Doing Business in Thailand_2011_UK Trade

HELPING YOUR BUSINESS GROW INTERNATIONALLY

Thailand Business Guide

This guide was produced by the UK Trade & Investment Thailand Markets Unit in collaboration with the British Posts in Thailand. Disclaimer Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation and Skills, and the Foreign and Commonwealth Office) accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned.

Front cover image: Bangkok

CONTENTS

INTRODUCTION Why Thailand? About this Business Guide RESEARCHING THE MARKET Where to begin How we can help you MARKET ENTRY Key business locations Establishing a presence Getting to Thailand GETTING STARTED Finding a customer or partner Due diligence Employing staff Language Marketing Day-to-day communications Interpreters BUSINESS ISSUES AND Intellectual property rights (IPR) CONSIDERATIONS Procurement Regulations and standards Getting paid and financial issues Insurance Management control and quality assurance Bribery and corruption Business CULTURE Monarchy Religion Introductions and greetings Making conversation Entertainment Gifts Body language and gestures Meetings and presentations Negotiating techniques UK SUCCESS STORIES CONTACTS RESOURCES/USEFUL LINKS

4 10 12 15 17 18 22 24 25 26 29 30 31 32 37 39 41 46 47 48 48 50 50 51 51 52 52 53 53 54 55 56 57 3

INTRODUCTION WHY THAILAND? Thailand offers exciting business opportunities to companies prepared to take a serious interest in this dynamic market. Over a number of years, Thailand, which has a population of 67 million, has managed to transform its economy from one that was primarily agriculture-based, to one of the most diverse in the region. As well as agriculture, major industries include food processing, cement, integrated circuits, automotive parts and assembly, petroleum products, textiles, footwear, toys, furniture, synthetic fibre and tourism. The country has a well-developed infrastructure, a free-enterprise economy and generally pro-investment policies. Strategically located at the heart of Asia – one of the world’s largest growing economic regions – Thailand is also well placed to offer a gateway to both the ASEAN (Association of Southeast Asian Nations) and Asia-Pacific markets, particularly India and China, many of which offer great business potential. The ASEAN region alone has a cumulative population of more than 500 million and GDP in excess of US$700 billion.

Within ASEAN, Thailand’s economy is in the top three in terms of size and volume of international trade. It is therefore well positioned as the region moves towards economic integration and a single freetrade area in 2015. Zero tariffs between the top five members (including Thailand) were implemented in January 2010.

Economic leader Thailand is one of the largest growth markets in Asia, having recovered well from a recent slump in the global economy. Growth of 7.85 per cent is estimated for 2010 and 3-5 per cent for 2011. The Thai currency, the baht, is reflecting this performance and is now at its strongest level since the 1997 Asian financial crisis and among the fastest-appreciating currencies in the region. Stimulus packages will continue into the medium term, focusing on long-term competitiveness building rather than short-term injections. The Government is expected to spend 1.43 trillion baht (approx £27 billion) between 2010 and 2012, benefiting sectors such as transport, public health, water supply development, education and training, and housing.

Open for business The Thai Government welcomes foreign investment. The country maintains an open, market-oriented economy and views foreign investment as a means of promoting economic development, employment and technology transfer. Through Thailand’s Board of Investment (BOI), the Thai Government offers a range of tax incentives, support services and import duty concessions to companies from various sectors seeking to invest in the market. Over the last few decades Thailand has been a major destination for foreign investment and this looks set to continue. A recent survey conducted by the Japan External Trade Organization (JETRO) stated that Thailand was the “most optimal location for establishing a production/sales base in the coming five to ten years.”

Thailand has been designated a high‑growth market under UK Trade & Investment’s five‑year strategy.

INTRODUCTION WHY THAILAND? (CONTINUED) Political situation Thailand is a constitutional monarchy with a parliamentary government. The King, a highly revered figure in Thailand, is the Head of State, while the Prime Minister is the Head of Government. Thailand has had a number of military coups, most recently in September 2006. Civilian rule returned in February 2008. Despite frequent changes in government, Thailand’s economy continues to grow and has weathered the global economic crisis and the political demonstrations in early 2010. The recent political unrest has tested the operating environment for businesses in Thailand. Most companies are confident their operations can continue uninterrupted with adequate preparations in place, such as business continuity plans and backup sites. Political demonstrations, on occasion, have disrupted infrastructure, such as the closure of Bangkok’s international airport in 2008 and its Skytrain system in early 2010.

Commercial opportunities The UK enjoys a healthy trading relationship with Thailand. From 2005 to 2009 two-way trade in goods and services averaged £3.6 billion a year. In 2009 UK goods and services exports to Thailand increased by 14 per cent and 39 per cent respectively compared to the previous year. Although the balance of trade remains in Thailand’s favour (1:2.5), the UK is Thailand’s most significant European investor and the second-largest European exporter (after Germany). Thailand takes a welcoming approach to UK companies. British goods enjoy an excellent reputation there, although they must generally be cost-effective and have good after-sales support. There are a wide range of business opportunities for UK companies in Thailand. In particular, the country’s economic growth has created openings for UK firms in a number of infrastructure sectors, including electrical power, telecommunications and renewable energy.

Thai consumers are also creating opportunities for new sales of UK medical products, cosmetics, security equipment, food supplements and educational services. Moreover, UK companies are increasingly looking to Thailand not only as a thriving market in its own right, but also as a regional base for doing business more widely in Asia. The British Chamber of Commerce Thailand (BCCT) is the oldest foreign

chamber and the largest non-Asian foreign chamber in Thailand. It is also the largest and oldest British Chamber in Asia with a membership of over 650 companies including Barclays Capital, BG Group, BT, Diageo, GlaxoSmithKline, HSBC, Prudential, Rolls-Royce, Shell, Standard Chartered Bank and Unilever. The UK retail sector is also well represented by a growing number of companies including Tesco, Boots, M&S, The Body Shop, Next, Mothercare, Burberry, Paul Smith, Thomas Pink, Savile Row Company, Ted Baker, Topshop and Fitflop.

TOP TEN UK EXPORTS OF GOODS TO THAILAND IN 2010 (ÂŁMILLIONS) Item 2010 2009 Road vehicles 238 80 Office machines 89 83 Metal and scrap metal 60 36 Specialised machinery 57 40 Medicines and pharmaceutical products 54 48 Power generating machinery and equipment 48 47 General industrial machinery 44 42 Beverages 43 31 Electronic machinery and appliances 41 52 Miscellaneous manufactured articles 35 25 Total 709 484

% change 198 7 67 43 13 2 5 39 -21 40 47

Source: Department for Business, Innovation and Skills analysis of Office for National Statistics data

INTRODUCTION WHY THAILAND? (CONTINUED)

Market strengths Key strengths of the Thai market for UK companies include: • Hub of South-East Asia, gateway to Indochina and Southern China. • Improved and modernised transportation facilities. • Well-developed infrastructure and upgraded IT and communication systems. • State-of-the-art industrial estates. • Thailand ranked nineteenth out of 183 nations by the World Bank’s Ease of Doing Business survey in 2011. • Good transport hub. • Low-cost skilled workers and labour. • Government efforts to make Thailand a foreign-investor-friendly market, for example by tackling bribery and corruption, and simplifying import regulations. • Wealth of experienced international legal advisers and business consultants.

Priority sectors The following sectors offer significant commercial opportunities for UK companies and reflect Thailandâ&#x20AC;&#x2122;s priorities and UK capability: Advanced engineering Agriculture Education and training Environment Food and drink Railways Power

Opportunities also exist in: Automotive and automotive parts Healthcare, medical devices and pharmaceuticals (Thailand is aiming to be Asiaâ&#x20AC;&#x2122;s medical hub) Petrochemicals Renewable energy Tourism Sports and leisure equipment

INTRODUCTION ABOUT THIS BUSINESS GUIDE Much of the information presented in this booklet is contributed by experts at UK Trade & Investment, British Diplomatic Posts and the British Chambers of Commerce.

We have helped many thousands of businesses achieve international success by providing tailored services with specialist support covering a wide range of industries.

The Thailand Business Guide, which can also be downloaded from www.ukti.gov. uk/export/thailand, is intended to provide general business advice and should not be used as a substitute for market research, due diligence or legal and professional services.

