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Start Selling your Products in Thailand with Sanet
Business Units – an affordable and efficient way to get started
More than 2,400 automotive suppliers, a billion-dollar market for medical technology with 1,400 private hospitals and practices, 55 billion Euro in exported electronics, and the “kitchen of the world” with countless companies in the food processing business: these are just a few of the numbers we could cite which reflect Thailand’s high level of industrialization and make them the central hub of Southeast Asia.
Therefore, it is no surprise that such a highly developed market continues to attract an ever-increasing number of European SMEs with its extensive offer of machines and facilities. Moreover, Thailand has managed to reduce its poverty rate from 5% to well under 15% since the start of the new millennium. This has resulted in the emergence of a middle class with significant buying power, in which European consumer goods have taken on the role of status symbols.
But what is the best way to approach the Thai market? The Sanet Group in Thailand recommends going about it in this step-by-step manner.
Step 1: Establish a Presence via a Cost-effective Business Unit
When establishing an initial presence, we recommend finding solutions which are accommodating to your circumstances. You want everything to be transparent, with costs being as fixed as possible, allowing you to have direct access to clients and avoid any marginal losses.
Sanet Trade & Services in Bangkok is offering the opportunity to set up your own Business Unit (BU), which checks all those boxes. The trading house appoints one staff member to handle each represented company exclusively, who then provides a wide range of services and support relating to market entry, client information logging, product consultation and after-sales service.
Sanet also handles transactions for jobs coming done in Europe for clientele in Thailand. Having exclusive access to a member of our team makes it so much easier for each manufacturer to get the support from their service partner that they need
This form of market presence does have one drawback: storage and logistics are not part of the standard package in Thailand, as these issues must be negotiated separately.
Companies without market experience or a client list prior to establishing their presence in Thailand stand to benefit significantly from an analysis of their products’ actual market potential. The Sanet Group offers the service of creating a “Bird’s-Eye-Analysis” for this, as it is a practical way to inform clients about the market’s size and most significant participants, as well as the structure of the competition and typical market mechanisms to keep in mind.
One thing to avoid by all means is having your own staff – even if they are Thai – or commission-based trade representatives handle these types of issues for you. In contrast with European representatives, they are legally allowed to claim a full reimbursement of costs even when things end up in the red.
Moreover, having your own staff be in charge of a pay-roll service or signing commission documents connected to foreign companies jeopardizes you of being in violation of foreign worker laws as per the Foreign Business Act. Violations of this sort are sanctionable by up to three years of jailtime for the staff members and their foreign executives.
And by the way, a Representative Office (RO) is also not allowed to provide any sales support to the parent company, despite the high costs it requires to get it up and running, meaning it is not a suitable choice for a market entry.
Step 2: A Trade & Investment Service Office (TISO)
Once a market presence has been successfully established – typically measurable within two to three years – it is now time to consider whether it might be the time to set up a full-on subsidiary company. One thing to be aware of here is that Thailand has erected some significant financial hurdles to getting foreign trade activities and service provisions approved within its borders.
This is where Sanet’s affiliate Sanet Legal Ltd. comes in.
The trading company can assist you in founding your own company limited and in applying for a “Trade and Investment Office (TISO)” as well as for as foreign business certificate, which can be issued by the Thai Board of Investment (BOI). TISOs make it permissible for 100% foreign subsidiaries to support the parent company and affiliated companies via sales, marketing or service provisions. This permission even extends – with limitations – to the import, storage and further sale of goods belonging to affiliated companies. Services offices even have the right to acquire land.
The trading house Sanet Trade & Services Co. Ltd. is a company within the Sanet Group, the leading Thai-German consulting group in Bangkok. The group also features the German-led legal firm Sanet Legal Limited and the SANET ASEAN ADVISORS, who specialize in market analyses, feasibility studies, sales partner searches, project guidance for direct investments and general management consulting. Last but not least, the consulting services of the Sanet Group in Thailand are rounded out by the HR consultant and recruiting agency CREATING CAREERS in Bangkok and their professionalism in filling executive and middle management positions.
All the group’s companies can be contacted via firstname.lastname@example.org. Visit www.sanet.eu to find detailed information about the wide range of services the Sanet Group has to offer.
Step 3: A Foreign Business License (FBL) – Trade with no Legal Limitations
Once you successfully obtain a Foreign Business Certificate, you might then begin to consider applying for a “Foreign Business License (FBL)” in order to free yourself from those trade and service limitations for foreigners once and for all.
Be warned, however, that the application process for an FBL is tedious, time-consuming and sometimes uncertain. Thailand has set so many hurdles in place because they wish to protect their domestic traders and service providers from the foreign competition. Therefore, it is not recommended to try to apply for such a license right from the start. Such attempts often end in failure after 9-12 months without ever reaching the goals they invested so much time into.