December 2012
Table of contents Executive Summary ................................................................................................................................ 1 1 Demographic Information................................................................................................................... 4 1.1 Respondents profile .......................................................................................................................... 4 1.2 Industry breakdown of respondents................................................................................................ 5 1.3 Size, revenue and history .................................................................................................................. 6 1.4 Legal and administrative issues ........................................................................................................ 9 2 Outlook .............................................................................................................................................. 12 2.1 Growth in Thailand.......................................................................................................................... 12 2.2 Investments..................................................................................................................................... 13 2.3 Jobs in Thailand ............................................................................................................................... 14 2.4 Growth, Sales and Profitability ....................................................................................................... 14 3 Opportunities and Challenges........................................................................................................... 16 3.1 Positive externalities ....................................................................................................................... 16 3.2 Negative externalities ..................................................................................................................... 16 4 Strategies ........................................................................................................................................... 16 4.1 Cost reduction and Profitability increase........................................................................................ 17 5 Evaluations ........................................................................................................................................ 18 5.1 Institutions support to companies .................................................................................................. 18 6. Report by size ................................................................................................................................... 20 7. Report by sector ............................................................................................................................... 23 Annex .................................................................................................................................................. 26
EABC Business Confidence Survey 2012
Executive Summary This 2012 Business Confidence Survey has been conducted by the European ASEAN Business Centre (EABC), in collaboration with a Consortium of 16 European Chambers of Commerce and Associations throughout Thailand and Europe 1. The survey was designed and administered in order to gather information from business executives on local and international factors. The questions regarded challenges for executives and their outlook on growth. Targeted respondents of the questionnaire were senior executives of companies within the European business communities, particularly current members of EABC and European bilateral chambers in Thailand. Starting on 1 November 2012 and finishing on 18 November 2012, the survey was distributed to over 2000 email addresses via established business networks of the EABC Partners and Associates. The survey - conducted with a web-based, self-administered interface - allowed anonymous participation and consisted of 29 simple questions. The feedback received from 221 respondents provided an interesting perspective on current challenges and upcoming opportunities. In terms of respondent profiles, 90% of the respondents were senior executives of companies largely involved in manufacturing or services and included companies of small, medium, and large sizes. The largest portion of the respondents (31%) said their companies employed 15-99 employees, whereas 11% had more than 500 employees and 18% had 5 employees or fewer. 42% of respondents stated that their companies had yearly revenue of more than 100 million THB, whereas about 17% had yearly revenue of less than 5 million THB. The majority of respondents (86%) had different scales of share participation from abroad, with more than half having at least one permanent office also in Europe. 53% of respondents have been in Thailand for 11 years or longer, while only 6% have been operating in Thailand for less than a year. Half of the respondents who operate in the international scene foresee their presence in Thailand becoming increasingly important, whereas only 7% see declining importance. Business outlook Outlook for growth of the Thai economy and business sectors: •
•
Half of the respondents expressed positive opinions about potential growth of the Thai economy in the next two years, comparing to only 6% with a negative outlook of the Thai economy. 67% of the respondents are optimistic about the outlook for growth in their business sectors, while about 8% are pessimistic.
1
EABC Partners and Associates are Thai-Italian Chamber of Commerce, German-Thai Chamber of Commerce, Advantage Austria, British Chamber of Commerce Thailand, Belgian-Luxemburg-Thai Chamber of Commerce, Danish-Thai Chamber of Commerce, DIGITALEUROPE, EURATEX, EUROCHAMBRES, Franco-Thai Chamber of Commerce, Irish-Thai Chamber of Commerce, Netherlands-Thai Chamber of Commerce, Swiss-Thai Chamber of Commerce, Thai-Finnish Chamber of Commerce, , Thai-Norwegian Chamber of Commerce and ThaiSwedish Chamber of Commerce
1 | Page
EABC Business Confidence Survey 2012
Company outlook: •
•
•
•
81% of the respondents are considering new major investments in the next two years, the majority of which plan to invest in ASEAN, followed by investing in Thailand and the rest of the world. This is particularly the case for large scale companies. Half of the respondents expect the number of new positions for foreign employees to remain the same, while 35% and 13% see the number of positions to increase and decrease respectively. The majority of the respondents (approximately 80%) foresee improvement (both strong and moderate) in their company’s growth, profitability, and sales in the next 6 months. Whereas less than 10% envisage a decline (strong or moderate) in the company’s performance in the near future. The executives’ perspectives are even more positive in the longer run (i.e. next 2 years). Almost 70% of the respondents believe the positive outlook of their companies is related to the potential expansion of the customer base and market demand.