UKTI’s capacity-building services can make a real difference to your business. To use them your business may need to meet certain eligibility criteria. Your local International Trade Adviser (or equivalent person in Scotland, Wales and Northern Ireland) will be able to explain our range of services and how they can help you grow your business internationally.

About UK Trade & Investment UK Trade & Investment (UKTI) is the government department that helps UK‑based companies succeed in international markets and assists overseas companies in bringing their high-quality investment to the UK’s dynamic economy. Combining the resources of the Department for Business, Innovation and Skills (BIS) and the Foreign and Commonwealth Office (FCO), UKTI has a global network of 1,300 staff in 162 locations in 96 markets based in British embassies and other diplomatic offices around the world.

To find your local International Trade Adviser visit www.ukti.gov.uk/export.html

RESEARCHING THE MARKET WHERE TO BEGIN Doing business in Thailand may seem rather daunting for those new to the market, but taking a strategic approach is the key to making the process manageable. Companies should conduct reliable research before venturing into business in any new territory. Good research saves money and improves efficiency and performance right from the start.

Desk research General introductory business information about Thailand is increasingly available and companies can obtain a reasonable amount of preliminary insights through desk research. Economic research and sector analysis can often be obtained from a large number of leading consultancies, research agencies and public-sector trade promotion organisations. Furthermore, the increasing use of e-commerce and B2B (businessâ&#x20AC;&#x2018;toâ&#x20AC;&#x2018;business) websites in Thailand has made identification of, and access to, potential partners possible across the globe. A good place to start is the UKTI website (www.ukti.gov.uk), which provides detailed country and sector information. Registration is free and offers additional benefits such as access to business opportunity alerts and information updates.

Consultation and bespoke research You should not rely solely on desk research. Websites and online materials can be out of date and the quality and reliability of content varies widely. Sometimes, you may simply be unable to find the information you’re looking for. This is why it is essential to verify initial research findings and conduct further investigations. Often, this requires you to map out a bespoke research brief with the help of specialists, exploring what additional information you might need to make an effective entry into the market and how you can make the contacts vital to success. UKTI offers a range of such services to UK businesses interested in exploring the Thai market. Speaking to an expert UKTI provides support for UK companies through a network of international trade teams based in the English regions. UKTI services are also available to firms in Scotland, Wales and Northern Ireland. To arrange a consultation with your local International Trade Adviser call +44 (0)20 7215 8000 or visit www.ukti.gov.uk

Overseas Market Introduction Service The Overseas Market Introduction Service (OMIS) is a UKTI service available to companies interested in researching the Thai market. It can assist you by undertaking tailored research using UKTI’s extensive network of dedicated researchers across Thailand. OMIS can be used in a wide variety of ways to help your business with its particular needs when entering the Thai market. They include: • Market research and analysis – Sector reports – Market initiatives – Regulatory environment – Market opportunities • Identification of local contacts – Agents – Distributors – Suppliers – Potential partners • In-market activities – Meeting arrangements – Event organisation, such as workshops, seminars, promotional activities and product launches. For more information about how OMIS could help you grow your business in Thailand, please contact your local International Trade Adviser. 13

Key questions • What are the unique selling points to your business proposition? Will there be a market for your products and services? • Are there any legal barriers to your business model? • Where in Thailand would you start? • Do you have sufficient resources (management time, project finance and expenses) to fund your Thai projects? • Who will be leading the project within your company? • Do you need to work with a partner in Thailand to succeed? Can you communicate with them effectively? • Have you evaluated business risks (such as protecting your intellectual property) and conducted research and due diligence? • Do you know how to secure payment and get the right quality products? Rarely will one have answers to all the questions above, and this “knowledge gap” forms the basis of further research and investigation.

Events and seminars UKTI organises business events, seminars and workshops in the UK and Thailand covering a wide range of business interests and issues. These events inform companies about business opportunities and offer the latest information about the Thai market. They also provide a valuable platform for networking and sharing experiences with like-minded peers and regular access to visiting Thai delegations. For information about events please visit www.ukti.gov.uk Market visits and trade missions Visiting Thailand is an invaluable part of the process of market entry. You will experience the marketplace first-hand, and make the contacts necessary to do business. This is essential, but will be much more effective with careful planning. UKTI organises regular trade missions to Thailand where you can benefit from group activities in addition to your own programme. UKTI’s OMIS service can be used to support visits, providing bespoke meeting arrangements with appropriate potential partners, agents and distributors or with relevant government officials.

RESEARCHING THE MARKET HOW WE CAN HELP YOU UKTI provides a wide range of trade development services designed to help UK companies succeed internationally. Some of these services are provided at zero or heavily subsidised cost. All are delivered by experts with extensive experience of overseas trade and detailed knowledge of the global marketplace. If you are considering doing business in Thailand, speak to UKTI about our range of services and how we can help you to achieve your business objectives.

Events and seminars: are held across the UK and Thailand. They include specific sector-based activities.

UKTI services include:

Business opportunities: can be emailed directly to your inbox, highlighting sales leads in your chosen overseas market(s). Companies can register for this free service by visiting www.ukti.gov.uk

Overseas Market Introduction Service (OMIS): a chargeable, tailored service to help companies access market and industry information, identify potential contacts and plan an event. Passport to Export: provides new and inexperienced exporters with the training, planning advice and ongoing support they need to succeed overseas. Gateway to Global Growth â&#x20AC;&#x201C; where next? a free service to experienced exporters. It offers a strategic export review, planning advice and support to help companies build on their previous export successes and develop new overseas markets.

Trade missions: organised by UKTI to help UK companies visit the marketplace they are interested in and talk face to face with prospective business partners. UKTI also organises inward missions to the UK to allow overseas delegates to meet with potential partners or investors.

iscal Stimulus Initiative: can help UK F companies of all sizes to identify the opportunities created by fiscal stimulus packages and major spending programmes around the world. xport Communication Review: assesses E the way companies communicate with overseas customers and makes practical recommendations for improvement. The service is managed for UKTI by the British Chambers of Commerce.

RESEARCHING THE MARKET HOW UKTI CAN HELP YOU (CONTINUED) xport Marketing Research Scheme: offers E support, advice and grant funding to eligible companies wishing to research a potential export market. The service is managed for UKTI by the British Chambers of Commerce. FCO Country Updates: provide authoritative analysis of emerging markets and identify key issues relevant to UK businesses. The updates are compiled by British embassies with access to high-level government and business contacts.

For more information about UKTI services please contact your local UK International Trade Team.

Market Entry KEY BUSINESS LOCATIONS Thailand is divided geographically into four regions comprising 77 provinces. Bung Kan district, in Nong Khai, north-east Thailand, became the country’s seventy-seventh province in August 2010. • Central: location of Bangkok, the capital city. • North-east: the country’s most populous region and home to Nakhon Ratchasima (Korat), a main industrial city. The region is also a large source of rice and crops. • North: main cities include Chiang Mai and Chiang Rai, popular tourist destinations, particularly known for handicrafts. • South: well known for travel and tourism, with world-renowned beach resorts such as Phuket, Koh Samui, Hua Hin, Phang Nga and Krabi.

As well as being the country’s capital and centre of government administration, Bangkok is also Thailand’s main economic, educational and training, and cultural hub. With a population of 9.3 million (over 9 per cent of the national total), including neighbouring areas, it is the principal commercial entry point into Thailand for international traders and investors. The eastern seaboard of Thailand is the country’s industrial zone and a centre for Thai or foreign-owned industries such as petrochemicals, automotive, engineering, large-scale manufacturing and power generation. The area comprises the provinces of Chonburi, Chachoensao, Samut Prakan and Rayong, as well as the port of Laem Chabang, Thailand’s largest and one of the busiest in the world.

Market Entry Establishing A Presence Although you may be approached directly by Thai companies interested in purchasing your products on a nonâ&#x20AC;&#x2018;regular basis, it is generally advisable to establish an in-country presence in order to gain a foothold in Thailand. Most UK companies successfully doing business in Thailand have local representation either by establishing their own offices or by appointing agents/ distributors. Such a presence shows that companies are serious about the market and willing to provide local technical support to partners and customers. After pricing, technical support is the most important issue for prospective Thai buyers. UK companies looking to trade with Thailand should also be aware that many Thai businesspeople are likely to base decisions as much on perceptions as they would on objective consideration of business information. Agents and distributors An agent is a companyâ&#x20AC;&#x2122;s direct representative in a market and is paid commission, whereas a distributor buys products from the manufacturer and sells them on to customers. The difference between the cost of purchasing products and selling them on (the profit) forms the distributorâ&#x20AC;&#x2122;s income.

