Thailand – Bangkok, Thailand – Guide to doing business in Thailand – read this first!…

Jul 22, 2012 4 Comments by

Thailand – Bangkok, Thailand – Guide to doing business in Thailand – read this first!…

by The Guru

I lived and worked in Thailand for many years and I want to share my insights with you on doing business there.  As with most things in Thailand (LOS – Land Of Smiles), things are not always what they seem…

Thailand appears at first glance the most accessible of Asian countries which is why so many westerners choose to holiday there and often make their home there.  However, the culture and mentality can be very different so I will guide you through my top 10 tips for situations you may encounter…

There is a saying I have:

A holiday in Thailand is wonderful, living in Thailand is great but working in Thailand is a nightmare!

This is true but there is an obvious advantage to having an income here to fund the lifestyle you seek so we will see what we can do to steer you in the right direction.

In no particular order, here are the top ten things you HAVE to know about doing business in Thailand.  Although each experience is different, there are some common unwritten rules:

Suitable Businesses – Thailand has strict laws about what you can and cannot do.  The list of prohibited employment is long and odd and a few notable entries are mining, forestry, taxi driving, cooking and bar work.   The first three probably do not appeal anyway though some do try the third!  However, you might ask how you are supposed to own a restaurant or bar if you cannot work in them?  Good question… !  I will return to that later on.

Thailand - Bangkok, Thailand - Guide to doing business in Thailand - read this first!...

In the meantime, the best bets for work for foreigners here are as follows:

low wages (teacher, bar manager, junior real estate agent, call centre operator),

mid-level wages (general manager in hotel, graphic designer, IT programmer )

and high wages (professional services – accountant, lawyer and similar).

Of course you never get rich anywhere in the world by working for others so you will probably want to set up your own business if you have some capital.  The top options for this are real estate, property development, hotel ownership, franchised businesses and online websites/portals.  These are where the real money is made if you are the right person in the right place at the right time with the right help.

By this I mean that Thailand is no easier than anywhere else to do business – in fact it is a lot harder -but you do have potentially higher rewards and the lifestyle is hard to beat if are successful.  But you do need to be in the right place at the right time and so opening yet another bar in the same Soi where others are struggling as a recession kicks in is not a great move.  Ideally you need a recession-proof business like an online business with low overheads or a business you can move to different markets easily and adapt.  Finally you need help and so a partner or franchisor to teach, support and guide you are more important here than anywhere else.  In fact some of the most successful businesses here are franchises!

Check First – Always check the background of a business you are buying or the person you are dealing with.  There are some very disreputable Thai business people here and even more untrustworthy foreigners!  Many seem to either see Thaialnd as the place to come to cheat because they think the rules are more relaxed (they are not but they are just more difficult to enforce as a foreigner) or they come here with good intentions but gradually adopt local shoddy business ethics.  The key is to check things and see what you are getting for your money.  If it is physical, inspect it; if a service or online business, see the existing offering at work.

Contracts – In my previous business life I was cheated by around one in ten people.  In Thailand I would reverse those statistics – it really is that rough out here!  Finding someone trsutworthy in Thailand is tough…

But you should not be put off – the key is to plan and be careful.  A good contract is a great way to start as all legal disputes here start and end with the contract (… killing – only joking!).  Not just the purchase of the business or franchise depends on the contract but all dealings with suppliers, partners and staff.  Suppliers are a particularly tough relationship as they nearly always demand half the payment up front, then either run off or present you with an extra bill at the end for extra work you never agreed the price for.  This is very common and very unprofessional.  Again, put a simple contract in place that covers you and puts penalties against them not you!

Thailand - Bangkok, Thailand - Guide to doing business in Thailand - read this first!...

With partners and staff, get local legal advice as the rules are very particular regarding rights on splits etc but make sure you are protected.  Everyone smiles here and pretends to be very laid back but you do not need to believe that or be that way yourself.  You can be professional.  There is a strong community of ethical business people centred around Bangkok but it takes time to meet them and the further you go from Bangkok, the less of them there are although they do exist.  A forum is a good place to meet others for advice but before and not after you have signed the contract…

Lawyers – Sadly, there is a real problem here with lawyers as there is no code of conduct they have to adhere to.  They have to be Thai to practise so any foreigner will only be the company owner or manager apart from the big international firms which get special dispensations to trade in an advisory capacity.  You are therefore left with paying international prices to an international firm or using a smaller local firm.  There are good local ones but many bad ones and I cannot stress strongly enough to check around and get referred.

Thailand - Bangkok, Thailand - Guide to doing business in Thailand - read this first!...

Accountants – These are another issue similar to lawyers.  Only Thais can work in the profession but foreigners do get to work in larger firms with Thai staff who sign the final paperwork.  These prices are high and the other common option is local one man band firms which are cheap but very variable in quality of work.  There are a handful of smaller firms that fit the middle road but you need to seek them out carefully.

Staff – Staffing is the single biggest headache in Thaialnd as it is elsewhere but here it is worse!  They will be late, slow and much worse in any business you operate and no matter how hard you try to teach them, help them and incentivise them, they will just leave one day with no notice and for no reason.  Thais don’t like work, full stop, and only do it for the money – careers are rare.   However, you will need some staff at some point so do your best, be patient and you will find the few good apples who will bring their friends especially if you pay over the odds.