Business climate: opportunities and challenges •
•
•
Potential business opportunities in the ASEAN Economic Community (AEC) ranked first with more than half of the respondents considering this as the main opportunity for Thailand in the next five years, followed closely by ASEAN trade agreements with key trade partners (e.g. India, China) and the potential Free Trade Agreement between Europe and Thailand. Service liberalisation is ranked fourth being the main opportunity for Thailand in the next five years. Slightly more than half of the respondents thought that external factors had been affecting their business in a negative way. The main portion of these negative respondents (60%) viewed the European economic crisis as their main external challenge, whereas the US economic slowdown (30%) and the slow economic performance of China (10%) are ranked significantly behind. Of the negative respondents who have problems inside Thailand, the largest portion is most concerned with the performance of public institutions and political instability. Some also regarded the issue of human resources (i.e. high costs, lack of expertise, limitation on employment of foreign workers, etc.) and lack of transparency and corruption as their principal concerns. Poor logistical infrastructure barely surfaced as a challenge for businesses operating in Thailand.
Business strategy: •
About half of the respondents evaluate the performance of the Thai Government and authorities as neutral in relation to their business operation and strategies. Interestingly however, a much higher proportion of the remaining half regarded the Government/authorities’ performance as negative to their business. This is particularly the case with respect to the policy and regulatory environment, regulatory enforcement and implementation, followed by the political situation and outlook. Less than 20% of the respondents regarded Thailand’s support to investors as positive.
2 | Page
EABC Business Confidence Survey 2012
• •
To effectively reduce costs in the next twelve months, more than 40% of the respondents regard the reduction of procurement costs as the first priority. In an attempt to increase the company’s revenue and profitability, increasing sales and acquiring new customers were indicated as top priorities.
Conclusion In this first year of the EABC annual business confidence survey, the overall outlook of respondents is optimistic both for the next 6 months and the next two years. Despite pertinent challenges in the global economy (the European crisis and the fear of slow economic performance in the US and China), the business environment in Thailand and AEC offers significant opportunities. The majority of respondents plan to expand their business in ASEAN and Thailand in the next two years to avail themselves of what they see as potential for business growth. However, this is related to a call for improvement in areas cited by the respondents as barriers/challenges to their business operation, particularly: trust in public institutions and political instability, human resource issues, corruption and lack of transparency, and poor logistical infrastructure.
3 | Page
EABC Business Confidence Survey 2012
1 Demographic Information The survey was conducted from the 1st to 18th November 2012 through a professional web platform. The survey was anonymous. All the Bilateral European Chambers supported the project inviting their members and contacts to fill out the form. Most of the questions were mandatory, only few questions had the possibility of omission. Some questions, marked in the report below, were displayed only to a certain group of people, depending on previous key questions. The total number of survey respondents was 221 (it was not possible to complete the survey twice by the same computer/person).
1.1
Respondents profile
The respondents to the Business Confidence Survey 2012 were divided into 3 different categories, according to their job position in the company: 10% are working in a middle position like assistant manager, accountant or sales executive; 22% are senior managers and the largest part (68%) is composed of CEOs, CFOs, general managers and presidents.
Figure 1: Respondents profile
Q: Please indicate which category describes better your present Job position
Middle position 10%
Presidents VPs Directors • • • • • • • • • •
CEO CFO COO CTO President Vice president Sales & marketing VP General manager Director regional Executive director
• • • • •
Senior managers 22% • • • • •
Manager Regional manager Area sales manager Senior sales manager Project manager
• •
• • • • • •
Assistant manager Senior brand Marketing officer Sales supervisor Assistant sales manager Sales executive Business analyst Engineer Assistant engineer Accountant Assistant project manager
Senior finance manager Regional facilities manager
4 | Page
EABC Business Confidence Survey 2012
1.2
Industry breakdown of respondents
The “service sector” is the most popular sector that took part in the survey, representing 58% of the respondents. Meanwhile “manufacturers” represented 29%. The “other” 14% were educators, trade associations, importers and distributors.
Figure 2: Industry distribution
Q: Please indicate the primary sector of your company
Other
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
14% 8% 22% 14%
Services
24%
32% 29%
Manufacturing 0
58%
0.2
0.4
0.6
47%
48%
33%
37%
20%
15%
40%
small companies
40%
Medium companies
21%
0.8
Large companies
The different industries were represented almost uniformly in the survey, with the Financial and Insurance sector as the only exception. 27% of respondents are operating in the Professional Services sector, 35% in the Industrial Goods and Services sector, and 30% in the Consumer Goods and Services sector. This is a guarantee of the quality and representativeness of the data collected this year.
Figure 3: Respondents core business
Q: Please indicate the sector that best describes the main business of your company 4%
Consumer goods/services
4% 30%
Professional services Industrial goods/services
35%
Finance and Insurance 27%
Other
5 | Page
EABC Business Confidence Survey 2012
1.3
Size, revenue and history
83% of the surveyed companies are SMEs and the remaining 17% are large firms. After analysing Fig. 5, it can be inferred that almost half of the large size firms operate as a business to consumer (B2C) providing either goods or services. On the other side the results on medium companies showed that 40% of them run their business mostly in the business to business (B2B) model. Small companies are primarily providing professional services.
