Thailand - Country Commercial Guide
Selling Factors and Techniques

Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.

Last published date: 2021-08-16

Overview

Price, quality, and availability of service are the key selling factors in Thailand. In addition, relationships are also significant in selling products and services in Thailand, especially to the government. Therefore, U.S. suppliers are strongly encouraged to seek partnership with a local agent or distributor and provide training for marketing and the technical support staff as the basis for successful market entry and expansion in Thailand.

Trade Promotion & Advertising

In 2020, total media spending in Thailand was estimated to reach approximately $2.4 billion lead by TV advertising ($1.25 billion) and digital advertising ($677 million). According to the Digital Agency Association in Thailand (DAAT), total industry spending slowed down in 2020 due to the Coronavirus pandemic. The top five industry sectors spending in advertising include motor vehicles, non-alcoholic beverages, communications, skin-care preparations, and dairy products. Thailand’s media spending outlook is expected to grow less than 5 percent to $2.5 billion in 2021.

According to the Electronic Transactions Development Agency (ETDA), Thais spent almost half of the day on the internet on average in 2020, largely due to COVID-19. Health measures such as working from home and social distancing requirements were the key factors causing people to engage in more online activities to avoid face-to-face interactions.

Thailand has almost 70 million people, with 94.3 million unique mobile subscribers which represents a penetration rate of approximately 135 percent of the total population. As of January 2021, there were 55 million social media users in Thailand and the penetration number for social media users is estimated at approximately 79 percent of the total popoulation. According to the Thailand Internet User Behavior report 2020, the top three social media platforms include Facebook (98%), YouTube (98%), and LINE (96%). The number of social media users in Thailand is expected to reach 62 million in 2025.

The top three popular internet activities are watching videos online at 98 percent, streaming TV content at 53 percent, and playing online games at 36 percent. In terms of social media advertising audiences, the top three active audiences are Facebook (56 million users), Instagram (16.4 million users), and Twitter (7.5 million users). The top three e-commerce activities are searching online for a product or service (90%), visiting an online retail store (85%), and purchasing a product online (82%). More than 69 percent of Thai internet users made an online purchase via a mobile device, according to the digital report by the “we are social” website.

Commercial promotions are an equally important marketing tool for both consumer and industrial products in Thailand. Consumer trade promotion in Thailand is frequently conducted by using gift premiums, discount coupons, or drawings for items such as package tours, cars, or electrical appliances. Consumer trade promotion events are frequently held in supermarkets and shopping malls. Exhibiting firms repeatedly take part in these events because the cost of attending is much lower than participating in a privately organized trade fair. The Department of Trade Promotion in Thailand frequently holds industry exhibitions to promote Thai exports to international buyer audiences during “trade days” and increases domestic awareness by staging “public days” at such fairs. Trade events will become hybrid events after the recovery from the pandemic, as more virtual or live streaming for content events and seminars are likely.

Industrial product promotion, on the other hand, varies from industry to industry. The two most efficient methods of promotion for industrial products are trade exhibitions and the placement of advertisements on social media. Trade fairs with an industry focus serve as a screening tool since exhibitors can be certain they will have access to the appropriate group of customers. The Commercial Section at the U.S. Embassy in Bangkok maintains a list of suggested industry events staged in Thailand as well as U.S. Pavilions at local events and trade missions. This information is also published on the web in English at Commercial Service Thailand. It is advisable to localize all product literature and technical specifications when advertising in trade journals, participating in trade shows, or organizing technical seminars. Successful firms also arrange for their agents to receive specialized training at offices or factories in the United States.

Pricing

The market in Thailand is open and very competitive. U.S. firms should study factors such as the channels of distribution, necessary sales and promotional techniques, and the current pricing practices of key competitors. Standard credit payments apply in Thailand as well.

Importers of large equipment or machinery charge a commission of 5–10 percent and allow their customers to open a letter of credit themselves. Manufacturers or wholesalers normally receive a 5–10 percent profit margin. Retailers and distributors of local products require a 25–35 percent margin. There is also a seven percent VAT charge on consumer goods.

Thai consumers are very price-conscious. In fact, less than half of Thai consumers report buying based on brand-name recognition, and first-time buyers often buy on price alone. Consumers are often offered free gifts or extra options with their purchases. In addition, midnight sales and one-off promotions have proven to be quite successful. Retailer’s pricing depends on the product and the frequency of turnover. In general, the margin structure is as follows:

  •  Discount Stores                                                           8-10%
  • Department Stores                                                       40%
  • Manufacturers or Wholesalers                                   5-10%
  • Distributors of Local Products                                   10-15%
  • Direct sale of specialty products                               60-80%
  • Direct sale of general products                                  40% maximum
  • Importers of large equipment or machinery           5-10%
  • Importers of luxury products                                      60% minimum

Sales, Service, Customer Support

Training, post-sales service, reliable customer support, and the availability of spare parts are the most important factors cited by Thai customers in evaluating services related to their purchasing decisions. These factors are especially important when marketing industrial products. Buyers seek a quick turnaround time on their requests for technical assistance and expect such service to be provided by reliable suppliers. If a local branch cannot provide the service, suppliers should be able to acquire support from overseas branches. Spare parts should also be available in a timely manner.