Entering a market by working with an agent or distributor can have several advantages. It reduces time and costs, and companies gain the local knowledge and networks of the agent. However, there are some drawbacks, too. Employing a third party results in an additional cost to your products and you may also lose some control and visibility over sales/ marketing. It also has implications for intellectual property rights protection, increasing the risk of your product being copied or counterfeited. Your local UKTI office will advise you on how to commission a tailored report for your specific needs and can also provide a list of the best potential partners. A visit to Thailand will enable you to meet some of them and appoint a local contact. Suggested questions to ask agents/ distributors are listed below. You should also conduct due diligence to verify this information. Given these considerations, companies need to select agents and distributors carefully. Some of the frequently asked questions are in the following checklist. You should also conduct due diligence to verify this information.

Background • Company size, history and ownership (private or state owned) • Quality and quantity of the sales force • Customer feedback and trade/bank references Distribution channels • Regional coverage • Types of outlets covered and frequency of calling • Transportation and warehousing facilities Are they right for you? • Does the agent/distributor have a genuine interest in representing your product? • Can they benefit from actively promoting your interests (is it a win-win)? • Do they also represent any competing companies/products? • Can you communicate effectively with your counterpart?

Once a working relationship is established, the agent/distributor needs to be managed actively by: • Visiting as regularly as is practicable at a senior management level. This shows interest in and commitment to the agent and the market. It will also provide you with an opportunity to learn about conditions in the market and see how your products are faring. • Working closely with the agent to show them how they can profit from your products. • Helping to prepare marketing and sales plans for the agent. • Providing regular training for the sales staff and after-sales training for the technical staff in the UK. • Linking performance to incentives and agreeing milestone targets. There is additional guidance on working with Thai partners in later sections of this Thailand Business Guide.

Market Entry Establishing A Presence (CONTINUED) Establishing a permanent presence Although it is possible to be represented through agents or distributors, companies can progress to the establishment of a permanent presence in Thailand. Having a permanent in-market presence can provide several possible benefits including: • demonstrating commitment, • cutting out the “middleman”, providing direct access to the end customer/supplier, • giving direct control over corporate strategy and activities, and • enabling trading in local currency and easing the conduct of business transactions. There are a number of structures in Thailand that allow foreign companies to conduct various business activities. These include representative offices, joint ventures and wholly foreign-owned enterprises. Each of these structures has unique advantages, restrictions and drawbacks and it is essential to choose the option best suited to your business aims.

Companies seeking to establish a permanent presence in Thailand must set up operations as an appropriate legal entity, depending on their intended business scope. They must also be compliant with Thai legal and tax requirements. It is usually more difficult to alter a business structure once a legal entity has been incorporated or established, so it is vitally important to seek professional advice on your investment structure during the early stages of planning. You must fully understand your intended business activities in Thailand (for the short and long term), whether they are practicable, if there are any legal and sector barriers to entry and what the suitable vehicle is for you. UKTI can offer dedicated one-to-one consulting and incorporation services to assist UK companies establishing various kinds of permanent presence in Thailand. Please contact us for more details.

Representative offices Representative offices are often the first step taken by foreign companies when establishing a permanent presence in Thailand. They provide a vehicle in which the foreign investor can engage in limited non-revenue-earning activities. These activities are restricted to: • searching for local sources of goods or services for its head office, • inspecting and controlling the quality and quantity of goods procured by its head office, • providing advice in various fields relating to products directly sold by its head office to local distributors or consumers, • disseminating information about new products and services offered by its head office, and • reporting to its head office on local business developments and activities. Joint ventures A joint venture (JV) is an organisation jointly owned by one or several Thai and foreign partners. A JV can be formed by way of equity contribution, where ownership, risk and profit are shared, based on each party’s monetary contribution. Alternatively, a JV can be incorporated, with liabilities and profit distribution being decided by contractual agreement.

JVs can be beneficial in a number of ways. A good local partner may contribute market knowledge and strong marketing and distribution channels, and they may help reduce the costs and risk of market entry. The challenge of establishing and running a successful JV is to find and nurture the right partnership. Partners have to overcome issues such as mismatched expectations and differences in business culture and practices. The ability to maintain effective communication, and control where necessary, is also crucial. It is essential that you carry out corporate and financial due diligence before you sign up to any partnership. Companies should also plan an exit strategy and ensure that any contractual agreements include an appropriate opt-out provision. Wholly foreign-owned enterprises A wholly foreign-owned enterprise (WFOE) is a company incorporated in Thailand that is 100 per cent owned by a foreign organisation(s). WFOEs are often a popular option for foreign companies, as they give them complete control over their business entity, as well as allowing them to enjoy the full profit from its operation. Compared with a JV, WFOEs also generally give greater protection to the investor’s intellectual property rights. 21

Market Entry GETTING TO THAILAND Visas In general, foreign nationals wishing to visit Thailand need a valid passport and must obtain an appropriate visa from their nearest Thai embassy or consulate. Under the Tourist Visa Exemption Agreement, British nationals do not require a visa to enter Thailand if the duration of the stay does not exceed 30 days. However, each person has to have minimum living expenses of 10,000 baht or 20,000 baht per family. More information on visa requirements can be found at www.mfa.go.th or from the Royal Thai Embassy in London. Royal Thai Embassy 29-30 Queen’s Gate London SW7 5JB Tel: +44 (0)20 7589 2944 Email: thaiduto@btinternet.com Website: www.thaiembassyuk.org.uk Office hours: Monday-Friday 09.30-12.30 and 14.00-17.00 Visa and Consular Section: 09.30-12.30

By air There are 78 international airlines that fly to Bangkok, four of which fly directly from the UK to the city’s Suvarnabhumi International Airport. They are British Airways (daily), Eva Airways Corporation (six days a week), Qantas Airways (daily) and Thai Airways International (twice daily). At the airport. Public taxis (24-hour service): There is a taxi counter on level 1, near entrances 3, 4, 7 and 8. Public taxis are fitted with a meter and have a sign “TAXI-METER” on the roof. The minimum fare is 35 baht for a distance of no more than two kilometres. The taxi fare from the airport to the centre of Bangkok (Ploenchit Road, where the British Embassy is located) is approximately 400 baht (£8), including toll road fees and a 50 baht airport surcharge. AOT airport limousine (24-hour service) The minimum service rates for transfer from the airport to Bangkok city centre are: sedan (2-3 passengers) 950 baht minibus (6-7 passengers) 1,200 baht

Air-conditioned buses offer fast connections between major cities. Tickets can be purchased from bus terminals or through travel agents and hotels. Most travel is overnight and includes at least one meal and services such as soft drinks and blankets. If you are travelling in a small group of people there are plenty of minibuses for hire. Trains, although slow, are cheap and comfortable. On long-haul journeys seats convert into sleeping bunks.

Boats connect many parts of Bangkok through the city’s extensive network of waterways. River buses go up and down the city’s Chao Phraya River with reliable regularity. There are three kinds of taxi in Thailand. Firstly, those with a “taxi” sign on top and a meter inside; secondly, tuk‑tuks which go shorter distances than taxis and where fares are negotiated in advance; and thirdly, motorcycle taxis. Bangkok’s Skytrain and underground are great ways of avoiding the city’s notorious traffic. Trains run from 6am to midnight.

Getting Started FINDING A CUSTOMER OR PARTNER Once you have identified the best market-entry option for your company in Thailand, the next step is to find potential customers or partners.

The following UKTI services can help you find potential customers, agents, distributors and partners in Thailand: • Overseas Market Introduction Service UKTI’s Overseas Market Introduction Service (OMIS) can be used to identify a tailored list of potential customers, agents, distributors or partners and arrange a programme of meetings with them when you visit Thailand. OMIS can also be used to engage UKTI to arrange a seminar or product introduction event in Thailand – which can be an effective way of getting your message across to a number of potential customers. • Trade shows and exhibitions Numerous trade shows and exhibitions take place in Thailand throughout the year and can be an excellent way to meet potential customers face to face. However, arranging appointments in advance to meet pre‑identified contacts at niche industry events is essential if you want to make effective use of your time. • Trade missions UKTI supports a large number of trade missions to Thailand, organised by trade associations and local chambers of commerce. They provide an excellent opportunity for businesses to visit Thailand to find out how business is done and generate valuable sales leads.