Figure 4: Size breakdown of respondents Q: Your company can be described as:
17%
Large size 46%
Medium size Small size 37%
Chart Title
Figure 5: Size by Industry
Q: Correlation between the size and the industry 100% 90% 80% 70% 60% 50%
8% 5%
5% 5%
26%
39%
21%
20%
45%
10%
Other
35% Finance and Insurance
16%
40% 30%
2% 2%
37%
Industrial goods/services Professional services
30%
24% Consumer goods/services
0% Large size
Medium size
Small size
6 | Page
EABC Business Confidence Survey 2012
The chart below shows the revenues generated in Thailand during last fiscal year (2011); in this survey there is a good distribution among the different sizes of companies.
Figure 6: Breakdown of respondents' total revenue Sales
Q: What was the 2011 total revenue of your company in Thailand?
> 1 billion THB 16%
100 – 999 Million THB 26%
< 5 Million THB 17%
5 – 15 Million THB 18%
15 – 99 Million THB 23%
Figure 6a: Comparison of the revenue companies present in Europe or Chart ofTitle not 100% 90% 80% 70%
3 2 10
4 4
> 1 billion THB
32
100 – 999 Million THB
60% 50%
6
15 – 99 Million THB
17
40% 30% 20%
5 – 15 Million THB
17 25
10%
< 5 Million THB
0%
Yes
Office in EU
No
7 | Page
EABC Business Confidence Survey 2012
In terms of employees in Thailand, the data set is quite balanced: 30% of the 2012 respondents have more than 100 employees and 31% between 15 and 99. Sales Figure 7: Number of employees in Thailand Q: How many employees do you have in Thailand?
11%
< 5 employees
18%
5-15 employees 15-99 employees
19%
100-499 employees 21%
> 500 employees
31%
Almost half of the companies (47%) have been established in Thailand after year 2000 and almost a third (29%) before the 1990. A very small number have been established in the last 12 months.
Figure 8: Years of respondents' operational presence in Thailand Q: How long has your company been operating in Thailand?
6% 29%
14%
<1 years 1-3 years 4-10 years
27% 24%
11-20 years >20 years
8 | Page
EABC Business Confidence Survey 2012
From the chart below it is easy to see that the majority of the companies have been established under the Foreign Business Act, which requires the majority of the shareholders to be Thai. Foreign people and/or entities have registered only a third of the companies. This is made possible by the Board of Investment (BOI) programme.
Figure 9: Breakdown of ownership composition
Q: How do you describe the composition of shares capital of your company?
Wholly Thai 14% Wholly Foreign 33% Half or less Foreign 40%
1.4
More than half foreign 13%
Legal and administrative issues
More than ž of the companies taking part of the survey are Limited Company entities. This option is common especially for medium size companies. Itâ&#x20AC;&#x2122;s also important to underline that 10% of the companies are listed as Public limited.
Figure 10: Legal entities of respondents
Q: Under what legal entity is your company registered in Thailand? 0% 4%
1% 6%
3%
Public Limited Company 10%
Limited Company Limited Partnership Registered Ordinary Partnership Representative Office
76%
FBA (Registered under Foreign Business Act) Other (please specify)
9 | Page
EABC Business Confidence Survey 2012
As seen in the information below, 56% of surveyed companies have at least one office in Europe, which may be a headquarters or a branch. Around half of these multinational companies stated that Thailand is becoming significantly more important in their overall global strategy. Around 60% of companies with a presence in the EU stated that the strategic reason they are operating their business in Thailand is to provide goods or services for the Thai market, whereas 26% of these companies distribute to the European market.
Figure 11: Breakdown of respondents' presence in Europe
Q: Does your company have at least one office in Europe (headquarter, branch etc)?
44%
Yes
+ 56%
No
Figure 11a: Breakdown of respondents' opinion on the importance of the presence in Thailand
Q: How would you currently characterize the importance of Thailand in your company's overall global strategy? (Answer only if the company has one office in Europe )
27%
+ 44%
56%
Increasingly important Same level of importance
25% 4%
Declining in importance
10 | Page
EABC Business Confidence Survey 2012
Figure 11b: Breakdown of respondents' strategic reason of their presence in Thailand
Q: What are the strategic reasons for your company operating its business in Thailand? (Answer only if the company has one office in Europe )
To provide goods or services for the Thai market
44%
56% +
36%
To provide goods or services for the European market
16%
Request from European customers / partners to enter Thailand
4%
Companies with less non-Thai shareholders were slightly more inclined to provide goods and services to the European market, but more than 50% of all companies listed Thailand as their final market.
Figure 12: Breakdown of the strategic reason Chart Titlethe company is operating in Thailand
Q: Correlation between the composition of the property by origin of stock-holders with the reason the company is operating in Thailand 100% 90%
19%
80%
7%
70% 60%
19%
10% 4%
Other
29% Request from European customers / partners to enter Thailand
50% 40% 30%
56%
57%
20%
To provide goods or services for the European market
10% 0%
To provide goods or services for the Thai market Wholly Foreign Ownership
50% or less Foreign Ownership
11 | Page
EABC Business Confidence Survey 2012
2 Outlooks 2.1 Growth in Thailand The respondents showed a positive opinion about the growth of the Thai economy within the next 2 years. Half of the sample expressed an optimistic point of view and just 6% of them believe that Thailand will face negative economic scenarios.
