Thailand is one of the largest countries in the region of South East Asia. The borders are shared with Lao PDR to the north and northeast, Myanmar to the west, Malaysia to the south, and Cambodia to the east. The population of Thailand is estimated at 65 million. With a population of over 10 million, the capital city of Bangkok is the most important city politically and economically. Thai people are very proud of this and it is reflected in their culture. Doing business successfully with Thai people requires knowing the beliefs and values of Thai society.
Business and Market Challenges
Thailand's consumers and businesses are really price-conscious, often favoring affordable prices over product quality or other advantages. Exporters with products that are competitive for reasons other than price should plan to work with their local partner to undertake an extensive marketing strategy.
While Thailand's average applied MFN tariff rate is 11 percent (24 percent for the agricultural sector and 9 percent for the industrial sector), the highest tariff rates apply to imports competing with locally produced goods, often leading to even further price pressures for exporters hoping to succeed in the market. Furthermore, Thailand has essential trade agreements with important countries as Japan, Australia, New Zealand, China and India. Each firms with direct competitors from those countries could face additional price pressures.
Business and Market Opportunities
Thailand is a well-established sovereign member of the international community. In addition to early membership in the World Trade Organization and United Nations, Thailand also participates in regional memberships such as ASEAN, AFTA, and APEC.
It has created great opportunities for many firms in a few of infrastructure sectors including telecommunications, electrical power, and renewable energy. Thai consumers are making opportunities for new market of medical products, cosmetics, automotive accessories, educational services and food supplements. Thailand also continues to look for suppliers of defense equipment, broadcast equipment, food packaging and processing equipment, and environmental technology.
The Thai government is focusing resources on the development of its transportation network, especially high speed train projects as well as ongoing infrastructure projects, including the expansion of the Subway systems and Bangkok Skytrain. Firms engaged in these parts will find great opportunities for success business in Thailand.
Business and Market Entry Strategy
Finding a local partner, such as a distributor and agent, is still the preferred means of entering the business in Thailand for the first time as it is one of the most effective and efficient ways to reach Thai buyers. The distributor and agent can expedite and facilitate market entry with their extensive market knowledge and for established networks. Within the business culture of Thailand, interpersonal relationships are important factor for successful transaction and business in Thailand.
The Bottom Line
Overall prospects for the Thai economy in the near term will depend on the pace of manufacturing recovery in flood-hit industrial estates, the extent and reach of the government expansionary fiscal policy for reconstruction, and potential threats of the global economy. Building good relationships is an important part of business and the negotiation process.
