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CAPTURE THE

OPPORTUNITIES IN

THAILAND

BUSINESS SWEDEN

Business Sweden in Thailand

August 2015

BUSINESS OPPORTUNITIES IN THAILAND

Thailand is the second largest economy in South East

Asia, after Indonesia. The country has seen an

impressive growth since the early 1980’s with an

average growth rate of 5,4%

This growth has taken Thailand from an agrarian society

to an industrialized middle income country. The

manufacturing sector is an important GDP contributor,

and the consumer market is growing in importance

Sweden exports products such as electronics,

machinery, and transport equipment to Thailand, while

importing e.g. food products, electronics and vehicles

The mature manufacturing industry, and the growing

consumer market presents many opportunities;

As ASEAN’s largest automotive producer, and food

exporter, and world leading electronics manufacturer

– Thailand is ASEAN’s manufacturing hub

Medical devices, retail, renewable energy, and IT &

Telecom are other key opportunity sectors

BUSINESS SWEDEN IN THAILAND

Business Sweden has been present in Bangkok since

2008 and is, together with the Hanoi office, responsible

for the Mekong region, including Thailand, Vietnam,

Myanmar, Cambodia and Laos

In Thailand, Business Sweden, supports and advises

Swedish companies with their market entry and/or

growth in Thailand

Type of support and advice include market entry and

growth strategies, stakeholder analysis and

management, facilitation of government relations,

identifying partners, manufacturers and acquisition

targets, and more

Contact us to discuss your

company’s business opportunities

in Thailand!

19 AUGUST, 2015 BUSINESS SWEDEN 2

THAILAND IS THE SECOND LARGEST ECONOMY IN

SOUTH EAST ASIA

Vivianne Gillman

Trade Commissioner to Thailand

INTRODUCTION

BUSINESS SWEDEN 19 AUGUST, 2015 3

THE ASEAN ECONOMIC TRADING BLOC WAS FORMED

1967 TO PROMOTE GROWTH, STABILITY AND PEACE

MYANMAR

Cambodia

THAILAND

MALAYSIA

VIETNAM

LAOS

CAMBODJA

INDONESIA

PHILIPPINES

SINGAPORE

BRUNEI

ASEAN - THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS

ASEAN HAS OVER TIME DEVELOPED TO BECOME A REGIONAL FORCE IN ASIA

INTRODUCTION TO ASEAN

KEY FACTS THAILAND

KEY CHARACTERISTICS


GOOD OPPORTUNITY TO SUPPLY TO YOUR JAPANESE AND US CUSTOMERS AND COVER ASEAN AS WELL

~4% around millennium shift

2.8% (2013), 0.9% (2014), 3.6% (2015f)

GDP per capita 2014, USD 5,445

Registered FDI 2014, USD 13 bil.

Mostly from Japan, USA, China

and Hong Kong

Population 2014, App. 65 mil., Population

in working age: App. 61% (2013)

FORECASTED GROWTH

LABOR FORCE 4X SWEDISH POPULATION

HIGH FDI LEVELS

HIGH FDI INFLOW IN 2014 WITH FORECASTED GROWTH

IN 2015

GEOGRAPHICAL OVERVIEW OF THAILAND

SOURCE: BOI, MINISTRY OF COMMERCE, DESKTOP RESEARCH

INTRODUCTION TO THAILAND

GEOGRAPHICAL OVERVIEW OF THAILAND

ADVANTAGES AND DISADVANTAGES WITH THAILAND



Strategic location

Relatively low inflation

rate of around 3%

Government support

and incentives for

manufacturing

World-class

Infrastructure

Labor cost higher

than neighboring

countries

Political instability

Corruption

Bureaucracy

Productivity

STRATEGICALLY LOCATED IN CENTER AMONG 7 OF 10

ASEAN COUNTRIES


IDEAL LOCATION FOR SETTING UP MANUFACTURING FACILITY TO COVER ASEAN COUNTRIES

KEY INDUSTRIAL AREAS IN THAILAND

DESCRIPTION OF THE INDUSTRIAL AREAS


THAILAND’S INDUSTRIAL AREAS ARE CONCENTRATED

IN CENTRAL THAILAND


Ayutthaya

Chonburi

Rayong

Bangkok


MIXED INDUSTRIES IN SAME AREA IS IDEAL FOR SUPPLYING TO DIFFERENT CUSTOMER SEGMENTS

Ayutthaya

Chonburi

Rayong

Bangkok

Samutprakarn

Around 80% of

business is located

in this area Key industries are agriculture,

automotive, chemical, electronic,

and steel

Key industries are agriculture,

automotive, chemical, and steel.

Thailand largest airport is also here.


automotive, electronics, and plastics

Samutprakarn

Rayong

Ayutthaya


automotive, electronics, plastic, and

steel. Thailand largest sea harbor is

also located here.