Figure 13: Respondents' opinion on growth in Thailand
Q: How would you describe the outlook for growth of Thai economy within the next two years?
Optimistic
50%
Neutral
44%
Pessimistic
6% 0%
10%
20%
30%
40%
50%
60%
Companies that operate as a business to consumer (B2C) are the most optimistic about the growth in Thailand. Moreover every sector shows a positive trend in growth except for the financial sector. Their predictions are not promising and more than one third of the respondents from banks and insurance companies state that the industry is pessimistic about their situation for the next two years.
Figure 14: Respondents' opinion on growth in their sector
Q: How would you describe the outlook for growth in your sector in Thailand within the next two years? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
6%
44%
2%
2%
43%
45%
0%
10% 38%
30%
48% 25%
50%
Overall
Pessimistic
56%
Neutral 70%
53%
42%
38%
Consumer Professional Industrial Finance and goods/services services goods/services Insurance
Optimistic Other
12 | Page
EABC Business Confidence Survey 2012
2.2 Investments More than four companies out of five are considering a new investment in the next two years. Most of these investments will be made in the ASEAN area and 37% will be in Thailand.
Figure 15a: Companies point of viewColumn2 about new investments
Q: Is your company considering any major new investments in the next two years?
If Yes, where? No 19%
Rest of the World
19%
ASEAN Yes 81%
44%
Thailand
37% 0%
10%
20%
30%
40%
50%
SMEs split their investment budget equally between Thailand and the rest of the ASEAN countries. Almost half of the large companies prefer to allocate their budget in ASEAN.
Figure 15b: Prediction of budget allocation Chart Titleof big companies and SMEs Q: Is your company considering any major new investments in the next two years?
100% 90% 80%
2% 30%
70%
15% 17%
22% 10%
Yes, in the Rest of the World
60% 50% 40%
35%
34%
49%
Yes in ASEAN
30% 20% 10%
No
34%
34%
Medium size
Small size
19%
Yes in Thailand
0% Large size
13 | Page
EABC Business Confidence Survey 2012
2.3 Jobs in Thailand The general expectation about permanent positions for foreigners in Thailand is that the number is going to increase, particularly in companies that have between 15 and 99 employees.
Figure 16: Expected trend of permanent positions of foreign people Q: How would you expect the number of permanent positions of foreign people in Thailand to develop over the next two years? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
13%
19%
7%
11%
Decrease 48%
52%
59%
50%
35%
31%
Overall
<15 employees
Stay the same
41%
34%
between 15 and 99 empoyees
> 100 employees
Increase
2.4 Growth, Sales and Profitability The factors that will be affecting business performance the most are the changes in the demand of the Thai market and the actions of global competitors.
Figure 17: Breakdown of respondents on factors influencing the business performance Q: What is the main reason behind the changes in your business performance? 6%
Increase/decline in customer base and market demand More/Less resources
17%
35%
Exchange rates Rise/decline in production costs
8%
Diversification from Competitors strategies Governmentâ&#x20AC;&#x2122;s planning and regulations 11%
9% 9%
5%
Global economic environment Other
14 | Page
EABC Business Confidence Survey 2012
Companies are clearly expecting a better performance in the medium run rather than in the short run. â&#x20AC;&#x153;Salesâ&#x20AC;? is the area with the greatest level of expectations. An average 90% of the respondents expect an increase in revenue within the next 2 years.
Figure 18: Expected results on short/long run performance
Q: How would you describe the following aspects of your company in the next months?
100% 90%
0%
0%
5%
5%
18%
5%
1%
1%
7%
9%
12%
25%
0%
1%
6%
6%
14%
3%
Strong decrease
80% 70%
Decrease 52%
53%
60%
50%
50%
58%
57%
40%
Stay the same
51%
Increase
30% 20%
38%
36% 29%
10%
Strong increase
22%
19%
14%
0% 6 months
24 months
Growth
6 months
24 months
Profitability
6 months
24 months
Sales
15 | Page
EABC Business Confidence Survey 2012
3 Opportunities and Challenges 3.1 Positive externalities AEC, FTA, agreements between the ASEAN Countries, and liberalisation of services are considered to be the biggest opportunities for Thailand. Only 2% of respondents see other opportunities beyond these.
Figure 19: Breakdown of respondents' opinion on the next Thailand best opportunity for economy Q: What is considered to be the main opportunity for Thailand in the next 5 years? 2%
AEC (Asean Economic Community)
12% 32%
Free Trade Agreement (FTA) with Europe ASEAN Agreements with key trade partners (e.g. India, China)
27%
Service Liberalization 27%
Other
3.2 Negative externalities The major problem faced by the companies is the crisis in the EU. Around 23% of respondents state that they have been negatively influenced by the present circumstances. The USA slowdown is a problem that affected 11% of the companies while a slowdown in China affected just 4% of them.
Figure 20: Breakdown of respondents on facors that influence negatively the Column2 business performance Q: Have external problems affected your business in a negative way?
