Thailand Market Entry

Thailand Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

The high level of trade liberalization in Thailand makes it possible to implement all forms of trading: through representatives, intermediary companies, direct trades with wholesalers and trades with retail sellers. With regard to the efficiency of business transactions, it is possible to recommend the use of local representatives familiar with the local environment. This form of cooperation, common when doing business with Asian partners, has also proven itself for Czech companies that have been operating in the territory for a long time. Without a connection with such a “strategic partner”, conducting business transactions is very tedious, often unsatisfactory and ultimately unsuccessful. To search for potential business partners, it is possible to use a network of official sources, e.g. lists of exporters and members of the Thai Chamber of Commerce, the Federation of Thai Industry, the KOMPASS Thailand catalog, etc. Check smber for agriculture and fishing facts of Thailand.

Thailand’s foreign trade is largely liberalized and meets the usual international standards. However, some areas and commodities are subject to state regulation and control.

Import regulation

It is prohibited to import:

obscene objects/literature/images, pornographic materials, goods with the Thai national flag, narcotics, fake banknotes, coins and bonds, fake royal/official seals, fake goods infringing intellectual property rights, fake trademarked goods.

The following items are subject to import regulation:

Medicines, foods and dietary supplements require prior licensing by the Ministry of Health’s “Food and Drug Administration (FDA)”.

Antiques and works of art require a Fine Arts Department permit.

Arms and ammunition, explosives, pyrotechnics and replica firearms require permission from the Ministry of the Interior. Some other weapons, such as electrical protective equipment, also require a permit.

Cosmetics require the importer to state their address, places of product production and storage, category, etc.

Wild animals, flowers, fish and other aquatic animals require a permit from the Department of National Parks and Wildlife Conservation, or authorities of the Ministry of Agriculture and Fisheries.

Protection of the domestic market

Thailand protects its market, or domestic producers (and also consumers), relatively high customs burden and, on some items, an accompanying excise tax. Another form of protection is requirements for import licenses, product labeling, examinations, testing and certification. Processes related to taking steps to grant said permits, licenses, certifications, etc. can become a significant trade barrier with regard to the costs, length and extensiveness of the entire import approval process. At the same time, confidential information related to production etc. may be requested.

Forms and conditions of operation on the market

Under Thai law, the following forms of business organizations can be formed:

– Limited Liability Company

– joint venture (Joint Venture)

– Sole Proprietorship

– limited partnership (Partnership)

– branch office (Branch Office)

– representative office (Representative Office)

– regional office (Regional Office)

The most common and simplest form is a representative office.

Although there are clear rules for creating them, there are often different interpretations by local institutions, which has an impact, for example, on required payments of taxes, insurance, levies, etc. It is therefore recommended to hire a local consultancy or law firm to handle all formalities smoothly.

Detailed information on the conditions for setting up a business in Thailand can be found on the website of the Thai Board of Investment (Board of Investment).

Marketing and communication

In Thailand, all sales techniques common worldwide can be used.

The level of trade liberalization and the meeting of global competition in the Thai market create prerequisites for their effective functioning. An important role in the process of introducing new products to the market is played by multimedia and by means of the company’s promotional events.

However, the cited means of promotion are very financially demanding. Therefore, Czech companies usually have to turn to traditional means such as exhibitions, advertising, catalog presentations and, of course, last but not least, use personal contacts with potential customers and representatives.

An overview of major trade fair and exhibition events in Thailand can be found on the following websites:

www.thaitradeshow.com

www.thaitradefair.com

Issues of intellectual property protection

Although in Thailand the protection of intellectual property rights is guaranteed by law (Copyright Act), in reality the enforcement rate is quite low. The reason is not only the relatively low standard of living of the majority of the population, i.e. a large part of smaller producers and sellers violating the law in question, but also corruption, which is not an unusual phenomenon.

The issue of protecting intellectual property rights is one of the fundamental topics that the EU Delegation in Bangkok has been dealing with for a long time.

Public procurement market

The main contractors of public contracts are state enterprises in the fields of energy, transport, water management, the environment, education and municipal services. Public contracts are published in the form of tenders, in which foreign companies can also apply, if the conditions of the tender allow it. A large part of the tenders is published simultaneously with the condition that only entities with local registration can participate in the tender. In practice, foreign companies without a local “strategic partner” usually have no chance of succeeding in such tenders.

In accordance with the liberalization of trade in Thailand, the so-called state programs for the development of individual sectors of industry and services are gradually being abandoned, and specific assignments and implementation of projects are awarded to private entities. A common form of concrete participation of companies are BOO (Build-Own-Operate), BOT (Build-Operate-Transfer), or BOOT (Build-Own-Operate-Transfer) combination projects.

Payment terms, payment ethics and resolution of commercial disputes

Generally speaking, there are relatively few commercial disputes in Thailand compared to other countries. This follows from the experience of most foreign partners who do business with Thai companies for a long time, which requires building a solid personal relationship between representatives on both sides of the business.