Getting Started Due Diligence Many of the problems that foreign companies encounter when engaging in business transactions in Thailand could have been avoided by carrying out some due diligence at the outset.

as registered capital on the business licence. You can check whether or not the registered capital has been paid up by using a firm of accountants to get a Capital Verification Report.

There are different levels of due diligence that are appropriate for different situations. If your sole interest is in exporting, the best proof of a Thai company’s ability to pay is whether it is able to raise a letter of credit from the bank. If a company can produce this you do not need to check its financial standing as the bank will have already done so.

If you want to establish a business relationship in Thailand that goes beyond exporting, you will need to carry out further research. A thorough evaluation of your potential partner may be time-consuming and expensive, but doing so will greatly reduce the risk of serious problems in the future. However, it is not enough to obtain a copy of a company’s accounts as they may not be accurate. Accounts in Thailand are unlikely to be audited to the standards routinely expected in the UK, and companies may have different sets of accounts for different audiences. It is therefore advisable to use such data in conjunction with information obtained elsewhere.

One simple piece of due diligence is to get a copy of a company’s business licence. This will tell you the following: • The legal representative of the company • The name and address of the company • The amount of registered capital which is also its limited liability • The type of company • The business scope • The date the company was established and the period covered by the licence You should check that the information contained in the business licence matches what you already know, and if it doesn’t find out why. You will have more security if you know who the legally responsible person is, so find out who you are dealing with. The shareholders of the company are responsible for the amount of liability stated

Good quality consultancy and assistance is available from firms resident in Thailand and the UK. These companies can carry out operational, financial, legal and technical due diligence checks, typically by looking at the actual operation of the business and building up a more accurate picture by carefully interviewing people who work in and with the firm. UKTI can provide lists of consultancies based in the UK and Thailand that can provide due diligence checks on Thailand companies. 25

Getting Started Employing staff Recruitment channels There are several channels for recruiting staff in Thailand: • Online job services such as www.jobthai.com and www.jobbkk.com. • Classified adverts for jobs in Thailand are available from local Thai daily newspapers such as Thai Rath, Manager Daily and Krungthep Turakij. • Classified adverts for jobs in English are available from the Bangkok Post and The Nation. Both newspapers have daily circulation figures of around 60,000 copies. • Recruitment services companies: there are several experienced domestic and international recruitment firms operating in Bangkok. • Contacting the British Embassy/British Chamber of Commerce/educational institutes. Recruitment steps When you are recruiting in Thailand, make sure that you carry out all the normal steps that you would if recruiting in the UK. Ensure that candidates’ technical and linguistic capabilities match their claims and that you hire staff at the right level for the role. A recent MBA graduate returning to Thailand from overseas may not have the experience to navigate the complexities of setting up a company in Thailand without seeking professional advice, 26

and they may not have the capabilities to develop business at a senior level. Carry out due diligence To ensure that the staff you are hiring are right for your company it is essential to ensure thorough due diligence in recruitment, especially for senior managers. This includes conducting personal background checks and checking all references before offering them the position. Offer appropriate remuneration Once you have found the right staff you will need to give them good reason to stay with your company. You will need to provide a sufficient remuneration package to ensure that you recruit and retain the best employees. It is advisable to conduct some market research to get a clear idea of appropriate salary levels for the positions you wish to fill so that you can make an offer that is in line with current market rates. Average staff salaries in Thailand can be viewed at the Thailand Board of Investment website www.boi.go.th/english/how/labor_costs.asp. However, a company’s ability to attract and retain staff is considerably enhanced by tailoring remuneration packages to meet individual employee needs. Salaries are subject to a 4 per cent social security fund contribution and a 1 per cent workman’s

compensation contribution (for the first 15,000 baht of salary per month). Offering employees the opportunity to train overseas is also very attractive at all levels, although make sure that in return for providing such training they make a commitment to stay with your company. In addition, be sure to invest in the mentoring of Thai management-level talent; this can be done by giving them experience of working around the organisation and grooming them for global corporate positions. A clearly defined career progression route is also attractive and will help to retain staff. A lot of smaller companies setting up an office in Thailand may well just employ one person to deal with all aspects of running the company. Although this may be convenient and cost-effective, it might not generate the best performance for your Thai operation. Staff selection will prove vital; although the individual may be very willing, honest and capable, they may not be adept or experienced in international business practices. If your employee is not familiar with the relevant Thai rules and regulations pertaining to the running of an international office or business in Thailand, then you may soon have to deal with issues of non-compliance, which could prove very costly. Moreover, having one person in control of all financial and legal aspects of the business is not prudent.

Working hours Working hours in Thailand are: • Normal office hours: 08.00-17.00 or 09.00-18.00 • Government offices: 08.30-16.30 • Normal lunch break: 12.00-13.00 • Non-hazardous work: 48 hours a week • Hazardous work: 42 hours a week • Public holidays: 13 days a year • Annual leave: not less than six days a year

Getting Started language Communication is crucial to the success of any company, yet business is all too often lost through simple misunderstandings that could easily have been avoided. When working across different time zones, cultures and languages, the chances for misunderstanding are multiplied considerably. It is therefore essential that you have an appropriate communications strategy in Thailand. There are four main Thai languages spoken in Thailand (Central Thai, Southern Thai, North-eastern Thai and Thai – which is used in Northern Thailand and Laos). The language referred to as “standard Thai” is close to Central Thai. As a foreigner, it is not easy to learn Thai, but if you make an effort this will be appreciated by Thai people. The use of English is widespread among larger companies, but proficiency is low among SMEs and the lower-tiered labour force. In this respect, Thailand’s language readiness trails regional competitors such as Malaysia, Singapore and the Philippines. Presentations, proposals and contracts can be produced in English, although it is important to use fairly simple and non-idiomatic language to avoid any misunderstandings.

Getting Started marketing To win over potential new customers in Thailand you will need to continually reassess your marketing strategy.

of the British Ambassador in Thailand to announce the launch or presence of UK goods and services in the country.

Sales literature Trade shows and exhibitions have already been mentioned as ways of reaching potential new customers, but you still need to persuade them to buy your product. You will need to ensure that your sales literature is effective in English and, if possible, Thai and decide what kind of advertising is appropriate.

Media Companies that can afford it may well wish to consider TV advertising as it still commands the widest reach to the mass market. Internet usage in Thailand is increasing rapidly, although penetration is still modest at 13 million internet users (against a population of 67 million), of whom just two million have broadband. Internet advertising and the use of the internet for purchasing goods are still in their infancy.

Product and service adaptations You may need to adapt your product to meet Thai preferences or requirements in order to be able to sell it. Adapting to local regulations, tastes and cultural preferences vastly improves chances of success. Branding The Thai market for consumer products is brand conscious. New entrants to the market with a recognised brand may wish to consider some sort of product launch or press conference to announce their arrival in Thailand. Sales promotion Companies that appoint local partners can usually be guided by them with regard to the type of advertising and sales promotion that would suit the launch of their product(s). UKTI can advise on using the residence

Specialist consultancies can be appointed to develop a marketing strategy appropriate to your product and to the region of Thailand where it will be sold. Brochures and marketing campaigns should avoid religious symbols or satires of historically famous local figures, events or the local culture. Thai consumers are increasingly receptive to offbeat marketing campaigns and there has been a leap in the number of radically innovative advertising campaigns, but these should be conducted with caution.

Getting Started DAY-TO-DAY COMMUNICATIONS Once you have made contact with a Thai company, it is likely that your day-to-day phone and email communication will be in English with one of the company’s English‑speaking members of staff. If the standard of English in the Thai company is not satisfactory, it is advisable to ask for parallel Thai texts and obtain translations to ensure proper understanding.

If Thailand is likely to become a significant part of your business you may wish to consider hiring a Thai-speaking member of staff. You might also consider taking up the challenge of learning Thai yourself – even having a basic level of communication will create a positive impression.

If you are going to sign anything – as obvious as it sounds – make sure you get it translated first, and by an independent translator. Do not rely on your supplier’s translation and do not be pressured into signing anything that you do not fully understand. Most failures occur in relationships because of fractured communications and mutual misunderstandings. Document verbal discussions with a written record to confirm understanding for important meetings.