If Yes, which ones exactly? European Crisis No 48%
Yes 52%
23%
USA Slowdown
11%
China Slowdown
4%
Poor logistic infrastructures
4%
Lack of transparency and…
16%
Public Institution/political…
19%
HR issue (High cost, Lack of…
17%
Other
7% 0%
5%
10%
15%
20%
16 | Page
25%
EABC Business Confidence Survey 2012
4 Strategies 4.1 Cost reduction and Profitability increase The main strategy undertaken by companies in order to defray costs is to reduce procurement costs and to outsource some operations. Just 10% of them are likely to cut the budget for human resources.
Figure 21: Breakdown of respondents' on reducing cost strategy
Q: What is your company's first priority for the next twelve months in order to realise cost reduction objectives? Reduce procurement costs 20% Reduce headcount 41%
21%
Reduce rental expenses Subcontracting and outsourcing Other
10%
8%
The most frequent approaches in order to increase revenue and profitability are to raise sales activities and to enlarge the customer base.
Figure 22: Breakdown of respondents' on increasing revenue/profit strategy Q: What is your company's first priority for the next twelve months in order to increase revenue/profitability? 5%
Increase sales activities
16% 35%
Acquire new customers Increase marketing
10%
Offer new services Other 34%
17 | Page
EABC Business Confidence Survey 2012
5 Evaluations 5.1 Institutions support to companies The regulatory environment has registered the worst score in the issues related to the Government and authorities. The majority of companies expressed a neutral opinion of the authorities.
Column1 Figure 23: Breakdown of respondents' on quality of regulatory and burocratic procedures related to the Thai Government and authorities Q: How do you evaluate the Thai Government/authorities in relation to your business:
Current political situation
Very negative
5%
Very negative
Somewhat negative
24%
Neutral
Very positive
3%
Very positive
Very negative
51% 8% 2%
3%
8%
Somewhat negative
32%
Somewhat positive
12%
Support to investors
8%
Neutral
42%
Somewhat positive
19%
Somewhat negative
37%
Neutral
Regulatory enforcement
Very negative
6%
Somewhat negative 48%
Somewhat positive Very positive
Policy and regulatory environment
19%
Neutral
53%
Somewhat positive Very positive
16% 5%
18 | Page
EABC Business Confidence Survey 2012
This pie chart represents the opinion of the respondents about the support to the companies provided by the Chamber of Commerce.
Figure 24: Breakdown of respondents' on Chamber of Commerce support
Q: How do you evaluate the work of the Chambers of Commerce/EABC to support to your business?
Supportive 30% 45%
Need some improvement
N/A 25%
One out of every four companies stated that they are interested in dialogue with authorities and business matching opportunities and they are expecting the Chamber of EABC to support them in these tasks.
Figure 25: Breakdown of respondents' on Chamber of Commerce support in several areas
Q: In which areas would the support from the Chambers of Commerce/EABC be beneficial for your company?
Dialogue with authorities/advocacy
26%
Intelligence database, study, analysis
19%
Business matching, networking opportunities
25%
Business advisory services
13%
Trade fairs, road shows
13%
Other
4% 0%
5%
10%
15%
20%
25%
30%
19 | Page
EABC Business Confidence Survey 2012
6. Report by size Figure A: Demographic summary by size - Description of the typical small, medium and large company in Thailand
Small companies • Between 5 and 15 empoyees • Average revenue <5 Million THB • More than 50% of the shares are own by Thai investors • Average time in Thailand: between 4 and 10 years ago
Medium companies • Between 15 and 99 employees • Average revenue between 100 and 999 Million THB • The majority of the shares are held by foreign investors • Average time in Thailand: between 11 and 20 years ago
Large companies • More then 500 employees • Average revenue is higher then 1 Billion THB • The company is wholly owned by foreign investors • Average time in Thailand: more then 20 years
Note: the categories "Finance and Insurance" and "Others" are NOT considered in the report.
20 | Page
EABC Business Confidence Survey 2012
There is not a big gap between small, medium and large companies concerning their perceptions about opportunities for Thailand in the next 5 years.
Figure B
Q: What is considered to be the main opportunity for Thailand in the next 5 years? 100% 90%
2% 12%
3% 11%
3% 11%
0% 15%
28%
28%
26%
29%
Service Liberalization
26%
28%
26%
ASEAN Agreements with key trade partners (e.g. India, China)
80% 70%
Other
60% 50% 40%
25%
30% 20%
32%
10%
30%
35%
31%
Free Trade Agreement (FTA) with Europe AEC (Asean Economic Community)
0%
Overall
Small
Medium
Large
In the figure below, the problems affecting companies are displayed according to the size of the problem. There is once again little variation between small and large companies.
Figure C
Q: Have these problems affected your business in a negative way? 100% 90% 80%
10%
7%
26%
28%
70%
13%
25%
10%
25%
60% 50%
31%
32%
28%
Lack of transparency and corruption
31%
Public Institution/political instability HR issue (High cost, Lack of expertise, Foreigners limitation, etc) Poor logistic infrastructures
40% 30% 20%
Other
27%
27%
28%
27%
6%
6%
7%
6%
Overall
Small
Medium
Large
10% 0%
21 | Page
EABC Business Confidence Survey 2012
There is a substantial difference on the way SMEs and large companies try to reduce the costs. Large size companies are focused on reducing procurement costs. SMEs have a strategy of outsourcing and subcontracting while also lowering procurement costs.