Chonburi

OVERVIEW OF THE ECONOMIC DEVELOPMENT OF THAILAND


THAILAND HAS A LONG HISTORY OF PROMOTING FREE

TRADE RELATIONSHIPS

SOURCE: BOI, MINISTRY OF COMMERCE THAILAND

Asian financial crisis

started in Thailand and

spread to different

countries in the region

1932

1961 2015

ASEAN FTAs:

ASEAN + CHINA

ASEAN + JAPAN

ASEAN + KOREA

ASEAN + INDIA

ASEAN + AUS/ NZ

Thailand co-founded ASA

with Malaysia and

Philippines which would

later develop to ASEAN in

1967 (+ Indonesia and

Singapore)

Siamese Revolution

Changed Thailand

from absolute

monarchy to

constitutional

monarchy

1997

1992

Thailand signed the

ASEAN Free Trade Area

(AFTA) together with 4

other founding members

and Brunei

THAILAND FTAs:

Thailand + Australia

Thailand + China

Thailand + India

Thailand + New Zeeland

Thailand + Japan

Thailand + Peru

Under negotiations:

RCEP

Thailand – EU

Thailand – EFTA

TPP (12 countries)

and still more...

2003 - 2012

2004 - 2011

Thailand joined GATT

which later was replaced

by WTO in 1995

1982


TRADE LIBERALIZATION AND INTERNATIONAL ECONOMIC INTEGRATION ARE KEY WORDS FOR THAILAND


THAILAND OFFERS SEVERAL SECTORS OF INTEREST

FOR SWEDISH COMPANIES

SOURCE: DESKTOP RESEARCH AND INTERVIEWS

THAILAND OFFERS BUSINESS OPPORTUNITIES IN SEVERAL AREAS FOR SWEDISH COMPANIES

Automotive

“Detroit of Asia” is a nick name for

automotive industry in Thailand

Largest automotive producer in

ASEAN and among top 10

producer in the World

2014: 1.9 million vehicle were

produced (2.4 million in 2013)

Electronic

Thailand is World’s 2nd largest

producer of air conditioning and 4th

largest producer of refrigerators

Automotive industry is another key

driver for electronic industry

2014: BUSD 31 exports of

electronics

Food Processing

Thailand is the largest food

exporter in Southeast Asia

There are around 1500 medium to

large size of food processing

companies in Thailand

2014: BUSD 24 exports of food

and drinks

KEY INDUSTRIES IN THAILAND

CARS & COMMERCIAL VEHICLES PRODN.

2013 – 2019, MILLION UNITS

KEY OPPORTUNITIES


AUTOMOTIVE IS THE LARGEST INDUSTRY IN THAILAND

AND THE COUNTRY IS THE BIGGEST PRODUCER IN SEA

THE LARGEST MARKET TO APPROACH IS FOR PASSENGER CARS AND PICKUP TRUCKS

Local contents for some vehicle

models could be up to 90%.

Several car companies has R&D

activities in Thailand as well.

The establishment of large

automotive MNCs as Toyota, GM,

Honda, Nissan, Volvo, Scania, etc.

in the market bring opportunities

for sub suppliers

Skilled labor and favorable

investment incentives are key

factors for setting up automotive

related production in Thailand

Supplying to

OEMs

Thailand as

outsourcing

destination

Thailand as

manufacturing

hub

1,3 1,1 1,1 1,2 1,2 1,2 1,3

1,1

0,7 0,8 0,8 0,9 0,9

1,0

0,05

0,04 0,04

0,04 0,04 0,04

0,04

2013 2014 2015 2016 2017 2018 2019

SOURCE: THAILAND BOARD OF INVESTMENT (BOI), MINISTRY OF INDUSTRY, BMI, BUS INTERVIEWS

KEY INDUSTRIES IN THAILAND [AUTOMOTIVE]

ELECTRONICS & ELECTRICAL APPLIANCES PRODN.

2011 – 2018, USD BILLION

KEY OPPORTUNITIES


ELECTRONIC PRODUCTION IS LARGE BUT FOCUSED ON

LOW VALUE ADDED ASSEMBLY FOR EXPORT

THERE IS A LIMITED PRESENCE OF TIER 1-3 SUPPLIERS WITHIN THE ELECTRONICS INDUSTRY

Most of production are low value

added which open opportunities for

Swedish companies with high

value added technology

Major companies such as Hitachi,

Fujitsu, Toshiba, LG, WD, Seagate,

etc. are in the market bring

opportunities for sub suppliers

Skilled labor and favorable

investment incentives are key

factors for setting up electronic

production in Thailand

Supplying to

OEMs

High value

added

production

Thailand as

manufacturing

hub

31,2 33,2

35,4 37,9

40,6 43,4

46,4 49,5

2011 2012 2013e 2014f 2015f 2016f 2017f 2018f

Estimated CAGR 7%

SOURCE: REUTERS, KASIKORN BANK, BOI

KEY INDUSTRIES IN THAILAND [ELECTRONICS MANUFACTURING]

