Thai Biz 101 - Doing Business in Thailand

Disclaimer: Please note that regulations in Thailand change from time to time. The information above was correct at the time of publication, but we recommend that you always consult with an expert for the latest regulations.

Written by Stuart Blott, General Manager, Sutlet Group Co., Ltd.

The vast majority of organisations in Thailand do not calculate income tax properly for their employees. This is an incredible oversight and one that is potentially costing organisations hundreds of thousands of Baht every year.

Employees in Thailand pay an income tax based on their earnings. This income tax is, however, subject to deductions in accordance with various factors, including whether they are married, have children, are the only working partner in a marriage, whether the children are in education, whether they pay interest on a property, and others related to investments and donations.

Take a look at the following example:

• Mr. Smith and Mr. Johnson both earn Baht 100,000/month.
• Mr Smith is married, his wife is a stay at home Mum, he has two children (both in education) and pays Baht 10,000/month interest on his condo.
• Mr. Johnson is single, has no children, and rents his condo.

Over the course of 12 months, Mr. Johnson will have to pay Baht 17,760 more income tax than Mr Smith. For larger organisations with dozens or hundreds of staff, and who pay income tax on behalf of their employees, this is a substantial difference. For individuals who receive a salary after tax, this equates to a flight home every year.

These figures should all be listed and recorded in your organisations payroll system. An accurate payroll system is crucial in calculating these significant cost savings, and also provides staff with confidential documented evidence regarding their salary that can be used to obtain loans and other financial services.

If you feel that your organisation, or your employer, is not taking full advantage of potential income tax exemptions here in Thailand, or that your payroll system could be improved, ask the question - or contact one of the organisations below.

Written by Stuart Blott, General Manager, Sutlet Group Co., Ltd.
Contribution by Danaya Chinda, HR & Customer Service, PB Legal Services Co., Ltd.

Cost effective ways to run your small business in Thailand (part 1: Marketing)

Competition in Thailand for consumer Baht is high, and so no matter what industry you are in or where you operate, you must market and promote your small business in Thailand effectively.

Unfortunately, the easiest thing to do when you’re promoting your business is to spend money! Marketing agencies, advertisements, print publications, radio and TV spots, fancy new websites etc… they call cost serious money. As an SME in Thailand, you may not have the resources to engage in these traditional marketing activities.

The good news is that there are a multitude of promotional options available that a) do not need to cost a fortune and b) are equally, if not more, effective than their traditional counterparts. Below, we will present a selection of these based on our experience running small businesses in Thailand.

*Before you start promoting your business, make sure you have a strong idea of what your organisation stands for, why it is the best in its market, and that you can concisely explain WHY a customer should choose you over the competition. If you need help with this, talk to us.

Use every opportunity to get your business name, and brand, out there.

Make sure that your business cards, letterhead, email signatures, outgoing faxes, receipts, invoices, brochures, company presentation, folders, and anything else you can think of has a consistent design, logo, slogan, message and includes your website address. It might not seem like much, but this presents your business in a very positive, professional manner and also, you never know who will come across one of the above… it could very well be your next customer.

Create a formal referral process with your current customers

The chances are that you have plenty of satisfied customers in your target market, and perhaps all over Thailand. Combine this with the fact that we all know people are more likely to believe something if they hear it from someone they know and trust. What does this tell us? That referrals are a HUGE promotional channel, and often under utilised.

Step 1: What can you offer your current customers in exchange for qualified referrals? A discount on their next purchase/spending? Great, do that. But try to be creative about it. For example, Sutlet Group in Bangkok offer their customers a special leisure-themed gift (such as a 50% discount on dining at Up-scale Restaurant X in exchange for a referral. All that took was a simple conversation with the restaurant manager, who was happy to welcome new guests to his venue.

Step 2: Communicate this referral opportunity to your customers, and remember to provide them with the tools to ‘sell’ your product or service to their contacts.

Step 3: Ensure that new referrals are also offered a special privilege/discount for signing as a referred customer, even if it means losing your profit on their first part of the relationship. Think long term.

Online marketing

More and more customers are using the internet to search for your service and your competitors. Many companies have learned their lesson about online marketing and know now that the key is being found in search engines. This does not need to cost money.

To effectively market your product or service online, you need to consider three separate elements:

1. Your website – keep it simple and clean and focus on ‘selling’ the benefits and competitive advantage of your product or service, rather endlessly talking about ‘what you do’. All a prospect wants to know is a) can I trust these guys? and b) why should I choose these guys?

2. Social networking – it may seem strange to have a facebook page and a blog for your tailor business or your cutlery distribution company, and it is! The point is that the more you post online about your company, wherever this is, the more chance there is that Google and other search engines will pick you up when someone in Norway or Argentina searches “forks and spoons in Thailand”.