Getting Started INTERPRETERS If language proves a problem when attending meetings in Thailand it is recommended to use interpreters. A good interpreter can be the key to successful communication. If they have not understood what you have said, your message will be lost on your audience. There are two forms of interpreting. Consecutive interpreting means you speak and then your interpreter speaks: this is the usual form for meetings, discussions and negotiations. Simultaneous interpreting involves the immediate translation of your words as you speak them. This requires special equipment and can be expensive. It is generally used only for large seminars and conferences. Interpreting is a skill requiring professional training. Just because someone is fluent in English and Thai, it does not necessarily mean that they will make a good interpreter. If you are giving a speech or presentation remember that the need to interpret everything will cut your speaking time approximately in half (unless using simultaneous interpreting). It is essential to make sure that the interpreter can cope with any technical or specialist terms in the presentation. It is better to be slightly restricted and stick closely to a script than to fail to sell yourself. If you are giving a speech give the interpreter the text well in advance and forewarn them of any changes. 32

Remember: there are four different Thai languages spoken in Thailand. Ensure that your interpreter can speak and understand the form of language specific to the region that you are visiting. To get the best out of your interpreter: • Hire a well-briefed professional interpreter. Though this is likely to be expensive, it will be money well spent. • Have your own interpreter available, even if your Thai counterparts have one for their side. One interpreter working for both sides may become tired and start missing the meaning or the detail of what is being said. With your own interpreter you should also have some feedback afterwards on the nuances behind what was said (and – just as importantly – not said) during the meeting. • Try to involve your interpreter at every stage of your pre-meeting arrangements. The quality of interpretation will improve greatly if you provide adequate briefing on the subject matter. Ensure your interpreter understands what you are trying to achieve.

• Speak clearly and evenly with regular breaks for interpretation. Don’t speak for several paragraphs without pause. Your interpreter will find it hard to remember everything you have said, let alone interpret all your points. Conversely, don’t speak in short phrases and unfinished sentences. Your interpreter may find it impossible to translate the meaning if you have left a sentence hanging. • Avoid jargon, unless you know your interpreter is familiar with the terminology. • Listen to how your interpreter interprets what you have just said. If you have given a lengthy explanation but the interpreter translates it into only a few Thai words, it may be that they have not fully understood. Or they may be wary of passing on a message that is too blunt and will not be well received by the audience. • Make sure that your message is getting through clearly and is delivered in a tone that will not cause resentment. A list of translators and interpreters in Thailand is available on request from the UKTI team in Bangkok.

Getting Started INTERPRETERS (CONTINUED) Basic Thai Key phrases/greetings Hello Sawasdee (krup/ka) How are you? Sabai dee mai? I’m fine Sabai dee Pleased to Dee jai thee dai meet you phob koon Thank you Khap koon (krup/ka) Never mind Mai pen rai Sorry Kor thoad (krup/ka) I cannot speak Thai Phoot Thai mai dai Please speak slowly Prohd photo cha-cha I don’t understand Mai kao jai Good luck Kor hai chok dee Does anyone Mee krai pood pasa speak English? ang-grit dai bangmai Do you understand? Kao jai mai? May I take a Kor tai ruup dai mai? photograph? Where is the toilet? Hong nam yoo nai? How much does Nee tao-rai this cost? (krup/ka)? What is this? Nee aria? Very expensive Paeng maag Do you have Mee tuuk gwaa something cheaper? nee mai? The bill please Gep taang (krup/ka) Goodbye La gon See you again Laew phob gan mai

Places Airport Bus station Railway station Police station Hotel Embassy Hospital Post office Market

Sanam bin Sa-tanee rot mae Sa-tanee rot fai Sa-tanee tum-ruad Rang-raem Sa-tantoot Rong-payabaan Prai-sanee Ta-lad

Directions I want to go… Where is…? Turn left Turn right Go straight Stop here Slow down

Yaak ja pai… Yoo thee nai…? Leeo sai Leeo kwaa Trong pai Yuut te nee Cha-cha

Business Issues and Considerations

Although it presents numerous opportunities the Thai market can pose significant challenges for foreign companies. Whether buying, selling or investing, whether dealing in physical products or knowledge, it is important to be aware of the complexities and risks. Outdated or overlapping regulations are common challenges in Thailand, as businesses have become more sophisticated and outpaced the original domains covered by tax codes and regulations. None are insurmountable, but they do require time and resources. Grey areas cannot always be clarified, and should be recognised as a potential risk element.

Business Issues and Considerations Intellectual property rights (IPR) As a member of the World Trade Organization (WTO), Thailand is committed, under the auspices of the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement, to provide the effective and appropriate enforcement of IPR. The Thai Government has been taking systematic measures to reduce IPR violation in every sphere of business activity, including producing, distributing, selling, importing and exporting.

The process of registering a trademark in Thailand can take up to nine months. It is valid for ten years from the date of registration and may be renewed within 90 days prior to expiry for a further period of ten years.

Trademarks Trademark protection in Thailand is regulated through the Trademark Act BE 2534 (1991), which came into force on 13 February 1992. There are four options for submitting an application for the registration of a trademark in Thailand. They are:

Patents, petty patents and designs In Thailand, inventions and product designs can acquire a protection under the Patent Act BE 2522 (1979), later amended by the Patent Act (No.3) BE 2542 (1999). Detailed information on the Patent Act and application procedures in English can be found at www.ipthailand.go.th/ (only available in the Thai language at present).

1. The Application Request Service and Examination Division, Trademark Bureau, the Department of Intellectual Property. 2. The Provincial Commercial Offices. 3. Via registered mail to the Trademark Registrar, the Department of Intellectual Property, with a payment of the fee by money order, payable to the Trademark Registrar. 4. Via the internet at the online trademark service: www.ipthailand.go.th/ (only available in the Thai language at present).

Thailand’s trademark registration procedures in English can be found at www.ipthailand.go.th/ (only available in the Thai language at present).

It can sometimes take up to one year for the application of protection to be granted. Duration of protection: • Patents are valid for 20 years • Petty patents are valid for six years (although they can be renewed twice, with each renewal lasting for two years. Therefore the maximum duration is ten years). • Designs are valid for ten years.

Business Issues and Considerations Intellectual property rights (IPR) (CONTINUED) Copyright In 1931 Thailand became a member of the Berne Convention for the Protection of Literary and Artistic Works, an international agreement governing copyright. Copyright protection in Thailand is provided through the Copyright Act BE 2534 (1994), which was promulgated on 21 December 1994 and became effective on 22 March 1995. In Thailand the period of validity for copyright in a work which is created in the course of employment, instruction or control, endures for 50 years from creation. If the work is published during this period, copyright endures for 50 years from first publication. Computer programs in Thailand are protected as literary works under the Copyright Act. For more information contact: Department of Intellectual Property 44/100 Nonthaburi 1 Road Bangkrasow Muang Nonthaburi 11000 Thailand Tel: +66 (0)2547 4621-25 Fax: +66 (0)2547 4891 Email: osdip@moc.go.th Website: www.ipthailand.go.th/ (only available in the Thai language at present) 38

Business Issues and Considerations Procurement Since 2005 Thai government procurement over 2 million baht (£40,000) has been conducted through an electronic auction. The responsible organisation is the Thai Government Procurement Office (www.gprocurement.go.th – only available in the Thai language at present). Normally, large private companies/state enterprises/ government organisations advertise their invitation to bid in the Bangkok Post and The Nation, two local English-language daily newspapers. The UKTI team in Bangkok publishes details of tenders received directly from state enterprises or government organisations on the UKTI website (www.ukti.gov.uk) under “Business opportunities”.

Business Issues and Considerations Regulations and Standards Investment rules and incentives Two governmental organisations have the authority to grant investment incentives in order to encourage both foreign and local investment in Thailand. They are: â&#x20AC;˘ Thailand Board of Investment (BOI): may grant general investment privileges. These are based on the location of the enterprise. Presently, there are three general regional zones, to which are allocated different levels of investment privileges. â&#x20AC;˘ Industrial Estates Authority of Thailand (IEAT): has the authority to grant investment privileges to enterprises that are located specifically within industrial estates that have been developed either by the IEAT, or as a joint venture between the IEAT and a private entity. While the BOI provides valuable incentives many Thai and foreign companies establish businesses without BOI assistance. Accordingly, investors should carefully consider the advantages of seeking BOI incentives before making an application.