EXPORT OF FOOD & DRINKS FROM THAILAND

2012 – 2019, USD BILLION

KEY OPPORTUNITIES


THAILAND IS A LARGE FOOD PRODUCER WITH A

GROWING EXPORT INDUSTRY

THAILAND IS DEPENDENT ON IMPORTS OF HIGH TECH EQUIPMENT FOR FOOD PRODUCTION

Since Fukushima accident in

Japan, significant Japanese food

production has shifted to Thailand.

It could be possible for Swedish

food producers to follow suit.

The establishment of large food

MNCs as Unilever, Nestlé, etc. in

the market bring opportunities for

sub suppliers

With large agriculture area and

different climate in different

locations many type of vegetables

and fruits can be sourced here

Supplying

equipment to

producers

Thailand as

manufacturing

hub

Thailand as

sourcing

destination

Estimated CAGR 7%

23 23 24 25 27 28

30 32

2012 2013 2014 2015 2016 2017 2018 2019

SOURCE: BMI, BUSINESS SWEDEN DESKTOP RESEARCH

KEY INDUSTRIES IN THAILAND [FOOD PROCESSING]


SWEDISH BUSINESS HAS A LONG HISTORY IN THAILAND

SOURCE: EMBASSY OF SWEDEN, DESKTOP RESEARCH

1975 1974 1963 1965 1912 1868

• More than 70 Swedish companies are established in Thailand,

including ABB, Atlas Copco, AstraZeneca, Electrolux, IKEA, SKF

and TetraPak

• Swedish trade with Thailand increased from SEK 6,2 billion in 2007

to SEK 7,7 billion in 2014

• Prioritized sectors: Healthcare, Manufacturing, Disaster Relief, IT

and Telecom, Green / clean tech

2014

First

friendship

treaty

Bofors

exported to

Thailand

Two-way

trade volume

was around

$US 1billion

Swedish

Embassy set

up in

Bangkok

SWEDEN IN THAILAND

THERE ARE MORE OPPORTUNITIES FOR GROWTH IN THE TRADE RELATIONSHIP


TODAY, THERE ARE APPROXIMATELY 70 SWEDISH

COMPANIES IN THAILAND

SOURCE: BUSINESS SWEDEN AND EMBASSY OF SWEDEN

EXAMPLES OF SWEDISH COMPANIES DOING BUSINESS IN THAILAND

Larger

Sized

Medium

Sized

Smaller

Sized

Through

Distributors

ABB

Alfa Laval

Atlas Copco

AstraZeneca

Autoliv

Electrolux

Ericsson

IKEA

Saab

Sandvik

Scania

SKF

Tetra Pak

Volvo

Mölnlycke Health

Akzo Nobel Coatings

Flexlink

IFS

Care

Nederman

Oriflame

Securitas

Diakrit

Hammars

Cabin

Krusell

Otto bock

Elekta

Gambro

GANT

Getinge

H&M

Hemocue

Moberg Pharma

Opsis

SWEDEN IN THAILAND

MOST LARGER SWEDISH COMPANIES ARE ESTABLISHED IN THAILAND


SWEDISH IMPORT FROM THAILAND IS QUIT STABLE

WHILE EXPORT FLUTUATE FROM YEAR TO YEAR

3,9 3,8 3,8 4,2 4,2 4,0 3,6 3,8

2,3 3,0 3,0 3,6

8,8

5,5 6,7

3,9

2007 2008 2009 2010 2011 2012 2013 2014

Swedish Import Swedish Exports

2007-2014

CAGR Swedish Export: 7.6 %

CAGR Swedish Import: -0.4%

SWEDEN-THAILAND TRADE VOLUME OF GOODS

2007 – 2014, SEK BILLION

SOURCE: STATISTICS SWEDEN

SWEDEN IN THAILAND

SWEDEN EXPORTS TO THAILAND EXCEEDED IMPORTS DURING THE PAST 4 YEARS


PRODUCTS FROM THE HEAVY INDUSTRIES REPRESENT

MOST OF THE EXPORTS

1 428

657

639

467

333

175

100

43

41

14

3 897

Computer, electrical & electronics

Other machines

Pulp & Paper and wood products

Transport equipment

Metal and mineral products

Petrochemicals

Pharmaceutical products

Other

F&B Tobacco

Textil & Garment

TOTAL

SWEDISH EXPORTS TO THAILAND

2014, SEK MILLION COMMENTS:

Computers, electrical and

electronics devices took up the

largest parts of Swedish exports

to Thailand in 2014

The hardware device exports

has been increasing during

2010-2014 with CAGR of

23%

Pulp & Paper is 3rd largest

segment but the growth during

2010-2014 has been only 3%

SWEDEN IN THAILAND

COMPUTERS & ELECTRONICS DEVICES IS AN IMPORTANT & GROWING EXPORT CATEOGRY

BUSINESS SWEDEN 8/19/2015 16

THERE ARE VARIOUS ESTABLISHMENT FORMS,

SUITABILITY DEPENDING ON ACTIVITY TYPE

BUSINESS SWEDEN 19 AUGUST, 2015

Export to

Thailand

Import from

Thailand

Manufacture in

Thailand

Agent/Distributor

Representative

Office

Limited Liability

Company

Joint Venture w. TH

company

Form of establishment

Type of activity

Allowed activities

Sales in

Thailand

THE MOST SUITABLE ESTABLISHMENT FORM FOR YOU DEPENDS ON YOUR INTENDED ACTIVITIES

*

* Only supporting function

FORMS OF ESTABLISHMENT

Le

ve

l of s

take

an

d c

on

trol

Quite a homogeneous culture

Rule-based

Punctuality

"Saying what you mean and meaning what you say“

Silence is not awkward

Focus on product and technical excellence

Negotiate fairly, offer best price first

Long-term planning

Flat structure and risk adverse

A rich culture country, the regions are all different

There is always flexibility, and a “But…”

Time accurateness is still an issue

A “YES” may mean “NO” and vice versa

Silence during meetings may look strange

“Know-who” often beats out “know-how”

Discounts – negotiate “good deals”

Last minute changes in appointments (follow up)

Top-down structure and risk taking

OVERVIEW OF THAI CULTURE


UNDERSTANDING THE CULTURE WILL HELP TO

CAPTURE OPPORTUNITES IN THAILAND

BE AWARE OF CULTURAL DIFFERENCES WHEN DOING BUSINESS IN THAILAND

OVERVIEW OF SWEDISH CULTURE

DO’S AND DONTS

OVERVIEW OF KEY SUCCESS FACTORS FOR DOING BUSINESS IN THAILAND


KEEP THE FOLLOWING SUCCESS FACTORS IN MIND

WHILE DOING BUSINESS IN THAILAND

Be objective

oriented

Focus on business objectives – Expect things not to go according to your plan

Study negotiation techniques – They will come handy both in business and privately

Do your

homework Thailand is a country full of customers, competitors and colleagues. Apply a fact based

approach and develop a strategy for your entry and growth in Thailand.

Take a long

term view Thailand is a long term market. Plan establishment in phases and bring patience and

perseverance. Expect red tape, bureaucracy and lengthy procedures.

Have a

strategy for

price/ cost

Thailand can be very profitable, if you have a strategy for price and cost.

Be careful

when

partnering

The right partner can make it – the wrong partner may break it! Be thorough in screening

of local partners and choose carefully. Be very careful before entering a Joint Venture.

Hire the best

people

Doing business in Thailand can be tougher than most markets – send you best

man/woman for the job. Hire carefully and go for competence and attitude – not low cost!

DO’S AND DONTS

DO YOUR HOMEWORK BEFORE ENTERING THE THAI MARKET!

WITH 5 OFFICES IN SOUTH EAST ASIA WE ARE AT HOME

ON YOUR FOREIGN MARKETS

BUSINESS SWEDEN’S PRESENCE IN ASEAN BUSINESS SWEDEN’S SERVICE OFFERINGS


MALAYSIA

VIETNAM

THAILAND

SINGAPORE

INDONESIA

MYANMAR, LAOS, CAMBODIA, BRUNEI AND THE PHILIPPINES ARE COVERED BY THE ABOVE OFFICES

EVALUATE OPPORTUNITIES

Business Sweden makes it easier for

Swedish companies to grow internationally

CHOOSE STRATEGY

ESTABLISH PRESENCE

GROW BUSINESS

BUSINESS SWEDEN IN ASEAN

CONTACT US

BUSINESS SWEDEN 20

Contact information

Business Sweden

23rd floor, Two Pacific Place

142 Sukhumvit road, Klongtoey, Bangkok 10110, Thailand

T: +66 2 684 6884

E: [email protected]

W: www.business-sweden.se

BUSINESS SWEDEN IN THAILAND

Documents

CAPTURE THE OPPORTUNITIES IN THAILAND - …€¦ · CAPTURE THE OPPORTUNITIES IN THAILAND ... SWEDISH BUSINESS HAS A LONG HISTORY IN THAILAND ... Oriflame Securitas Diakrit