So You Want To Start A Business In Thailand?

January 15, 2012

I read this post on a Thai forum the other day:

“I currently live in Viet Nam and am thinking of moving to Thailand. I have approximately 3 million baht and want to start a business in Phuket, maybe a guest house or a restaurant/bar. What do you think of this idea?”

I wanted to just scream at my computer screen “No, you idiot! If I thought for a week I couldn’t come up with a worse idea, or a better way to lose all my money.” Hey, if the guy wants to throw his money away, throw some of it this way.

So maybe now I should tell you what I really think about Expats starting businesses here in Thailand. Pick out 10 Expats who have tried to live out their dream of starting and owning a business here and I can show you at least 9.5 of them who have lost everything.

For example, I have a friend who had a great business plan and a good mind for business. About ten years ago he started his dream company. And it was doing OK, for a while. Just last week he told me that he would not be able to make payroll for his six employees this month. His savings and investments here are all gone, some through fraud perpetrated against him by his partner/girlfriend (I can’t think of anything worse than having your heart broken except maybe having your bank account emptied at the same time, by the same person.) and some due to lack of payment for services rendered (mostly by other Expats who cannot pay their bills either).

I don’t give advice to people about how they should live their lives. But I do have stories to tell and some thoughts on the subject.

1. I am retired, and I am going to stay that way. If I wanted to live a stressful life like I did before I quit work, then (as they say in New York) “I should’a stood at home.”

2. Maybe I might need some extra income. Instead of laying all my retirement savings down on an iffy endeavor, how about doing something like eBay or Craigs list or something that doesn’t require locking up all my savings.

Before I retired here permanently I bought Thai handicrafts in Chiang Mai, shipped them back to Seattle, and sold them at outdoor fairs for 4 summers. Best summers I ever had. Didn’t get rich but I made enough to live in the U.S. for the summer and then buy my plane tickets back here.

3. If one just gets bored and can’t find anything to do with yourself, and you think starting a business will make things better, then think again. If you can’t find anything to do here and are bored then you probably have had the “bored” problem all your life. You’d probably be bored anywhere. If you start a business you’ll just be exchanging stress and worry and 16 hour days for bored.

4. Occasionally you might meet someone who proved successful.

I did meet a man who just needed to make himself busy. He opened a resort/spa and has been quite successful. He had been a hotel owner back home for 30 years and had loads of money and he knew the business and had the cash to survive the first difficult years before his business took off and all you see is your money going out the door. He had all the prerequisites to build a successful business, which he did. His problem now: He is in his seventies and is having trouble keeping up the pace of running a popular resort. He’s tired and would love to slow down, but can’t (picture Rick in Casablanca) or he’d lose everything. So success can also have its drawbacks too. That is something many retirees looking to start a business here often overlook – How long can they keep up the pace of owning a business?

Although it is rare, I do know a few Expats who have had successful businesses here. They all have the same things in common though: In depth knowledge of their business, lots of money, a really good marketing scheme. Here are a few that work and are run by people I know.

Selling URLs and Pay-Per-Click (PPC)

One business owner I know buys domain names (URLs) with catchy names that he later resells to people who think these names will attract people to their sites. Right now he is concentrating on Chinese URLs. He also has a number of pay-per-click sites that you end up at when you have mis-typed the address you really wanted to go to, like (not owned by my friend): thaivis.com instead of thaivisa.com. You end up at a site with a list of other websites, usually similar to the one you wanted to get to in the first place. The website owner pays my friend a few cents anytime someone clicks on one of these. It’s a one-man business and takes almost no investment but he needs to keep quiet since he is working without a work permit.

U.S. Pet trade

I know someone who sells to the pet trade in the U.S., mainly for dogs. He has opened a fabricating plant here and ships the completed items back to the U.S. with quite a savings to what it would have cost to make them there (It’s called “outsourcing”.). He also owns the distributorship back home so he has no problem selling what he makes. Big time investment costs but almost a guaranteed sale on the other end.

Specialized Furniture

A friend got the idea of making large, one-piece wooden conference tables. He scourers the rice fields nearby and when he comes across a big tree (usually a Rain Tree) he negotiates with the farmer who is happy to sell the tree as it sprung up on its own and now it taking up lots space in his rice field. He brings the tree to a saw mill and has it made into large slabs (6′ to 12′ long). He then finished them beautifully, puts on stainless steel legs and voila, an executive, one-of-a-kind-big-corporation conference table. Reasonable investment cost. Most sales are to Europe and other parts of Asia and are done through the Internet.