Additionally, this like blog article, we may have someone comment on it, thus creating a personal relationship between Sutlet Group and that individual. Now that is excellent marketing.

Social networking resources to review include: Facebook, Twitter, Blogs (eBlogger and Wordpress), Flickr, Youtube, Google Buzz, Digg, Hi5 and Linked-In. Whilst you don’t need to utilise all of them, consider how you might use them creatively and intelligently.

To effectively post, blog and upload you need a very dedicated schedule that allows for little flexibility. It is something that you need to start, and continue, and continue and continue, without missing a week or missing a response/comment from a user.

Blog about anything related to your business or your industry, but try not to make every single blog a 1,000 word advertisement for how wonderful you are! Keep it a few hundred words, and keep it interesting!

3. Get listed on free business directories - There are literally dozens of free business listing and directories in Thailand. Google them and get the same business profile listed on ALL of them. It’s a day’s work and will increase your online presence x30. Remember to keep a record of all the listings, and your usernames and password for accessing them. Ad you grow, launch new services, win awards etc, you should update your profile everywhere to maintain consistency.

4. Post free press releases – Similar to posting a regular blog, post a free press release on prlog.org or freepressreleases.com every week. You may post about a new employee, new product, new service, new website, new event etc – think of something that your prospective client base will be interested in. Keep a log of PR ideas as they come to you, to make sure you have something ready each week.

With anything you post online, including blogs and press releases, make sure you in clued keywords related to your business, and to Thailand. This will assist relevant searches to find you.

Write articles or speak at seminars on your topic

Positioning yourself as an expert in your chosen field is a great way to promote your business and to attract prospective customers. Magazines, newspapers and others will accept articles on topics of interest within your industry. Do some research and see where you can find ‘guest articles’, including online. Write something about your industry, trends etc and try to keep you company out of it until closing off the article “for more assistance or information on this topic, contact COMPANY NAME at email@email.com”. You’ll see this at the end of this article too!

The same goes for speaking engagements. Within Bangkok, there are many groups who organize speaking engagement and training for other people. If you have the confidence to be a recognised leader in your field, contact them to see if you can help. Alternatively, set up and promote your own speaking engagement or presentation.

Create a marketing partnership

Creating a promotional partnership is simple. Find a company that is willing to distribute your own brochures or business cards within their marketing materials and that you would be willing to do the same for them, and go to work! Additionally, could your brochures be placed in reception areas of a restaurant, hotel, office or other location?

Alternatively, find a complementary business and carry out a joint promotion with them to share advertising and cut costs, whilst simultaneously generate business for both of you.

And, don’t forget to blog and post a press release about the partnership!

If you must utilize traditional promotional channels, really consider the ROI.

Magazines, newspapers, TV channels will throw a variety of figures at you to amaze and baffle you in Thailand. There may even be a graph or two and a testimonial from a client who tripled his sales because of advertising in newspaper A. Magazines here in Bangkok will dazzle with incredible circulation figures (often fabricated). The reality is that as a consumer, do we really even notice traditional, impersonal advertisements anymore?

Before considering anything like the above, really consider what ROI you can expect. How many customers do you need to generate from the advertising to make it worthwhile, and over what period of time. How realistic to you think it is to expect someone to see one advertisement and decide to utilize your company? It is a big expenditure and requires a big decision, especially for a small business in Thailand.

Summary

The ideas above are just a selection of the options available to small businesses in Thailand. The key is to be creative, utilise new promotional channels and to think outside the box a little. Importantly though, you also need to spend some time every day on promoting your business.

For more information, contact the author Stuart Blott at stuart@sutletgroup.com

Hello to all our readers!

We do apologise for our lengthy absence, but Thai Biz 101 is now back and will be posting regularly in conjunction with the Sutlet Group, PB Legal Services and FCA Thailand (all providing business services and solutions to Thailand’s corporate community).

As an update - Sutlet Group has been very busy over the past few months, recruiting the management team necessary to take the business to the next level. This includes:

Stuart Blott as our new General Manager - Stuart has 9 years of management experience in Thailand has has worked in IT, membership programs, tourism & hospitality and corporate team building. With an eye for operations and marketing, Stuart aims to lead the team to new levels of performance and customer service delivery. Stuart is based at our Bangkok office.

David Mitchell as our new Business Development Manager, with a focus on financial solutions and accounting. David will be based at our new Pattaya office and will oversea all financial services, providing our clients with a level of expertise unparalleled in Thailand. Davids international success and experience has involved both private sector and senior government enterprises.

One last Sutlet Group update! Our Chairman, Chris Thatcher, was recently elected to the British Chamber of Commerce Board of Directors! Congratulations to Chris.

Thats all for now - keep posted for more Thai Biz 101 updates!