Figure D
Q: What is your company's first priority for the next twelve months in order to realise cost reduction objectives?
100%
Other
90%
19%
22%
16%
21%
24%
9% 3%
80% 70%
21%
60%
10%
50%
8%
40%
24% 11% 4%
12% 9%
30% 20%
15%
Subcontracting and outsourcing Reduce rental expenses Reduce headcount
53%
41%
39%
39%
Overall
Small
Medium
Reduce procurement costs
10% 0%
Large
The main difference, show in the chart below, is that small companies try to acquire new customers rather than increase sales activities. Exactly the opposite strategy is adopted by medium and large companies.
Figure E
Q: What is your company's first priority for the next twelve months in order to increase revenue/profitability? 100% 90% 80% 70%
4%
2%
16%
16%
10%
13%
60% 50%
34%
40%
4% 20% 8% 27%
35%
10%
9% 6%
41%
47%
26%
Small
Offer new services Increase marketing Acquire new customers Increase sales activities
0%
Overall
Other
26%
42%
30% 20%
12%
Medium
Large
22 | Page
EABC Business Confidence Survey 2012
7. Report by sector Figure I: Demographic summary by sector - Description of the typical company operating in the B2C, B2B and professional services in Thailand
Consumer goods/services
Industrial goods/services
Professional services
• Between 15 and 99 empoyees • Average revenue between 100 and 999 Million THB • Ownership is equally divided between Thai and foreign investors • Average time in Thailand: 20 years or more
• Between 15 and 99 empoyees • Average revenue between 100 and 999 Million THB • Ownership is held by Foreign investors • Average time in Thailand: 20 years or more
• Between 5 and 15 empoyees • Average revenue between 5 and 15 Million THB • More often the ownership is held by Thai investors • Average time in Thailand: between 4 and 10 years ago
Note: the categories "Finance and Insurance" and "Others" are NOT considered in the
23 | Page
EABC Business Confidence Survey 2012
For each sector the perception of opportunities seem to be balanced. B2C slightly favours ASEAN agreements, while B2B slightly favours service liberalisation.
Figure II
Q: What is considered to be the main opportunity for Thailand in the next 5 years? 100% 90%
2% 11%
2% 12%
2% 10%
2% 12%
Other
28%
24%
31%
28%
Service Liberalization
27%
31%
24%
27%
ASEAN Agreements with key trade partners (e.g. India, China)
80% 70% 60% 50% 40%
Free Trade Agreement (FTA) with Europe
30% 20% 10%
32%
31%
33%
31%
Overall
B2C
B2B
Professionals
AEC (Asean Economic Community)
0%
The respondentsâ&#x20AC;&#x2122; opinions are perfectly balanced on the topic of negative Thai aspects despite the sector in which their company operates.
Figure III
Q: Have these problems affected your business in a negative way? 100% 90% 80%
10%
8%
8%
26%
26%
27%
30%
32%
29%
70%
14%
24%
Lack of transparency and corruption
29%
Public Institution/political instability HR issue (High cost, Lack of expertise, Foreigners limitation, etc) Poor logistic infrastructures
60% 50% 40% 30% 20% 10% 0%
Other
26%
26%
27%
25%
8%
8%
8%
8%
Overall
B2C
B2B
Professionals
24 | Page
EABC Business Confidence Survey 2012
A remarkable observation is that companies operating in the B2C and B2B sector are focusing on the reduction of procurement costs. Just 3% are considering a decrease of rental expenses. Professionals are also considering reducing human capital, subcontracting, and outsourcing as strategies.
Figure IV
Q: What is your company's first priority for the next twelve months in order to realise cost reduction objectives? 100% 90%
19%
80% 70% 60% 50%
20%
25%
Other
25%
Subcontracting and outsourcing
18% 21% 10%
3% 13%
7%
40% 30% 20%
13%
43%
20% 7% 4%
21% 52%
48%
4%
Reduce rental expenses Reduce headcount
26%
10%
Reduce procurement costs
0%
Overall
B2C
B2B
Professionals
In order to increase revenue, the main option for B2B is to increase sales. Professionals are more focused on the acquisition of new customers. B2C companies have a wider view on this topic and 13% of them are considering enhancing marketing as a strategy.
