Business in Thailand - Invest or Not?
Investing in any business, anywhere in the world is a risk and in the current economic climate, this fact is more than valid.
The old adage about only ever investing as much as you can afford to lose has never been truer, and investing in Thailand is certainly no exception.
But there are factors, both good and bad which make Thailand different.
I was told by the MD of a civil engineering company that Thailand was the most difficult place he had ever encountered, from a 'doing business' point of view.
His previous experience included several small states in Africa including Somalia, so that gives an indication of the difficulties here.
That has to be countered with the positive, entrepreneurial side of the country, where ventures can get going quickly, and as long as you are willing to put in the effort, then that venture will have a fair chance of being successful.
The rules governing foreign ownership and investment are enough to make many people shirk away from the idea.
The most obvious is the rule that says a foreigner can only own 49% of a company operating in Thailand, and the remaining 51% has to be Thai owned.
This applies to all countries except the United States since there was an agreement back in the 1920's offering the US exemption from that rule.
Employment of foreign nationals is another one. This is a pro rata system where by for every four Thai nationals, one foreigner is allowed to work, with a work permit.
There's the rule about company capital, visas, permits and a whole host of minor requirements, which mean the first stop for any serious investor is a good Thai lawyer, or one who knows Thai legal law inside out.
There are plenty about, but some are better than others - they all claim to know the legal aspects of company ownership, but some are just after your money. Nothing new there then.
Perhaps the most difficult aspect of doing business and being successful, outside of the expatriate community, is the 'Thai Way'.
As an investor/business partner in a marketing company I was heralded as a new beginning for a company.
However I also had a Thai business partner who had absolutely no intention of doing international business.
I was paraded around 'friends' to be introduced to people who spoke little or no English, and who appeared to be returning favors by meeting up and looking interested.
Unfortunately Thailand's business community is extremely insular, and without knowing people from school days, or whose family knows, this person, that person etc, the reality is that any attempts at trying to break into that clique are going to be met with resistance.
It all looks very nice and friendly on the surface, but that's as far as it goes.
If a foreign investor is willing to sit back and be a spectator, then that is probably a better option than trying to move within Thai business.
Leaving the actual workings of a company to the Thai shareholder will be far more profitable and less frustrating than hoping to 'make a killing' with new orders or to bring new business into a company.
Selling within the expatriate community, such as those In property, beer or financial services is one thing, but trying to sell a service product to a Thai business is quite another. In truth that is less likely to happen.
The language will always be a problem, and I sat in meetings for hours where not a word of English was spoken despite knowing that at least half of the people there could have translated for me.
Again, it's very frustrating and in some cases I have to say, downright rude. But that is the way it works in Thailand, and if a Thai business person doesn't want the foreigner to know what he or she is saying, they start talking in Thai (on the presumption that the foreigner would not have the language skills to understand).
Having a unique language is quite an advantage and is used regularly to get out of tricky situations.
This all looks as though the idea of being involved in Thai business is something of a nightmare, and there are probably as many who have worked their way around the problems as there are who have walked away.
Given a decent business partner who is willing to accept some new ideas and is willing to work as an equal as against someone who simply wants to 'show off', then it can be successful.
The ethics and principals of business in Thailand are just about the same as anywhere else, but the difference here is that those principals are easily bent and there is less transparency.
There are many stories where companies have had to delve to underhand techniques to progress, and I would say that is more prevalent here than in most business communities.
The need to do extensive and lengthy research is vital, and this is not just the due diligence on the company.
It also means checking out the history of your prospective business partner.
I found out things which had I known about earlier would have made me think again.
It may mean employing a security company or agency to research a person's history and business background, but at the end of the day, that will be money well spent. Tread carefully!