Better support and post-sales service have placed U.S. suppliers in a better position relative to Asian competitors that provide lower-priced products. Thai customers generally have high confidence in U.S. suppliers due to their well-trained service and support teams, availability of manuals, and willingness to modify product offerings. Some Thai buyers would rather invest in higher quality, more expensive products in order to save expensive maintenance costs following warranty expirations.

Suppliers of products that have complicated technologies should hire and train a Thai team of highly qualified and experienced technical people as well as provide technical training to their customers. It may also be advisable to set up a customer help desk. High-end Thai customers usually consider quality, service, and price when purchasing products. A well-trained, post-sales service team can increase the possibility of repeat orders from satisfied customers. In addition, Thai customers appreciate receiving periodic technical updates and information from their suppliers. Often, engineers or specialists are sent by U.S. firms to stay for extended periods in Thailand to conduct larger-scale training for large employee groups who will operate new equipment.

Since sending engineers and technicians for training or customer service can be costly for local end-users, it is advisable for U.S. suppliers to appoint a qualified partner who can provide customers with quality services in the Bangkok area and elsewhere. Major suppliers note that competitive pressures and slim margins have led them to place a high priority on service and support in order to retain existing customers and gain new ones. Positive word of mouth from customers can increase the supplier’s reputation and sales volume. Conversely, bad service can severely hamper a company’s chance of increasing sales in the Thai market.

Local Professional Services

The Foreign Working Act of 2008, The Royal Ordinance Concerning the Management of Employment of Foreign Workers of 2016, 2017, and Foreigner’ Working Management Emergency Decree 2018 require all foreigners working in Thailand to obtain work permits prior to employment in Thailand except for these eight categories. In addition, permit holders must have prior permission to change their occupation or place of work. Change of employer location, or the residential address of the permit holder, must be properly endorsed in the work permit by the labor authorities. The Foreign Working Act does not prevent a foreigner from engaging in work in more than one field for more than one employer.

The Royal Decree has been subsequently amended on several occasions. The Department of Employment released the summary of the draft Royal Ordinance Concerning the Management of Foreign Workers’ Employment latest update in 2017.

The Ministry of Labor has additional information on guidelines for employing workers in Thailand.

Principal Business Associations

The American Chamber of Commerce in Thailand (AMCHAM)

AMCHAM Thailand has a membership of over 650 organizations and over 2500 professionals. Its membership includes companies, non-profit organizations, and individuals. AMCHAM member companies have invested over $50 billion in Thailand and provide more than 250,000 local jobs. AMCHAM has over 25 committees that cover a wide spectrum of commercial and industrial business activities, as well as the Chamber’s social and charitable functions. Each committee serves as a forum for discussing common interests and issues, as well as for taking initiative and action.

The US-ASEAN Business Council (USABC)

The USABC is a leading advocacy organization for U.S. corporations operating within the Association of Southeast Asian Nations (ASEAN), serving as a key voice of the U.S. private sector in promoting mutually beneficial trade and investment relationships between the United States and Southeast Asia. The Council represents over 150 of the largest U.S. corporations.

The Federation of Thai Industries (FTI)

The FTI, established in 1967, is a private-sector organization that brings together industry leaders to promote Thailand’s socio-economic development. The main objectives of FTI are to represent Thai manufacturers at both national and international levels, to help promote and develop industrial enterprises, to work with the Thai government in developing national policies, and to offer consulting services to members.

The Thai Chamber of Commerce and Board of Trade of Thailand

The Thai Chamber of Commerce acts as a primary organization for providing recommendations to develop the economy for the government and related authorities. In addition, the Thai Chamber of Commerce is a representative of the Thai private sector in facilitating cooperation with governmental and private institutions in foreign countries.

International Chamber of Commerce (ICC)- Thailand

ICC Thailand is an ICC-sanctioned national committee. This national organization is comprised of leading companies and business associations in Thailand. ICC Thailand has three main activities – rule setting, dispute resolution, and policy advocacy.

Limitations on Selling U.S. Products and Services

According to the Foreign Business Act (FBA) of 1999, certain types of business activities are reserved for Thai nationals only. Foreign investment in those businesses must be comprised of less than 50 percent of the share capital unless specially permitted or otherwise exempt.

The following lists, attached as annexes to the FBA, detail restricted businesses for foreigners:.