Note: I know of almost no bar, restaurant, or guest house owners who have really made it. In fact, they are usually looking to sell the business (Don’t believe me? Take a look here. ).

5. Keeping her busy. This is something I hear from older Expat men who are with younger women. Even though they use the words themselves, they don’t seem to know that “Keeping her busy” is just a euphemism for “Keeping her away from ….. (fill in the blank old man).”

Say I want to buy a business to keep my girlfriend/wife/mistress/paramour busy (this is usually a restaurant, bar, beauty/nail salon, or massage parlor, or maybe a 7/ Eleven for the big time spenders). Here the percentage of failures is more like 10 out of 10. If your girlfriend/wife/mistress/paramour knows they have you to take care of them, why go to work? They might be young but they’re not stupid.

6. Real estate is probably just as bad an investment here (if not worse) than anywhere else in the world given the present economic climate. In Thailand, the Thais look at a pre-owned house or condo just as they would a used car – better to buy new. You’d probably be looking at selling to another Expat if you could. If I said that resale of property is an iffy investment I would be severely understating the situation.

Want to be a business owner? Here is what people say.

Know your business. If you haven’t ever run a bar or restaurant or a guest house or 7/Eleven, or invested in real estate, now is probably not the time to start. Do what you know and have an air-tight business plan.

Have loads of money. The money you invest here should be money you could throw away and still be able to live at the level you want.

Know about the business climate in your area. Things are quite different in different parts of the country. Bangkok is different from Chiang Mai, and Pattaya and Phuket are different from just about anywhere else in the world. Here is a book that might be of some help How to Establish a Successful Business in Thailand, by Phillip Wylie.

Know how to market what you want to sell.

Speak Thai; at least enough to speak to your workers and customers and with the various government officials you will need to communicate with.

Know your workers. In Thailand, many of your employees might be Thai, or they could very likely be Burmese, and in the south they might be Muslims. The more you understand their culture the better employees they will be. I just went to a business grand opening in a Muslim neighborhood. The men were in sarongs, the women in head scarves, and they served goat curry for lunch.  A Buddhist opening would have been a different world – and I am sure pork would be on the menu.

Play it by the book. If you try to cheat, say on taxes, or business licenses, or work permits, or hiring illegals, you are in for lots of trouble, with unscrupulous officials, mafia types, shakedown artists. The people who follow the rules, however convoluted they may be, have a much easier time of it. Get a reliable, and if possible honest, lawyer.

So, What to do with that 3 million baht?

A better answer to that person who wants to invest 3 million baht here in Thailand would be: If you lived simply but comfortably, say on 25,000 baht a month, you could live for 10 years on that amount of money.

That’s what I would do.

Advertisements

18 Responses to “So You Want To Start A Business In Thailand?”

  1. Liz said

    I have wanted to write a comment before but this time i am utterly compelled. i have a wellspring of applause your forthrightness, your clarity of insight and your goodwill and willingness to put your pen to paper. Just as you wanted to scream at your computer i want to rejoice because what you write resonates totally with my experience here. i too have thought about starting a business. no one with experience has given me any encouragement. Healthily, i am not discouraged by this, rather i see it as an act of benevolence from people who like me who have been very badly burnt…perhaps a curing of misplaced innocence. Blaze the territory with this refreshing piece of clear sighted writing. please keep writing. Scream more into that computer of yours and may your path in your retirement be filled with good and uplifting things.

  2. Frank said

    Great advice and I will pass this on to my Thai wife of 25 + years. My idea is to just build a modest house on the land we have there and enjoy life and do a little happy labor at the local school and tend to the garden and get back to writing. Her idea is to build a huge house for a B&B even though neither one of us have any experience in running such a thing.

    Frank

    • Frank,

      From what I have heard running a B&B is a 25 hour a day/8 days a week commitment and if you are successful (and most aren’t) then you will never have a moment of “you” time for the rest of your natural life. But to each his own.

      Note: Working, or even volunteering (for no pay) at the local school in Thailand requires a work permit. Be as low key as you can unless you have one of them. I recently heard (urban myth?) of a foreigner who was deported after he was picked up playing his guitar and singing at an open mike night at a local pub.