Officially, business disputes can be resolved through court or arbitration proceedings. Arbitrations are generally shorter, more flexible and therefore cheaper. In the case of a court process, you need to be prepared for its long duration (often over a year depending on the difficulty) and the relatively high costs associated with the need to use the services of local law firms.

The risks of the local market are not significantly different from normal business risks in other developed markets. For the Czech business sector, this means in particular the necessity to check the liquidity of the business partner. Under the given situation, a confirmed irrevocable letter of credit appears to be the most suitable payment instrument for the implementation of unit deliveries. Local banks and businesses are used to this payment tool and it usually works without problems. In the case of a loan, a guarantee from a trusted Thai bank is required, or guarantee of a reputable foreign bank. In general, it can be said that the payment morale of Thai companies is good, although even here there are understandably cases of insolvency or delays.

For each business case, when entering the local market, it is necessary to have a properly drafted relevant contract document that will deal with all business and investment risks with the Thai partner. In this context, it is recommended to use the services of local consulting and legal firms.

Visas, fees, specific conditions for traveling to the territory

Important notice (!) – due to unpredictable changes in entry/transit regimes, we recommend contacting the Thai embassy or consulate before each planned trip and verifying that the information below is up-to-date.

Czech tourists can travel to Thailand without a visa. To enter the country, however, it is necessary to present the so-called Thailand Pass / Thailand Pass Registration System (for air travel only) – ( www.consular.go.th ), a valid travel document, the validity of which is more than 6 months at the time of entry, and at the same time also prove sufficient health insurance and financial resources. A return ticket is also required.

The maximum permitted period of stay without a visa is 30 days, when using land border crossings only 15 days. The permitted period of stay can be extended in exceptional cases (e.g. hospitalization or other serious reasons). When re-entering the country, the sum of all stays in 6 calendar months must not exceed 90 days.

For other purposes of entry and stay or for entry for the purpose of tourism with a stay exceeding 30 days, a visa must be applied for. Visas for the purpose of doing business in Thailand can only be obtained at embassies or consulates of Thailand abroad.

It is also possible to apply for a multiple-entry tourist visa at the embassies and consulates of Thailand. The issuance fee is set at THB 5,000. The visa can be valid for up to six months, during which time the visa holder can re-enter Thailand and each of the stays during the validity period can last up to 60 days. When using this type of visa, it is recommended that at passport control upon entry into Thailand, the relevant official should be informed of the visa in the passport and immediately afterwards check that the length of stay has not been mistakenly set at the standard 30 days with a single entry; in the event of an error, it is advisable to request immediate correction.

Holders of diplomatic and service passports of the Czech Republic do not need a visa.

Employment of citizens from the Czech Republic

Like any administrative act in a foreign country, obtaining a work permit in Thailand is a very complicated process for foreigners and therefore for Czechs as well. It is generally recommended to complete the entire procedure in cooperation with a legal office.

Work permit

Czechs (foreign nationals) can work in Thailand only after receiving a Work Permit. Therefore, those who plan to work in Thailand should apply for a work permit well in advance.

The first step is to apply for a visa (non-immigrant type). Applicants apply for a visa at Thai embassies and consulates abroad and should be prepared that the conditions for obtaining a work visa are relatively strict. A large number of documents may be required when applying for a visa. A specific list of required documents can be requested from the relevant Thai embassy or consulate. These are usually all documents related to the company in which the person wants to work (extract from the commercial register, sworn declaration, list of shareholders/participants, certified financial statements, certified written company income tax return, list of company employees who are foreign nationality, focus of the company and its headquarters marked on the map, etc.).

In addition, the applicant must secure a so-called “Letter of Acceptance” issued by the Thai Ministry of Labor and Social Affairs. A Czech job seeker should receive this letter from his future Thai employer before submitting his visa application.

Long-term visa

Once the applicant receives a non-immigrant visa and work permit, upon arrival in the country it is necessary to apply for a long-term visa valid for one year (before the original visa expires) at the Immigration Office or at a one-stop service center for visas and work permit (One Stop Services Center for Visa and Work Permit) for applicants with professional qualifications, or in the visa center at the Office of Foreign Workers Administration (Visa Center at the Office of Foreign Workers Administration). An immigration officer will likely only extend a first-time applicant’s visa for another 30 days.

You must return to the immigration office in good time to verify your status. The official will probably extend the visa for another 30 days if it is during the waiting period for the annual visa.

Fairs and events

As standard, a number of exhibitions and fairs take place throughout the year in Thailand, especially in Bangkok (IMPACT Arena, BITEC, etc.).

The current list of exhibitions and fairs can be found on the websites of the main Thai fairs, respectively. fair organizers:

www.thaitradeshow.com

www.thaitradefair.com

We also recommend following the website of the Embassy of the Czech Republic in Bangkok, where information is provided on upcoming embassy presentation events in which Czech companies can participate.

Currently, all trade fair activities in Thailand are still partially affected by the fading Covid-19 pandemic, but the situation is improving.

Thailand Market Entry