Foreign ownership The Foreign Business Act 1999 allows foreign ownership of businesses in Thailand according to a classification on three lists. List 1 allows for no foreign ownership, List 2 allows very restricted foreign ownership and List 3 allows up to 49 per cent foreign ownership. However, foreign investors often wish to own all or at least a majority interest in their subsidiaries established abroad. Where such a subsidiary in Thailand seeks BOI privileges, the BOI may allow it to be majority or 100 per cent foreign owned, subject to conditions. In 2007 the Thai Government considered further amendments to the Foreign Business Act which would have made it more difficult for foreign companies to own a majority shareholding in a business in Thailand. The initiative lost momentum after the return to power of civilian government in 2008. However, UK companies thinking of investing in Thailand should ensure they have the relevant and up-to-date information before making any decisions. Comprehensive information and guidance are available on the BOI website (www.boi.go.th) and from the UKTI team in Bangkok.

Business Issues and Considerations Regulations and Standards (CONTINUED) Customs duties The majority of imported articles in Thailand are subject to two different taxes: tariff duty and VAT. The Customs Tariff Decree also contains a section on goods that are exempt from duty. Foreign trade transactions are subject to certain provisions of the exchange control law and various licensing requirements: • Import duty: The majority of goods imported by businesses in Thailand are subject to duty rates of between 0 per cent and 100 per cent. • Value added tax (VAT): VAT was introduced in Thailand on 1 January 1992, replacing business tax. The current rate of VAT is 7 per cent, down 3 per cent from when it was first introduced. Export goods are not subject to VAT. • Excise tax: Import goods in Thailand subject to excise tax are petroleum products; beverages; electrical equipment; perfume and cosmetics; crystalware or other types of crystal products; passenger cars and vehicles seating not more than ten people; and yachts. • Export duty: Export duties apply to seven items – rice; scrap metal; raw or tanned hides of bovine animals; rubber; wood; raw silk and silk yarn; and powdered fish.

• Exchange controls: Most imports valued at over 500,000 baht can be cleared only upon presentation of a certificate issued by a commercial bank demonstrating that the import has been reported to the Bank of Thailand. • Exports exceeding 500,000 baht in value: Before these can be cleared, the exporter must present a Certificate of Exportation to the Customs officer. Normally, export proceeds must be brought into Thailand within 180 days and converted to baht or deposited in a foreign currency account in Thailand within 15 days of receipt. • Duty refund: Goods such as raw materials used in producing, processing or packaging items for export may be imported under a system allowing for duties paid to be refunded or for a guarantee to be posted. The items imported must be re-exported within the time stipulated under Customs regulations. Imported goods which are not processed in any way and are not kept in a bonded warehouse are eligible for a partial duty refund equal to 90 per cent of the duty paid or the entire duty paid in excess of 1,000 baht, whichever is higher. • Exceptions: Custom duty exceptions apply to the importation of machinery, equipment and materials for use by oil and gas concessionaires, their contractors, and certain companies promoted by the BOI.

• Businesspeople relocating to Thailand may import their household effects, but the Customs Department requires that a work permit be submitted before they are released free of duty. • ASEAN agreement: Thailand, as a member of ASEAN, is subject to the agreed plan for the reduction of import duties that applies to trade between all the ASEAN countries. Thailand, which is also a member of the World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT), currently has free trade agreements (FTAs) with four countries: China (signed under ASEAN), Australia, New Zealand and India. FTA negotiations with other countries are under way. More detailed advice on Thai customs duties can be found at www.customsclinic.org. Import controls Certain goods entering Thailand are subject to import controls. They include:

• Weapons, ammunition, explosives, fireworks and real or replica firearms require an appropriate licence from the Ministry of Interior. Weapons such as electric-shock devices must also be declared. Some of these items may require a permit before importation. • Cosmetics: Thailand’s Cosmetic Act stipulates that, for the purpose of protection of public health, any importer of controlled cosmetics must provide the name and location of the office and the place of manufacture or storage of the cosmetics, the category or kind of cosmetics to be imported and their major components. • Wild fauna, flora, fish and other aquatic fauna: Depending on the goods being imported, permission is required from the National Park, Wildlife and Plant Conservation Department, the Department of Agriculture or the Department of Fisheries.

• Drugs, foods and supplementary products: require prior licensing from the Food and Drug Administration at Thailand’s Ministry of Public Health. • Antiques/works of art: require permission from the Fine Arts Department.

Business Issues and Considerations Regulations and Standards (CONTINUED) Customs documentation When goods arrive in or leave Thailand the importer/exporter is required to file a goods declaration and supporting documents to Customs to enable cargo clearance. To speed up and facilitate the flow and movement of legitimate cargo the Thai Customs Department provides two clearance systems: manual and electronic data interchange (EDI). The procedure works as follows: 1. Importer/exporter files a goods declaration (Customs Form No. 101 or No. 101/1). 2. Importer/exporter prepares the following supporting documents: • Invoice • Packing list • Foreign transaction form if the free on board (FOB) value exceeds 500,000 baht • Export/import licence (if applicable) • Other relevant documents (if applicable) 3. Customs checks the declaration and supporting documents. 4. Customs collects export duties and taxes. 5. Customs inspects and releases cargo.

Labelling and packaging The labelling of products in Thailand is regulated by the Consumer Protection Act BE 2522 (1979), which is administered by the Consumer Protection Committee (CPC). The CPC in turn delegates its authority to individual committees on advertising, labels and contracts. Generally, goods that are manufactured (by the factories covered by the law on factories and goods) and ordered or imported into Thailand for sale are designated as label-controlled goods. However, the Committee on Labels also has the power to designate the following goods as controlled for the purpose of labelling: 1. Goods whose nature or usage may endanger physical or mental health. 2. Goods that are regularly used by the public and where labelling would benefit. Labels on controlled goods must contain truthful statements. They must not include any statements which could lead to misunderstanding as to the material facts concerning the goods in question. They must also feature: • The name or trademark of the manufacturer or importer.

• The place of manufacture or the place of operating import business. • Statements indicating the nature of the goods. • The name of the manufacturing country, in the case of imported goods. • Price, quantity, usage, recommendations, caution and expiry date. In no circumstances may the Committee on Labels force business operators to reveal their manufacturing secrets, unless such information is essential to the health and safety of consumers. All products sold in Thailand must have a Thai label. For further information please contact: Division of Consumer Protection on Labelling Office of the Consumer Protection Board The Government Complex 5th Floor, Building 5 Chaengwattana Road Laksi, Bangkok 10210 Thailand Tel: +66 (0)2 143 0384 Fax: +66 (0)2 143 9768 Email: consumer@ocpb.go.th Website: www.ocpb.go.th

Getting your goods to Thailand • Sea freight: Goods can be sea freighted in consolidated containers to Bangkok Port and Laem Chabang Port. The average delivery time from UK seaports to Thailand is 30-35 days. • Air freight: Goods normally arrive within two to three days. Consolidated air freight (which is cheaper) takes between seven and ten days. • Courier: Several courier companies operate in Thailand, including DHL, FedEx, TNT, UPS and OCS. • Postal parcel/express mail service: The Thai service provider is Thailand Post (www.thailandpost.co.th)

Standards and technical regulation Standardisation policies in Thailand come under the remit of the Thai Industrial Standards Institute (TISI) (www.tisi.go.th), part of the Ministry of Industry. 45

Business Issues and Considerations Getting Paid and Financial Issues Since 1997, 100 per cent advanced payment through wire transfer is commonly used by traders in Thailand instead of an open account. Necessary details such as bank name, account name, account number, bank address and swift code have to be given to clients. Bank drafts are used for smaller purchases. For a middle-term customer, 50 per cent pre-payment and 50 per cent payment after invoice date can be agreed upon. The normal credit term is 30 days. For a long-term customer this can be extended to 120 days. Irrevocable Letters of Credit would be used if the total sale amount exceeds 1 million baht (£20,000). Financial assistance There are 32 commercial banks in the Thai banking system – 14 Thai commercial banks, two retail banks, one subsidiary bank and 15 branches of foreign commercial banks. They include the UK’s HSBC (www.hsbc.co.th) and Standard Chartered Bank (Thai) Public Co Ltd (www.standardchartered.co.th).

As of 24 February 2008, foreign currency brought into or taken out of Thailand above the value of US$20,000 must be declared at the Thai Customs Office. Thai currency over the amount of 50,000 baht must also be declared. People travelling to one of Thailand’s neighbouring countries are not allowed to take out more than 500,000 baht of Thai currency. Non-residents are allowed to open foreign currency accounts with any commercial bank in Thailand. As a special gesture to non-residents no restrictions are imposed on the maintenance of and withdrawal from the account, as long as the funds originate from abroad. Travellers cheques in US dollars can be cashed at provincial banks and authorised money changers, but the best rates can be obtained in Bangkok. Hotel rates are usually lower than those offered by banks and authorised money changers. Bank working hours Main offices and branches: 08.30-15.30 (Monday-Friday) Branches operated in department stores: 10.00-20.00 (Monday-Sunday)

Business Issues and Considerations Insurance The private sector in the UK provides credit insurance for exports of consumer products, raw materials and other similar goods. Speak to your banker or insurance broker for more information or contact the British Insurance Brokersâ&#x20AC;&#x2122; Association for impartial advice. British Insurance Brokersâ&#x20AC;&#x2122; Association Tel: +44 (0)870 950 1790 (consumer helpline) Email: enquiries@biba.org.uk Website: www.biba.org.uk

Private-sector insurance has some limitations, particularly for sales of capital goods, major services and construction projects that require longer credit packages or are in riskier markets. The Export Credits Guarantee Department (ECGD), a separate UK government department that reports to the Secretary of State for Business, Innovation and Skills, provides a range of products for exporters of such goods and services. Export Credits Guarantee Department Tel: +44 (0)20 7512 7000 Email: help@ecgd.gsi.gov.uk Website: www.ecgd.gov.uk

Business Issues and Considerations MANAGEMENT BRIBERY AND CONTROL AND CORRUPTION QUALITY ASSURANCE UK companies use a variety of quality assurance and management control techniques in Thailand. These include extensive travelling by UK personnel, a controlling or liaison presence in Thailand or providing extensive training and management for Thai staff. It is important not to allow milestones to slip by, whether these are attending a board meeting in a joint venture or arranging a quality audit with a supplier. Particular attention to detail should be paid when sourcing products from Thailand. Specifications can be misunderstood, so they need to be very clearly explained and agreed, and a quality management system put in place with the Thai company. Consultancies can undertake all or part of this process on your behalf.

Corruption remains an issue in Thailand. Anyone doing business in the country is likely to encounter or hear of corruption in one form or another. Practices such as facilitation payments, bribes and the giving and receiving of expensive gifts in order to develop business relationships are still a problem in certain places. Our advice to companies encountering corruption is simple â&#x20AC;&#x201C; donâ&#x20AC;&#x2122;t get involved. Not only are there issues of business integrity to bear in mind, but it is also, of course, illegal. Companies should ensure that all their commercial activities in Thailand are compliant with the UK Bribery Act which is set to come into force in April 2011. In 2010 Thailand was ranked 78th out of 178 nations in the Corruption Perceptions Index compiled by Transparency International. By way of comparison to other Southeast Asian nations, Malaysia ranked 56th, Indonesia 110th and the Philippines 134th.

BUSINESS CULTURE

In a highly competitive commercial environment it is more important than ever for us to comprehend the business culture of our target markets. This helps us to understand, anticipate and respond to unexpected behaviour, as well as enabling us to behave in an acceptable way and avoid misunderstandings

BUSINESS CULTURE MONARCHY

BUSINESS CULTURE RELIGION

Thai people have a deep, traditional reverence for their monarchy, and a visitor to Thailand should be careful to show respect for the King, the Queen and members of the Royal Family.

The predominant religion of Thailand is Theravada or Hinayana Buddhism. However, there is total religious freedom, with Islam, Christianity, Hinduism and other faiths practised and protected by the Thai constitution. Buddhism is the faith of 95 per cent of the Thai population, while 4 per cent are Muslims, 0.5 per cent Christians and the remainder Hindus, Sikhs and others. Despite the fact that Buddhism is the faith of the majority, both the Thai King and the Government uphold and support all the religions accepted by the people. Amidst this rich diversity of beliefs the Thai people have always lived together in peace and harmony.

The current monarch of Thailand is His Majesty King Bhumibol Adulyadej. He has reigned since 9 June 1946, making him the world’s longest reigning current monarch and the longest serving head of state. Most of the King’s powers are exercised by his elected government in accordance with the constitution of the day. However, he is head of the Royal Thai Armed Forces and holds the prerogative of royal assent and the power of pardon. He is also the defender of the Buddhist faith, Thailand’s predominant religion. It is a criminal offence to make critical or defamatory comments about the King or other members of the Royal Family in Thailand. This is known as “lèse majesté” and is punishable by a sentence of three to 15 years or longer.

Buddhist monks are highly respected and revered members of Thai communities. They have special areas reserved for them at airports and on buses and receive alms from the public as a sign of giving and devotion. In towns and villages the temple (wat) is the heart of social and religious life. Visitors should dress neatly when visiting religious places. Women should not wear sleeveless tops and short trousers, sandals or other unsuitable attire. Never sit in a position where your feet are stretched out in the direction of a Buddha image.

BUSINESS CULTURE INTRODUCTIONS AND GREETINGS

BUSINESS CULTURE MAKING CONVERSATION

The formal term of address for Thai people, men or women, is Khun, followed by the first name. It is commonly used for addressing somebody, both orally and in writing, whether they be Thai or foreign. Thai surnames are long, hence seldom used except in formal introductions. Most Thais have nicknames, which are often much shorter than their first names, and like to be called by them. However, you should always ask for their preference first.

Age, seniority and rank are taken seriously in Thai culture and have an influence on conversation and dialogue. The less senior person is expected to show restraint, and will rarely openly disagree with superiors as this goes against culture. As this impedes the flow of good communication, one may need to have additional conversations with other counterparts or in other settings, to confirm understanding.

Thais greet one another with a Wai, putting two hands together close to the body at chest level and bending their heads down to the hands. Generally, the younger person Wais the older, who then returns it. The lower the head is bent down in this greeting, the more respect is signalled. Handshakes are common when Thais greet foreigners, and are an accepted norm. However, since body contact in Thai culture is kept to a minimum, handshakes tend to be brief and not especially firm, especially with women. In making introductions, the younger or junior person is always introduced to the senior one. The safe dress code is to go formal and stick to conservative colours. Your potential business partner will see this as conveying a more serious level of commitment. 51

BUSINESS CULTURE ENTERTAINMENT

BUSINESS CULTURE GIFTS

Business lunches in Thailand tend to be strictly work-related, while dinners usually signify a more relaxed informal meeting between closer business acquaintances. Receiving an invitation to a dinner may indicate that your business relationship with the host is moving to a higher level. The host should arrive earlier than the guest. Bangkokâ&#x20AC;&#x2122;s notorious traffic conditions often prohibit punctuality; therefore a 15-30 minute delay in arrival can still be considered acceptable. Business lunches and dinners almost always take place at a restaurant rather than in the home.

It is common practice in Thailand to give government officials and VIPs a gift if they are the guests of honour at an official event.

A typical seating configuration usually features senior individuals at the head or centre (of long tables) or allows for higherranked personnel to choose their seat first, if the setting does not make this obvious. Other members of the team should be in close proximity to facilitate discussion. Particularly junior personnel may be seated at a different table. Very senior figures often prefer to have their managers or interpreters seated close by to provide details in response to questions which may arise during the meeting. Drinking alcohol is a normal part of social activity for men and is accepted for women. Cigarette smoking is common among both sexes. 52

Neckties, scarves, handkerchiefs, food/fruit baskets, books, moderately valued office items (pens, bags) carrying your company logo or lunch/fitness gift vouchers are all acceptable as gifts. Guest speakers at events almost always receive gifts, offering opportunities for the host and speaker to pose together for PR photos.

BUSINESS CULTURE BODY LANGUAGE AND GESTURES

BUSINESS CULTURE MEETINGS AND PRESENTATIONS

Avoid pointing with your finger to a person and never snap your fingers to get someone’s attention. It is considered rude to point your foot at a person or an object, while sitting with your feet up against parts of furniture is not acceptable. It is also disrespectful to touch someone’s head or pass something over someone’s head.

Organise appointments before you depart the UK. Follow up with telephone calls on arrival to confirm availability. Meetings can be arranged for over breakfast, lunch and dinner as well as during normal office hours.

Women expect men to maintain a reasonable distance, while unrestrained behaviour or emotions tend to be frowned upon as immature or a call for attention. These include raising your voice, showing excessive frustration/joy and public displays of affection between men and women.

