observed in the domestic market and primarily concerns services. Manufacturing, particularly for export or re-export, has been seen by successive Thai governments as benign, and the employment-creating and export-generating effects of manufacturing are seen as beneficial to the country. The authorities therefore make establishing a production base in Thailand a relatively easy procedure. The Industrial Estate Authority of Thailand (IEAT), part of the Ministry of Industry, are the sole regulators of factory licences on public industrial estates, and the concession allowing 100% foreign manufacturers to own freehold land on industrial estates, or elsewhere with Board of Investment privileges, is indicative of the authorities’ encouragement of industry in Thailand.

‘Livability’

Thailand is a very pleasant and easy place for foreigners to live, and as the country has developed, the facilities for residents from abroad have grown. A wide range of residential accommodation, international schools, hospitals, recreational facilities, and restaurants of all cuisines, are available not only in Bangkok but also in the main industrial area of the Eastern Seaboard. This is no small consideration, as a company’s ability to attract factory managers and other senior managerial and technical workers to this country is a major factor in industrial location. Managers from the largest industrial investment country in Thailand – the Japanese – say that Thailand tends to be one of their favourite overseas postings.

BoI Incentives

Many would see the Board of Investment’s benefits as the No 1 reason why manufacturers set up in Thailand. Certainly the incentives, particularly tax holidays of up to 8 years, are very appealing. If these sorts of incentives were not offered, manufacturers who could chose to locate elsewhere, where similar incentives are offered, may be tempted to do so. However if such incentives were reduced or eliminated across the board, as might ultimately be achieved through a ‘level playing field’ approach by the WTO, Thailand would be as competitive as it is now, as a result of the above advantages.

TIKON logo

Article contributed by Ian Hamilton, General Manager - Business Development, TICON Industrial Connection

TICON Industrial Connection Public Company Limited

13th Floor, Sathorn City Tower, 175 South Sathorn Road, Bangkok 10120

Tel:  +66 (0) 2 679 6565 ext 204

Email: ian.hamilton@ticon.co.th

Website: www.ticon.co.th

Developing a strong marketing plan helps to identify and clarify priorities for your business. It is equally important to consider Thailand-specific factors when writing your marketing plan.

In general, a marketing plan can be separated in to four main sections:
1. Setting of goals and objectives
2. Reviewing the current situation
3. Formulating the actual strategy
4. Allocating resources to undertake and monitor the plan

Whilst you shouldn’t take months to complete your marketing plan, it should also not be the product of one person’s work in a single afternoon. Involve important stakeholders in the process and even involve team members.

But what Thailand-specific factors should you consider when writing your plan?

1. Political situation - first and foremost, you need to consider where the country is heading politically. It is almost impossible to predict, but that in itself tells you that the uncertainty needs to be incorporated in to your marketing plan. Committing millions of Baht to large scale date-specific events may be money wasted if protests begin again at that time - include terms in your contracts whereby you are entitled to refunds if this is the case. This instability also means you need to set realistic objectives.

2. Don’t underestimate the importance of your brand / message - the local market in Thailand is very brand conscious. Creating a buzz around your brand, through online media or others, can result in excellent sales.

3. Be ready to offer promotions and flexibility - if there is one thing Thai’s like, it’s a promotion! We see them all over Bangkok and some shopping centres seem to roll from one promotion to another. The reason for this is simple - it brings customers through the door.

4. Find accurate sources of market information - for every expert claiming the economy is growing, there is one saying it is stagnant. Find sources of information for your industry and market that you feel are the most realistic.

5. Be realistic when reviewing your competition - it is a common flaw in Thailand to underestimate the competition; look closely at their offering and see how it compares to your own.

Thailand is currently very unpredictable. Your marketing plan must take this in to account - if you need assistance, seek marketing help.

Retention is a key issue for SME’s in Thailand. Preventing that top sales person from defecting to a bigger, multinational competitor is a tough task, but not an impossible one. How can an SME on a budget provide employees with suitable benefits, with the goal of retaining their top team members?

• Launch an employee benefits program: your team need to know that they mean something to the organisation. This can be done cost effectively. Key is to improve benefits as employees are promoted, and in line with their time at the organisation.
• Be creative with your benefits program: you don’t need top of the line health care, pension plans and champagne at staff birthday parties. Here are the types of benefits you should be offering:

1. Company pays for lunch on Friday
2. Everyone leaves work early on Friday
3. All staff birthdays include a card signed by all employees, and cake
4. Staff trips are organised every year – remember, in Thailand this does not have to cost a fortune. A couple of minibuses, a trip to a waterfall or beach, lunch and some dinner can easily be done by under Baht 700/person with a little bit of planning.
5. Basic annual bonus plan: equivalent of 3% of monthly salary goes in to a savings account and is paid as a bonus at the end of the year.
6. Pay mobile expenses for employees that need it for business purposes
7. Provide basic health insurance for middle/senior staff; basic plans from AIA start from just Baht 2,500/year/person.
8. Launch employee of the month and employee of the year awards – be creative with what these might be. For employee of the year, Baht 5,000 cash is great, but a return flight to Chiang Mai, free hotel night and some spending money is much more exciting
9. Make staff loans available at fair interest rates
10. Get yourself on training company email lists and look out for cost effective programs –send your staff on training where required. Some government sponsored courses can be as cheap as Baht 3,000 for 4 days! This is valuable for your employees AND for your organisation as these new skills are applied to operations.
11. Increase annual leave over time as employees are with you longer.
12. Have sit down meetings with employees to discuss potential growth within the organisation, and your expectations of them before they can achieve this.

Follow through with your benefit program and budget accordingly. Don’t miss an employee of the month award! Do not forget staff bonuses or a staff trip! Your commitment to the program will sell it as much as the 12 items above; it must be something you do willingly and gladly, not begrudgingly.

Written by Stuart Blott, CEO, Fusion Business Concepts - Member of the Sutlet Group