Doing business
Current business situation
Australia's trade and economic relationship with Thailand has grown strongly since the entry into force of the Thailand-Australia Free Trade Agreement (TAFTA). Australia continues to work with Thailand on the implementation of TAFTA.
TAFTA has allowed many Australian companies formerly locked out of the Thai market because of high tariffs and quotas to find new export opportunities, particularly in areas such as agriculture, processed food and beverages, mining and automotive products.
Business culture
Business tips
Greetings
Khun (pronounced koon, as in cook) is Thai for Mr, Mrs, Ms or Miss. When addressing others, Thais use Khun followed by a person's first (given) name. For example: Khun Somporn, Khun Mallee, or in a Western context Khun John (rather than Khun Smith). Most Thais also have a nickname, which may be used in place of their given name.
The traditional form of greeting in Thailand is the wai, which is performed by placing the palms of the hands together, raising them to the face with the fingertips at eye level and inclining the head slightly. There is great formality in the wai and the level at which the hands are placed have a great significance. Younger and lower-ranking people are expected to offer the wai to their senior counterparts first.
While Thais will generally greet each other with a wai, rather than a handshake, they will exchange handshakes with foreign business contacts.
Foreign business people are not expected to initiate a wai or even return it – a simple smile and a nod of acknowledgement is acceptable, but it may be appropriate to return a wai when you are a little more familiar with the tradition.
Business cards
Business cards are always presented when meeting someone for the first time. Where practical, business cards should have a Thai language version printed on one side of the card. Business cards should be handed person to person using the right hand or both hands. Similarly, they should be received using the right hand or both hands. On receiving a business card, take a few moments to read it, rather than placing it immediately in your pocket or on the table. In larger meetings, it is acceptable to place your counterparts’ business cards in order on the table in front of you.
Dress code
In general, Thai business people tend to follow a formal dress code. In business meetings a business shirt, tie and proper footwear (not sandals) are essential for men. Casual wear should not be worn to business meetings.
Business culture
Relationship building is an essential factor if you are to succeed in doing business in Thailand. Thais will generally expect to spend time building a relationship with their business contacts before they will exchange detailed information or commit to a deal. It is common to begin or wrap up business meetings with informal conversations. Your Thai counterparts may ask questions about your age, family and educational background in order to build familiarity with you.
In order to avoid offending you, Thais often will not admit that they do not understand what has been said, and they will generally avoid disagreeing openly or providing a negative answer to questions you may ask. Foreign business people may leave a meeting thinking they have achieved an agreement only to become perplexed when nothing further happens. Therefore it is advisable to have an interpreter to ensure that as far as possible effective communication takes place. Translating language is one thing – the meaning is another thing altogether!
Hierarchy and seniority are important and senior officials and business people will most likely expect to meet Australian representatives in similar positions, not their juniors. All correspondence should be addressed to the most senior person.
Thais respond well to bargaining and negotiating. This shows flexibility and a willingness to accommodate business partners. Business acumen may be judged by the ability to bargain and reach what they consider a fair deal. Sometimes the agreement may change between the negotiation and the final signing of the agreement, particularly if circumstances change unexpectedly (in which case both sides are expected to show flexibility).
The exchange of gifts is widely practised in business in Thailand and should be reciprocated. Gifts are given to those visited for the first time and signify friendship and an appreciation of hospitality. Gifts are opened in privacy, not when received. Gifts do not need to be expensive but a generosity of spirit will help build a strong relationship with your partners.
Note: care should be taken when giving gifts that they are relatively modest and proportionate to the occasion. Expensive gifts may constitute an offence if provided as an undue benefit with the intention to obtain or retain business or business advantage. If the person is a Foreign Public Official (FPO) this act may be an offence under Australia’s anti-bribery legislation.
Links and resources
Government, business and trade
ASEAN Supporting Industry Database – www.asidnet.org
Australian-Thai Chamber of Commerce – www.austchamthailand.com
Thailand Board of Investment – www.boi.go.th
Department of International Trade Promotion – www.thaitrade.com
Ministry of Commerce – www.moc.go.th
Ministry of Finance – www.mof.go.th
Ministry of Industry – www.industry.go.th
Thai Chamber of Commerce – www.thaichamber.org
Thai Industrial Standards Institute – www.tisi.go.th
News and media
Bangkok Post – www.bangkokpost.com
The Nation – www.nationmultimedia.com
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.
Top Business Risks
OECD Guidelines for Multinational Enterprises
Multinational Enterprises should be aware of the OECD Guidelines for Multinational Enterprises that provide voluntary principles and standards for responsible business behaviour in a variety of areas, consistent with applicable domestic laws. These Guidelines are endorsed and promoted by the Australian Government. For more information, go to the AusNCP website.
Extractive Industries Transparency Initiative
The Extractive Industries Transparency Initiative (EITI) is a voluntary mechanism which promotes and supports improved governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas, and mining.
The EITI is supported by governments, industry, and non-government organisations around the world. The Australian Government supports the EITI and encourages Australian companies operating internationally to comply with its recommendations.
APEC Business Travel Card Scheme
Managed by the Department of Immigration, the APEC Business Travel Card Scheme was developed to make travelling within the 21 APEC member countries much simpler and more efficient.
IP Passport fact sheets
These fact sheets outline foreign Intellectual Property (IP) regimes and some of the issues and challenges which may be faced by Australian exporters.
The current fact sheets are available on the IP Australia website.