Thailand - Bangkok, Thailand - Guide to doing business in Thailand - read this first!...

Premises – You are not allowed to own property in your name apart from a condo and unless you have an online business which is perfect to run from there you will need premises in the form of an office for staff or a commercial site for your bar, restaurant or shop.  It is unlikely that you will buy freehold as prices are very high in popular locations and then you have the problem of how to ‘own’ it…  So be very careful with the lease details as you will find there are some odd customs amongst Thai and Indian owners who want to get your money at all costs.

One is the use of ‘key money’.  This is essentially just an extra payment for no reason but loosely resembles a ‘premium’ payment in the west.  The only difference here is that it can be so high as to make the rent almost negligible and rather than being a one-off payment it can be demanded every year or even quarter!  The other common trick is with bars and restaurant leases.  The owners take no interest in their upkeep and then you arrive and are impressed with the low rent.  Ok, there is key money but you think it is a one-off.  You sign the lease for one year and they promise they will renew it and say so in the contract.  You spend a small fortune on the place and it does well then after the first year they offer to renew the lease but at a far higher rent and higher key money.  Most tenants leave and the owners get a nicely renovated property to rent for far more to the next tenant.

If they stay, they keep paying higher and higher rents till they go out of business.  Arguing will get you nowhere but the owners then repeat the process…

Regulations – Whatever anyone tells you to the contrary to try to defend the immigration and labour rules in Thailand, they are designed to be as difficult as possible for foreigners to stay here and earn money.  They could not be any more difficult if we sat down and started from scratch!  Living in Thailand for more than 3 months at a time requires a visa and regular renewal.  Retirement requires a retirement visa and proof of savings or income from abroad, not here as you cannot work with a retirement visa.  Working requires holding one of the type B or similar visas and then getting a work permit.

Thailand - Bangkok, Thailand - Guide to doing business in Thailand - read this first!...

The work permit allows you to do certain things but not the things on the forbidden list so you can have a bar but not serve a drink behind it, have a restaurant but not cook, take orders or serve the customers.  You are only allowed to be ‘teaching’ Thai staff to do the job and to hold your work permit you need to be seen to employ 4 Thai staff for each permit.  It gets worse but I have no space here to elaborate.  It is just a continual struggle to justify your existence and then you have to report every 90 days to immigration and you are called an ‘alien’ on all paperwork!  Lovely…

Disputes
– Disputes occur in everything in life and so be prepared for some here.  The local law is reasonably fair at considering foreigners’ claims but they take a low level of interest in a foreigner-foreigner bitter dispute as it is not in their interest to sort anything out.  The police are notoriously slow and only work for a ‘tip’ so the advice you should heed is try to avoid disputes at all costs and if you do have one, hire the right influential Thai lawyer with the right connections.

Be Careful.jpg

Be Careful – Overall, just take greater care than you would in your home country is my advice but do not be put off – don’t let them win!  There are many success stories but many sad losses also so the key is to plan well, trust no-one at first, don’t believe anything that is too good to be true and have the right support.   Friends and support will come gradually as you gain a reputation for being honest.

Thailand is a wonderful country and having an income here helps as money gives you lots more options.  Some businesses are easier than others and I hope these tips help…

If you have any experiences or disagree with my take on things, LET ME KNOW!

The Guru

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Asia, bangkok, thailand

About the author

I have traveled and lived all over the world - 95 countries and counting! I have information you can't find elsewhere and I share it here to promote healthy discussion about the world's people and cultures.

4 Responses to “Thailand – Bangkok, Thailand – Guide to doing business in Thailand – read this first!…”

  1. Frank Austin says:

    I am heading off to Thailand next summer and it bothers me that all I read online seems to be a negative reports of business in Thailand. I mean if I google business, everyone is warning me nit encouraging me!

    Do you think it is really that tough there?

    Thanks

    Frank Austin

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    • The Guru says:

      Hi Frank

      Firstly thank you for reading this blog.

      Well, I would say this. I traveled all over Asia for 9 years and worked and lived in Thailand for most of those. I would now not go back and try to do business there personally. Why? the level of crime and deception is enormous compared to other countries and is not for me.

      One example – if you pen any sort of business you need to sign literally inches and inches of stacked papers – a signature here, one there on each page. it takes hours but the worrying thing is that it is ALL written in Thais which you will not be able to read and secondly, many pages will be simply blank. YOu will be told, “oh, we fill that in later”….

      Still not worried?

      The point is that you can be fine IF you have someone you can trust but what if you have just signed away your lifesavings to the lawyer? You have no redress….

      The main purpose of this site is to compare countries and peoples so ask your self where else in the world this happens – I can’t think of anywhere readily. I am in Mexico now and it is far from transparent but nothing like that would be expected of you.

      I hope this helps.

      The Guru

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  2. Jenny Davis says:

    To Frank and others asking here, my advice is to go and see for yourself but tread very carefully indeed. As The Guru says, it can be very risky. I lived there for 10 years and saw a lot of problems caused by naive entrepreneurs not respecting local culture!

    Go slowly.

    Jenny

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