Figure V
Q: What is your company's first priority for the next twelve months in order to increase revenue/profitability? 100% 90% 80% 70%
5%
3%
3%
16%
16%
16%
9%
13%
60% 50%
7%
9% 17% 6%
Offer new services
30% 36%
Other
36%
43%
40%
Increase marketing
30% 20% 10%
34%
31%
43%
Acquire new customers 25%
Increase sales activities
0%
Overall
B2C
B2B
Professionals
25 | Page
EABC Business Confidence Survey 2012
Annex
26 | Page
Business Confidence Survey 2012
1. Please indicate which category describes better your present Job position Response
Response
Percent
Count
Middle (assistant manager, senior brand, marketing officer, sales supervisor, assistant sales manager, sales executive,
10.4%
23
21.7%
48
67.9%
150
answered question
221
skipped question
0
Response
Response
Percent
Count
business analyst, engineer, assistant engineer, accountant, assistant project manager) Senior (manager, regional manager, area sales manager, senior sales manager, project manager, senior finance manager, regional facilities manager, regional quality manager, deputy general manager, head of sales) Top (CEO, CFO, COO, CTO, president, vice president, sales & marketing VP, general manager, director, regional director, executive director, brand director)
2. Indicate the primary sector of your company
Manufacturing
28.5%
63
Services
57.9%
128
13.6%
30
answered question
221
skipped question
0
Other (please specify)
1 of 15
3. Indicate the sector that best describes the main business of your company. Response
Response
Percent
Count
Consumer goods/services (Fashion & textiles , Food & beverage, Pharmaceuticals & healthcare, Financial services, Retail &
29.9%
66
27.1%
60
34.8%
77
3.6%
8
4.5%
10
answered question
221
skipped question
0
Hospitality, Tourism & travel, Other consumer goods) Professional services (Media & Publishing , IT & telecommunications , legal consulting, Sciences, Standardization services, Advertising & branding, Public relations & communications, Management & HR consulting) Industrial goods/services (Automotive, Chemicals & petroleum, Civil engineering & construction, Utilities, commodities, Machinery, Transportation, logistics & distribution, Renewable energy equipment, Aeronautics, Paper manufacturing) Finance and Insurance (Banks, Insurance company, Broker) Other (please specify)
2 of 15
4. Your company can be described as: Response
Response
Percent
Count
Small Size
45.7%
101
Medium Size
37.1%
82
Large Size
17.2%
38
answered question
221
skipped question
0
5. What was the 2011 total revenue of your company in Thailand? Response
Response
Percent
Count
< 5 Million THB
17.3%
38
5 – 15 Million THB
18.2%
40
15 – 99 Million THB
22.7%
50
100 – 999 Million THB
25.9%
57
> 1 billion THB
15.9%
35
answered question
220
skipped question
1
3 of 15
6. How many employees do you have in Thailand? Response
Response
Percent
Count
< 5 employees
18.1%
40
5-15 employees
20.8%
46
15-99 employees
31.2%
69
100-499 employees
19.0%
42
> 500 employees
10.9%
24
answered question
221
skipped question
0
Response
Response
Percent
Count
7. How long has your company been operating in Thailand?
<1 years
6.3%
14
1-3 years
13.6%
30
4-10 years
27.1%
60
11-20 years
23.5%
52
>20 years
29.4%
65
answered question
221
skipped question
0
4 of 15
8. How do you describe the composition of shares capital of your company? Response
Response
Percent
Count
Wholly Foreign
33.2%
73
More than 50% foreign
12.7%
28
50% or less Foreign
40.0%
88
100% Thai
14.1%
31
answered question
220
skipped question
1
9. Under what legal entity is your company registered in Thailand? Response
Response
Percent
Count
Public Limited Company
9.5%
21
Limited Company
76.0%
168
Limited Partnership
3.6%
8
Registered Ordinary Partnership
0.5%
1
Representative Office
5.9%
13
1.4%
3
3.2%
7
answered question
221
skipped question
0
FBA (Registered under Foreign Business Act) Other (please specify)
5 of 15
10. Does your company have at least one office in Europe (headquarter, branch etc)? Response
Response
Percent
Count
Yes
56.1%
124
No
43.9%
97
answered question
221
skipped question
0
11. How would you currently characterize the importance of Thailand in your company's overall global strategy? Response
Response
Percent
Count
Increasingly important
48.8%
59
Same level of importance
43.8%
53
Declining in importance
7.4%
9
answered question
121
skipped question
100
6 of 15
12. What are the strategic reasons for your company operating its business in Thailand?
To provide goods or services for the Thai market To provide goods or services for the European market
Response
Response
Percent
Count
66.1%
80
29.8%
36
6.6%
8
17.4%
21
answered question
121
skipped question
100
Request from European customers / partners to enter Thailand Other (please specify)
13. How would you describe the outlook for growth of Thai economy within the next two years? Response
Response
Percent
Count
Optimistic
50.2%
102
Neutral
43.8%
89
Pessimistic
5.9%
12
answered question
203
skipped question
18
7 of 15
14. How would you describe the outlook for growth in your sector in Thailand within the next two years? Response
Response
Percent
Count
Optimistic
67.0%
136
Neutral
24.6%
50
Pessimistic
8.4%
17
answered question
203
skipped question
18
15. Is your company considering any major new investments in the next two years? Response
Response
Percent
Count
Yes in Thailand
37.9%
77
Yes in ASEAN
45.3%
92
Yes, in the Rest of the World
19.7%
40
No
18.7%
38
answered question
203
skipped question
18
16. How would you expect the number of permanent positions of foreign people in Thailand to develop over the next two years? Response
Response
Percent
Count
Decrease
12.8%
26
Stay the same
52.2%
106
Increase
35.0%
71
answered question
203
skipped question
18
8 of 15
17. How would you describe the following aspects of your company in the next 6 months? Strong
Some
No
Some
Strong
Response
Improvement
Improvement
change
Decline
Decline
Count
Growth
19.2% (39)
57.1% (116)
5.4% (11)
0.5% (1)
203
Profitability
14.3% (29)
50.7% (103)
8.9% (18)
1.5% (3)
203
Sales
21.7% (44)
57.6% (117)
5.9% (12)
0.5% (1)
203
17.7% (36) 24.6% (50) 14.3% (29)
answered question
203
skipped question
18
18. How would you describe the following aspects of your company in the next 2 years? Strong
Some
No
Some
Strong
Response
Improvement
Improvement
change
Decline
Decline
Count
Growth
35.6% (72)
53.5% (108)
5.0% (10)
5.4% (11)
0.5% (1)
202
Profitability
28.7% (58)
50.0% (101)
7.4% (15)
1.5% (3)
202
Sales
37.9% (77)
51.7% (105)
5.9% (12)
1.5% (3)
203
9 of 15
12.4% (25) 3.0% (6)