  3. Dixie said

    Thanks for the article. Love your blog! I’m from Ohio but my parents are originally from Thailand, so really interested in the culture. I was just wondering what are the issues, according to your opinion, that are under covered by mainstream media in Thailand, but important and worth being mentioned more? Thanks!
    Dixie

    • Hi Dixie,

      Yours is a difficult question to answer because different people will have different opinions about topics that the mainstream media overlooks. There are two large English language newspapers in Thailand, The Bangkok Post and The Nation. I read neither. Unless you want to know which politicians are back stabbing each other, or an Expat/Bar girl murder/suicide in Pattaya, or the wholesale price of tapioca, or English soccer scores, then it will be difficult to find interesting information in them.

      I personally blog about things that come into my mind at any moment. My next post will be my 50th. I just looked back on some old post. Take August 2010 for example. I wrote about life when my Internet goes down (which is often), Dengue fever in Thailand (which I have had), and keeping in touch with people back home using Skype and Facebook (my lifeline). These are things that people considering living here might want to know about. Lots of bloggers here will write about their experiences. There is a wealth of info there as long as you don’t get caught up reading the “complainers”. Examples of these are some of the ThaiVisa.com forums – complaint city.

      You will probably find that there are two types of comments about Thailand you’ll run into. One from the travelers and another from the long-term residents. Choose whom to read depending on the info you are looking for.

      I haven’t thought about what I will write about next. Tune in in about 2 weeks and see. I’m sure that the mainstream media won’t be covering it though.

      Cheers,

      Hugh

  4. Wade said

    Hello Hugh,

    First off I would like to say I agree with much of what you have written. However I think a primary reason for the failure of so many foreign run businesses in Thailand is overlooked. You touched on it briefly I would just like to expand on it.

    Many, many people come here with a colonialist attitude believing that everything back home runs, operates and just IS better in their countries. Mix this attitude with the general lack of business experience that most people setting up small businesses here tend to have, in my experience, and you have a recipe for disaster.

    I would like to say, I know very few foreigners here with small businesses that have succeeded. I know a considerable number of people that have the proper experience and capital that have done very well in larger enterprises. This does include some restaurants and bars, however the capital investment was generally much higher then 3 million baht and their market research was done properly in advance, they chose the right location and were in a market that they already had a considerable amount of experience in. I know one very successful restaurant in Bangkok owned by a foreigner, he brought in a Michelin Star chef and has over 25 years restaurant experience, 10 in Thailand.

    Also many people here do not apply local conditions to their present business plan, they walk in blind believing that because it worked in their country it will work here.

    The last point I will bring up here is I also regularly see people not being anywhere near capitalized enough to give their company time to grow and become successful.

    I wrote an article recently about the top reasons businesses in Thailand fail which you can read the link below if you are interested.

    http://consultingthailand.com/reasons-businesses-thailand-fail/

    • Wade,

      Thanks for the great comment. And your link is a must for anyone thinking of starting a business here.

      • Wade said

        Thanks Hugh,

        That article was a bit of a rant of mine after listening to people trashing Thailand, going on that the system doesn’t allow foreigners to be successful, etc.

        None of them liked it when I pointed out the facts that they had no experience, they were operating illegally and they never put in the effort to do a proper business plan.

        In the consulting company I run I regularly advise people that it is easier to operate a company in Thailand then most western countries. (I have done both) I can also give you a long list of foreign owned companies that have been extremely successful. They all have something in common, they are run by experienced business people who minimized their risks by doing proper planning and where I am not saying there are no skeletons in their closets, they also all try to operate 100% legally and above board.

  5. Christophe said

    Cambodia is far easier than Thailand to run a business in and that is why so many have left Thailand to go to Cambodia–none of this you can’t own the property and having others fulfill a quota system. You failed to mention that Thai workers are incompetent, lazy and don’t take personal responsibility. Far cry from the Japanese.

    • Thanks for your take on doing business in Thailand.

      I did want to reply to your comment about Thai workers. You say that I “You failed to mention that Thai workers are incompetent, lazy and don’t take personal responsibility”. If you have read my other writings you will see that I do not lump all Thai people into one group nor do I stereotype them. I am sorry that your experience here has made you feel that all Thai workers are incompetent, lazy, and irresponsible. My experience is that some are, as are some Americans, and some British, and some Europeans, and even some Japanese. But not all of any group.

      The billions of dollars invested in Thai factories by foreign companies probably attest to the fact that Thai workers can accomplish the tasks they set for them. If they were that incompetent, lazy, and irresponsible then I don’t think that there would be so many auto, electronics, apparel, shoe factories, etc. here.