English is commonly used at meetings and presentations in Thailand. Presentations are most effective when delivered formally and follow commonly accepted formats. However, more informal Q&A sessions will often encourage participation, as Thais are normally not keen to exchange views in formal settings or large meetings where there is a mixture of differently ranked

BUSINESS CULTURE MEETINGS AND PRESENTATIONS (Continued)

BUSINESS CULTURE NEGOTIATING TECHNIQUES

individuals. To encourage the audience to be more forthcoming with questions you might wish to consider deploying mechanisms such as allowing participants to submit anonymous questions on pieces of paper.

Building good relationships is a vital part of the business and negotiation process in Thailand. Thais place great importance on establishing the right chemistry with their business partners, and if this is achieved the subsequent relationship will benefit significantly.

During a meeting or presentation it is normal behaviour for Thais to speak to each other in Thai. This is not meant to be rude or a sign they are bored, but rather an attempt to seek confirmation that they have understood something correctly. Always take plenty of business cards and corporate literature along to meetings/ presentations. If possible, have the reverse of your business card translated into Thai. It usually creates a very good first impression. Follow up meetings by letter/email on your return to the UK. If possible, keep the Embassy informed of progress.

Getting business agreement can be a lengthy process. Thais are not generally quick decision-makers â&#x20AC;&#x201C; they prefer to consult with several people before making decisions. Do not expect to do business immediately or necessarily on the first visit. Signs of impatience should be avoided.

UK SUCCESS STORIES

BG Group: has a major investment in the Gulf of Thailand. This is focused on upstream activities, including an interest in the large offshore Bongkot field, which supplies approximately 15 per cent of Thailand’s gas demand. Boots: With annual sales of some £51 million and nearly 200 stores nationwide, Boots’ retail operation in Thailand is its biggest in overseas markets. Pipe Supports Ltd: recently opened its third factory in Thailand. Located near Bangkok, Pipe Supports Asia Ltd supplies the complete range of the Group’s pipe support products, including constant and variable supports, dynamic restraints, clamps, slide bearings and cryogenic support systems. The company manufactures a significant proportion of the Group’s products for distribution mainly in Asia and the Middle East. Reckitt Benckiser: has a licence to sell Strepsils throat lozenges into Thai grocery outlets. It recently expanded in Thailand with help from UKTI.

Tesco: Tesco is the largest UK investor in Thailand with over 660 stores across the country. 1998 saw the establishment of hypermarket Tesco Lotus in Thailand, a joint venture between Tesco and the local Charoen Pokphand Group. This partnership was dissolved in 2003 when Charoen Pokphand sold its shares to Tesco. Tesco Lotus sells a diverse range of products and services, including food, electronics and personal finance. Triumph Motorcycles: in September 2008 Triumph Motorcycles announced that it was expanding one of its Thai factories to increase capacity to over 130,000 motorcycles. Triumph’s first factory in Thailand was opened in May 2002 and was established for the manufacture of motorcycle components including frames, fuel tanks, header systems, swinging arms, engine covers and chrome-plated parts. A second factory was opened in 2006 where a wet painting facility and assembly line have been established. A third factory, opened in 2007, includes high-pressure diecasting and machining. The company now employs approximately 800 staff in Thailand.

Standard Chartered Bank: has 42 branches in Thailand offering the full range of consumer, corporate and financial institution products. Standard Chartered has been in Thailand since 1894.

UK SUCCESS STORIES (Continued)

Rolls-Royce: Rolls-Royce has major contracts for its Trent range of engines with Thai Airways International and Bangkok Airways. In addition to its success with local airlines, Rolls-Royce is already an established supplier to Thailand’s oil and gas sector, the Royal Thai Armed Forces and merchant vessel operators. Ewen McDonald, Regional Director, Rolls-Royce Thailand, said: “The Kingdom of Thailand is very important to Rolls-Royce. Thai Airways International and Bangkok Airways are valuable customers and recent additional orders will expand the Trent aero engine presence in the region. “They also offer a significant opportunity to strengthen further the partnership between the UK and Thailand, with the support of the UKTI team in Bangkok which has provided assistance to Rolls-Royce whenever appropriate.”

Contacts

If you have a specific export enquiry about the Thai market which is not answered by the information contained in this report please contact: UK Trade & Investment Enquiry Service Tel: +44 (0)20 7215 8000 Fax: +44 (0)141 228 3693 Email: enquiries@ukti.gsi.gov.uk UK Trade & Investment South East Asia Unit 1 Victoria Street London SW1H 0ET UK Tel: +44 (0)20 7215 8000 Alternatively, you can contact the UKTI team in Thailand directly: UK Trade & Investment, Bangkok British Embassy 14 Wireless Road, Lumpini, Pathumwan Bangkok 10330 Thailand Tel: +66 (0)2 305 8333 Fax: +66 (0)2 255 8619 Email: d l.bangkokcommercial.protect @fco.gov.uk Website: http://ukinthailand.fco.gov.uk The UKTI team in Bangkok comprises 12 staff who help UK-based companies grow their business in Thailand and assist Thai companies in bringing their high-quality investment to the UK.

Resources/Useful Links

Country information

Export finance and insurance

BBC website http://news.bbc.co.uk/1/hi/country_profiles/ default.stm

Export Credits Guarantee Department www.ecgd.gov.uk

Foreign and Commonwealth Office country profile www.fco.gov.uk/en/travel-and-living-abroad/ travel-advice-by-country/country-profile Culture and communications CILT (National Centre for Languages) Regional Language Network in your area www.cilt.org.uk/workplace/employer_ support/in_your_area.aspx Customs and regulations HM Revenue & Customs www.hmrc.gov.uk Economic Information

The Economist www.economist.com/countries

Intellectual property Intellectual Property Office www.ipo.gov.uk Market access Market access database for tariffs (for non-EU markets only) http://mkaccdb.eu.int/mkaccdb2/ indexPubli.htm SOLVIT â&#x20AC;&#x201C; Overcoming trade barriers (EU markets only) www.bis.gov.uk/EUMarketAccessUnit Standards and technical regulations British Standards Institution (BSI) www.bsigroup.com/en/sectorsandservices/ Disciplines/ImportExport

Export control

National Physical Laboratory www.npl.co.uk

Export Control Organisation www.bis.gov.uk/exportcontrol

Intellectual Property Office www.ipo.gov.uk

Trade statistics National statistics information www.statistics.gov.uk/hub/index.html UK Trade information www.uktradeinfo.com Travel advice Foreign and Commonwealth Office www.fco.gov.uk/en/travel-and-living-abroad NHS www.nhs.uk/nhsengland/Healthcareabroad Travel health www.travelhealth.co.uk British Chamber of Commerce Thailand www.bccthai.com

ÂŠ Crown Copyright 2011 You may reuse this information (not including logos, images and case studies) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk Any enquiries regarding this publication should be sent to our Enquiry Service by email: enquiries@ukti.gsi.gov.uk or telephone: + 44 (0)20 7215 8000 (Monday â&#x20AC;&#x201C; Friday 09.00-17.00) This publication is also available from our website at www.ukti.gov.uk

HELPING YOUR BUSINESS GROW INTERNATIONALLY

A range of UK Government support is available from a portfolio of initiatives called Solutions for Business (SfB). The “solutions” are available to qualifying businesses, and cover everything from investment and grants through to specialist advice, collaborations and partnerships. UK Trade & Investment is the Government Department that helps UK-based companies succeed in the global economy, and is responsible for the delivery of the SfB product “Helping Your Business Grow Internationally”. We also help overseas companies bring their high-quality investment to the UK’s dynamic economy – acknowledged as Europe’s best place from which to succeed in global business. UK Trade & Investment offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world. We provide companies with the tools they require to be competitive on the world stage. Other South-East Asia Business Guides are available for Indonesia, Malaysia, the Philippines and Vietnam. For further information please visit www.ukti.gov.uk or telephone +44 (0)20 7215 8000. Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation and Skills, and the Foreign and Commonwealth Office) accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. The paper in this document is made from 50 per cent recycled waste pulp with 50 per cent pulp from well-managed forests. This is a combination of Totally Chlorine Free and Elemental Chlorine Free. The inks are vegetable oil-based and contain resins from plants/trees and the laminate on the cover is sustainable, compostable and can be recycled. Published March 2011 by UK Trade & Investment © Crown Copyright URN 11/690