answered question
203
skipped question
18
19. What is the main reason behind the changes in your business performance?
Increase/decline in customer
Response
Response
Percent
Count
68.5%
139
More/Less resources
17.2%
35
Exchange rates
9.9%
20
Rise/decline in production costs
17.7%
36
22.2%
45
16.7%
34
34.5%
70
11.8%
24
answered question
203
skipped question
18
base and market demand
Diversification from Competitors strategies Governmentâ&#x20AC;&#x2122;s planning and regulations Global economic environment Other (please specify)
20. What is considered to be the main opportunity for Thailand in the next 5 years?
AEC (Asean Economic Community) Free Trade Agreement (FTA) with Europe ASEAN Agreements with key trade partners (e.g. India, China) Service Liberalization Other (please specify)
10 of 15
Response
Response
Percent
Count
53.0%
107
44.1%
89
45.0%
91
19.8%
40
4.0%
8
answered question
202
skipped question
19
21. Have external problems affected your business in a negative way? Response
Response
Percent
Count
No
47.5%
96
Yes
52.5%
106
answered question
202
skipped question
19
Response
Response
Percent
Count
22. Country specific issue:
Poor logistic infrastructures HR issue (High cost, Lack of expertise, Foreigners limitation, etc) Public Institution/political instability Lack of transparency and corruption Other (please specify)
11 of 15
12.6%
13
55.3%
57
62.1%
64
53.4%
55
19.4%
20
answered question
103
skipped question
118
23. Global economy: Response
Response
Percent
Count
European Crisis
84.6%
77
China Slowdown
14.3%
13
USA Slowdown
39.6%
36
5.5%
5
answered question
91
skipped question
130
Other (please specify)
24. What is your company's first priority for the next twelve months in order to realise cost reduction objectives? Response
Response
Percent
Count
Reduce procurement costs
41.3%
83
Reduce headcount
8.0%
16
Reduce rental expenses
10.0%
20
Subcontracting and outsourcing
21.4%
43
19.4%
39
answered question
201
skipped question
20
Other (please specify)
12 of 15
25. What is your company's first priority for the next twelve months in order to increase revenue/profitability? Response
Response
Percent
Count
Increase sales activities
35.3%
71
Acquire new customers
33.8%
68
Increase marketing
10.0%
20
Offer new services
16.4%
33
4.5%
9
answered question
201
skipped question
20
Other (please specify)
26. How do you evaluate the Thai Government/authorities in relation to your business:
Current political situation and outlook Policy and regulatory environment Regulatory enforcement and implementation
Support to investors
Very
Somewhat
positive
positive
Somewhat
Very
Response
negative
negative
Count
3.1% (6)
19.4% (38)
48.5% (95)
24.0% (47)
5.1% (10)
196
3.1% (6)
12.2% (24)
41.8% (82)
37.2% (73)
5.6% (11)
196
1.5% (3)
8.2% (16)
50.5% (99)
32.1% (63)
7.7% (15)
196
4.6% (9)
16.0% (31)
18.6% (36)
8.2% (16)
194
13 of 15
Neutral
52.6% (102)
answered question
196
skipped question
25
27. How do you evaluate the work of the Chambers of Commerce/EABC to support to your business? Response
Response
Percent
Count
Supportive
45.4%
89
Need some improvement
24.5%
48
N/A
30.1%
59
answered question
196
skipped question
25
28. In which areas would the support from the Chambers of Commerce/EABC be beneficial for your company?
Dialogue with authorities/advocacy Intelligence database, study, analysis Business advisory services Business matching, networking opportunities Trade fairs, road shows Other (please specify)
14 of 15
Response
Response
Percent
Count
51.0%
100
37.2%
73
24.5%
48
48.0%
94
25.0%
49
7.7%
15
answered question
196
skipped question
25
29. Please leave your email or phone number for us to contact you for the prize delivery. Your contact information will not be shared with anyone nor used for any other commercial purposes. Response Count 175
15 of 15
answered question
175
skipped question
46