      Good luck in Cambodia, and although I know nothing about business there I do hope that you will learn enough about the Cambodian culture and its language so that you will understand how to guide your workers to be successful. It would seem that you failed to do that here.

      • Christophe said

        As JERRY SPENCE says: thinking the exception disproves the rule is a error that can kill you. 1 man fell almost 100 stories and lived–you want to see if that applies to you? You made huge jumps in specious logic assuming that I ran a business and failed in Thailand. And, yeah, maybe you should look at why ex pats who lived a long time in Thailand are now moving to Cambodia before thinking it was personal failure. As there could be nothing at all wrong with the legal discrimination and racism–now could there? And you at least agree that Japanese know how to run businesses and 7 11s with fewer and yet more productive staff.

  6. I personally ponder how come you titled this posting, “So
    You Want To Start A Business In Thailand? Retire 2 Thailand’s Blog”. In any event . I really adored the post!Thank you,Mariam

    • Mariam,

      Thanks for the nice words. For some reason people getting ready to “retire” think that they should do stuff, like teach or open a business. I think retiring is the coolest thing I have ever done and can’t see why, after 40 years of working, why I would ever want to work again. With that in mind, I wanted to give my opinion on what starting a business here would take. My advice, stay retired.

  7. Harvie said

    good point, I wonder what changes will come in 2015 when the ASEAN comes into play. I would like to start something up in Thailand because I like the country, however every bone in my body is telling me its a bad idea.

    Perhaps ill wait a few years.

  8. Franchesca said

    This website was… how do I say it? Relevant!! Finally I
    have found something which helped me. Many thanks!

  9. Tanya said

    Hi, thank you for the article. My husband has been in the same industry his whole life -coffee. He has worked in every aspect of it from working w farmers to being head of quality for many large companies. He has traded coffee, opened roasting plants and opened shops. He’s run both large and small coffee companies in the USA and abroad. We’ve spent a lot of time in Thailand, have visited over a dozen times and were even married there. We have a dream of building a coffee company in Bangkok. We have a enough money to build a small roasting plant and shop and have started working on a buisness plan. I read through all your comments but didn’t see any mention of the Amity treaty. As Americans we were under the impression that we would be able to own our company 100%. We were planning on coming to BKK in a couple months to meet with property brokers and lawyers to ask questions and to do other market research. Reading your article certainly makes me a bit nervous at our prospects. Was wondering if you know about mugh about the Amity treaty? Also, how difficult is it to sell your company in the future? I appreciate any advice you can give! Thank you kindly.

    • Hi Tanya,

      There are special lawyers and consultants who could help give you advice on the Amity Treaty. The treaty allows you to start a business here in Thailand and be a majority owner and do business as if you were a Thai. But the treaty doesn’t cover everything. This is from Wikipedia:

      Under the Treaty, Thailand restricts American investment only in the following fields of business:[1]

      Communications
      Transportation
      Fiduciary functions
      Banking involving depository functions
      Exploitation of land and natural resources
      Owning land; and
      Domestic trade in agricultural products.

      I would guess that coffee is an agricultural product. This is something you’ll have to get an expert’s opinion on.

      BTW, I have two friends (both Thai) who have their own coffee companies here in Chiang Mai. One owns land, grows her own coffee, roasts it, packages it, and sells to the many coffee shops around town. It is a small business but she makes a good profit. The other buys the beans from the tribal people, dries them and roasts the beans and sells in bulk. His company has been around for decades and they are well established.

      I don’t know whether you are thinking of exporting the coffee or not but for the local consumption of coffee there will be a lot of competition. I would think it is the same for export. From what I hear, Laos is now the big kahuna for coffee. I would advise you to take a look at what is going on there.

      My advice about how difficult it is to operate a successful business here still holds. But you guys have the knowledge, are doing your homework, and I am sure will put in the hard work involved in starting a business. Those are the prerequisites. I wish you all the luck.

      I just saw your question about selling a company. Selling anything is difficult here but I would think that your market audience would be other foreigners. Most people who invest here say that you should only invest money that you can lose completely. I wouldn’t bank on your ability to flip a business here.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Thai Vocabulary in the News

Learn Thai vocabulary Words that have recently appeared in the Thai Newspapers

A Woman Learning Thai...and some men too ;)

Learn Thai Language & Thai Culture

Retire 2 Thailand's Blog

Thoughts on retiring in Thailand

%d bloggers like this: