Sales & Services
Selling in Thailand – this is how it works!
At Sanet you will be advised by professionals with their in-depth sales expertise.
Sales thrives on experience. Sanet Advisors have not only gained decades of experience themselves as entrepreneurs in marketing and sales.
Moreover, for almost 20 years Sanet has helped countless companies from various sectors in investment and consumer goods industry to get on the right track in Thailand and ASEAN. The Thai-German team of Sanet deeply understands and connects the business culture of both Western companies and Thai partners.
Entrepreneurial mindset and an analytical approach are the Hallmarks of Sanet’s advisory services.
The ban on foreign-invested trading company
In Thailand, the Foreign Business Act prevents foreigners from trading or providing services under threat of criminal prosecution.
With this act, the Government is protecting both domestic traders and distributors, as well as domestic service providers.
An Exception is granted to trading companies that have paid-in capital of at least 100 Mio THB or receive a “Foreign Business License” by the Thai Ministry of Commerce. This latter is rarely successful. The procedure is lengthy, and the outcome is uncertain. It must be extensively substantiated that obtaining this license will be of predominant benefit to the economy and the society of the country.
Service providers have a somewhat easier situation: they may be granted special permission by applying for incentives from the Board of Investment (BOI). However, this also does not work without some investment.
A minimum paid-up capital of 3 Mio. THB for the establishment of a Trade & Investment Service Office (TISO) or just an investment of 1 million THB for certain IT service providers, for example, are more manageable than 100 million THB for the approval of trading license.
For those who are unable or unwilling to use these options, the only remaining alternative for their distribution is a contractual relationship with Thai partners.
A warning must be issued against any illegal or “gray” circumventions. All involved persons may face criminal as well as significant tax consequences. Hiring a Thai employee or a commission-based person as an “agent” is also not legally permissible by law in general.
An importer or Business Unit at Sanet as a contractual partner?
Due to the legal restrictions, an importer and distributor is the classic mode of sales in Thailand. Pros and cons are well known. On one hand, the Western producer can choose a well-connected local partner knowing the market and the customers.
On the other hand, there is the additional margin that he must finance through the market price. Also, he will often fail to maintain the direct contact with the end user of his products.
Therefore, it is essential to professionally conduct a search for the perfect partner. Simple referrals, exhibition contacts or coincidental meetings remain a game of luck.
With its market experts, Sanet provides a high-qualified process of identifying and qualifying distributors. Through this process, many well-known brands in consumer goods and equipment industry have found their long term partner in Thailand.
An innovative, contractual alternative is to set up a Business Unit at Sanet Sales & Services (STS) as a Sales and Service Partner. The unusual concept of this business approach is that as a rule the Business Unit does not import and distribute goods. However, this also eliminates a typical mark-up.
Instead, the BU focuses on promoting the products of the client or “Principal” into the market and facilitating orders. Additionally, they provide technical support to the dealers or end users on site both before and after the conclusion of the contract, in which the customers directly enter with the Principal.
The tasks are conducted by dedicated experts working for only one specific Business Unit, backed up by the Principal’s technical support. The remuneration is completely transparent. It is based on a proposed budget for the BU in which the projected profit of the service provider is also disclosed.
A Joint Venture with You Thai Partner
You already have a distributor in Thailand, but you are interested in influencing and shaping the local business?
With at least 51% Thai business shares, your sales company is free from all restrictions as applied to foreigners. You are truly a Thai Company.
The composition of the management, the “quota” for shareholder resolutions and also the “veto rights” are just some of the rules that have to be considered. Cultural aspects and the effectiveness of the manager in day-to-day business are other prerequisites for the JV’s success.
Sanet’s team includes the perfect combination of specialized lawyers on the one hand and of experienced business managers on the other hand, in order to provide professional advice on shaping and structuring a Joint Venture. Sanet also arranges potential investors who may, for example, take on the function of the mediating third Thai party. This partner, provided he also possesses market and business knowledge, has the potential to be a valuable strategic co-partner who mediates in the event of conflicts.
By establishing a Sanet business unit which today has six employees, Rutronik GmbH were able in only two years to prevail against our competitors in Thailand. Today we are firmly established in the market.
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