List 1: The following list contains activities prohibited for non-nationals, including:

  • The Press, radio broadcasting stations, and radio and television station businesses
  • Rice farming, plantation, or crop growing.
  • Livestock farming.
  • Forestry and timber processing from a natural forest.
  • Fishery, only in respect of the catchment of aquatic animals in Thai waters and specific economic zones of Thailand.
  • Extraction of Thai medicinal herbs.
  • Trading, auction, and sale of antique objects of Thailand or objects of historical value.
  • Making or casting of Buddha images and monk alms-bowls.
  • Land trading.

List 2: The following list contains activities related to national safety or security, or those which affect arts and culture, tradition, folk handicrafts, or natural resources and the environment. Among other things, they include:

  • The production, sale, and maintenance of firearms and armaments.
  • Domestic transportation by land, water, and air.
  • Trading of Thai antiques or art objects.
  • Mining, including rock blasting and rock crushing.
  • Timber processing for production of furniture and utensils.

Remark: A foreign majority-owned company can engage in List 2 activities if Thai nationals or legal persons hold not less than 40 percent of the total shares, and the number of Thai directors is not less than two-fifths of the total number of directors.

Exceptions exist for companies that receive the following:

  • Permission from the Minister of Commerce with approval by the Cabinet (if there is a reasonable cause, the Minister, with the approval of the Cabinet, may reduce the Thai shareholding requirement, which cannot be less than 25% of the total shares).
  • Investment promotion from the Board of Investment.
  • Authorization by the Industrial Estate Authority of Thailand.
  • Permission under a treaty to which Thailand is bound.

List 3: The following list contains activities in which there are economic protections for Thai nationals. Among other things, they include:

  • Accounting, legal, architectural, or engineering services
  • Retail and wholesale
  • Advertising businesses
  • Hotels.
  • Guided touring
  • Selling food or beverages
  • Any kind of service business

There are exceptions to List 3 that exist for companies that receive the following:

  • Permission from the Director-General of the Department of Business Development at the Ministry of Commerce, with approval by the Foreign Business Committee, on obtaining a Foreign Business License.
  • Investment promotion from the Board of Investment or from the Industrial Estate Authority of Thailand, on obtaining a Foreign Business Certificate from the Director-General of the Department of Business Development at the Ministry of Commerce.
  • Protection under a treaty or obligation to which Thailand is bound, including the U.S. Treaty of Amity and Economic Relations (please see below for further information on the U.S. Treaty of Amity and Economic Relations); the Thai-Australia Free Trade Agreement (TAFTA); Japan-Thailand Economic Partnership Agreement (JTEPA); and ASEAN Framework Agreement on Services (AFAS). Each of these agreements and treaties allows companies to obtain a Foreign Business Certificate from the Director-General of the Department of Business Development at the Ministry of Commerce.

Further restrictions on foreign ownership in specific sectors, such as telecommunications, banking, and insurance, are regulated in specific laws pertaining to these sectors, such as the Telecommunications Business Act (2006), the Financial Institution Business Act (2008), the Life Insurance Act (1992), and the Non-Life Insurance Act (1992).

The U.S.-Thai Treaty of Amity and Economic Relations of 1833

Commonly referred to as the “Treaty of Amity,” the U.S.-Thai Treaty of Amity and Economic Relations of 1833 creates a special economic relationship between the United States and the Kingdom of Thailand that gives special rights and benefits to U.S. citizens who wish to establish their businesses in Thailand. The Treaty of Amity was amended in 1966 and provides two major benefits:

  • American companies are permitted to be a majority shareholder or to wholly own company or branch offices in Thailand.
  • American companies receive national treatment, meaning U.S. firms may engage in business on the same basis as Thai companies and are exempt from most of the restrictions on foreign investment imposed by the Alien Business Law of 1972.

Despite the Treaty of Amity, there are still certain restrictions on U.S. investment. Those restrictions are as follows:

  • Owning land
  • Engaging in inland transportation and communication industries
  • Engaging in fiduciary functions
  • Engaging in banking involving depository functions
  • Engaging in domestic trade in indigenous agricultural products
  • Exploiting land or other natural resources

The Commercial Section at the U.S. Embassy in Bangkok is responsible for issuing a certification letter to confirm the applicant is qualified to apply for protection under the Treaty of Amity and Economic Relations of 1833. The applicant must first obtain documents verifying that the company has been registered in compliance with Thai law. Upon receipt of the required documents, the Commercial Section will then certify to the Thai Department of Commercial Registration in the Ministry of Commerce that the applicant is seeking to register an American-owned and managed company, or that the applicant is an American citizen and is therefore entitled to national treatment under the provisions of the Treaty. For more information on how to apply for protection under the Treaty of Amity, please e-mail: office.bangkok@trade.gov.