Thailand’s growing economy holds enormous promise for startups due to its strategic location and low-cost labour. But navigating the Thai market for unlocking this promise isn’t easy. It’s because more than any other global region, Thailand represents a grouping of economically, culturally, and commercially distinct regions. Investors and entrepreneurs alike need to consider the localization paradox facing startups in Thailand.
Thailand has made its mark globally both in terms of an attractive tourist destination as well as a profitable business setting. Overseas investors have proved this and attest to the success of setting up businesses in Thailand.
Starting a business in Thailand is always a difficult prospect. How do startups in Thailand overcome the hardships? Here’s a guide to staking a claim for Thailand’s startup success stories.
Ensuring a positive relationship with other Thai businesses is crucial to launching a startup in Thailand. However, for a startup to then grow its market, especially considering its limited resources, it’s imperious to leverage local Thai businesses rather than building everything in-house. Partnerships enable rapid market growth and enable startups to roll out products and services faster and more efficiently. Contrarywise this, building in-house is often more expensive and takes longer.
Developing and maintaining partnerships is particularly valuable in Thailand given its diversity as a region. Startups should partner with consulting firms in Thailand as well as local companies. A partnership success story worth mentioning is the partnership between Lalamove – a Hong Kong-based logistics startup and Line – a popular chat app in Thailand in 2016. Combining forces to create LINEMAN, Line used Lalamove’s delivery network for its entry into the delivery business, while Lalamove leveraged Line’s Thai user’s network of over 30 million for scaling into the Thai market.
Engaging With Thai Regulators
Each time a company enters or rolls out a new service in Thailand, it should initiate and engage in a proper dialogue with Thai regulators in advance. One of the key benefits of engaging early is it enables startups with an opportunity to build trust with Thai regulators. The difference between a successful startup and failed business model in Thailand could very well boil down to mutual understanding and transparency with Thai regulators–to the trust that the technology it uses is secure, that the startup promotes the best interests of Thai consumers, and that the startup’s goals and objectives are aligned with Thailand’s national objectives.
The foremost lesson for an existing startup in Thailand is to expand early–to activate and develop a market expansion strategy from its onset instead of waiting to scale and becoming entrenched in a single region in Thailand. The reason this factor is critical is because the experience of a startup scaling in Thailand is particularly determined by the rate it expanded across multiple regions, its relationship with Thai regulators and partner network, and its product development. E-commerce giant Lazada and transportation services app Grab are two key examples of businesses adopting the mindset of scaling from day one.
Early expansion doesn’t mean startups should expand throughout Thailand and nearby countries without proper market research. As mentioned above, localization holds the key in Thailand. Thailand market research firms can help you with this regard as each country contains its own consumer habits, consumer spending power and other market nuances.
Particularly for startups based in Thailand with fewer resources and capital, it’s imperative to be capital-efficient and ensure you get the optimal return for each dollar you spend. With this in mind, selecting the right market strategy in Thailand for early expansion will have reaching implications with scalable company growth.
Adaptability of Products/Services
While early expansion and having a dialogue with regulators and partners is crucial for scaling across Thailand, startups in Thailand can’t afford to lose focus on the development of their core offerings, and adaptation of those offerings in the Thai market. Often, businesses that are focused on a particular country for several years, take product development lightly and don’t have the budget and time for investing to differentiate their product experience in the Thai market.
Investing In Talent
The next success factor surrounds experienced talent, which is hard to find in Thailand. When a startup wishes to expand or start a business in Thailand, it is imperative to invest in robust senior talent. A leader who would manage the Thai market is very crucial, needs to be culturally sensitive, understands the business model thoroughly, and be watchful enough to learn from the Thai market and respond accordingly.
While employees have their influence over the execution of the overall company’s vision, it’s still the company’s vision at the end of the day. It implies when hiring the initial members of the team, a startup in Thailand needs to look for people demonstrating a clear understanding of its vision and having ideas that would help the business. A startup must have people who understand its purpose, its customers, and how to make the vision of the startup a reality.
Finally, you have a business in Thailand with the finest product line, still, people aren’t buying? Probably you haven’t done enough market search or selected the right niche very carefully to meet audience requirements. Reaching out to potential customers towards your business entails persistent efforts in marketing. If you’re starting a business in Thailand, you would need the help of Thailand market research firms that helps you in focusing on the overall process of providing customer service, choosing the right niche, delivering a message to the right audience, and promoting the niche in Thai market.
Marketing your business in Thailand is an art form in itself. Thailand is becoming more heterogeneous, but the foundations of its culture won’t budge for anything: Thailand’s traditions, humour, protocols, discourses, are unchanging and at times stubbornly unaccommodating. Hence, the identity of your product offerings needs to seamlessly fashion itself. Cultural sensitivity and sympathetic protocol are of paramount importance for marketing in Thailand. The intricacies of its beliefs can make or break your business.
When setting up a company in Thailand, it’s tough to do everything right and avoid any mistakes. There’s much work to be done, several KPIs to keep track of, and limited helping hands. In addition, you need to be aware of external forces beyond your control.
There’s no guarantee that a startup would succeed, but with a robust strategy built upon the above success factors, there’s a fighting chance that the startup’s idea might succeed. Startups that approach their business strategically without leaving anything to chance, generally stay in business longer and achieve scalability faster.
The Thai economy is ripe for disruption and the country is emerging as a mecca for both overseas and local startups with the Thai government concerted efforts of redirecting the country’s economy to a tech-based economy from an agriculture-based economy.
Source: Asian Correspondent
Most hospitality businesses have been propelled by digital disruption with most executives globally admitting that the transformative has impacted their business to a great extent. It is, therefore, crucial to identify digital disruption approaches and perspectives and to digital implementation across the hospitality industry which offers lucrative investment opportunities in Thailand.
Following weak business operations in 2020, hoteliers have continued to see depressed conditions throughout 2021. The first shoots of recovery would start to break through from the mid of 2022 and will regain pre-pandemic levels by 2023. Against this backdrop, Thai domestic tourism is recovering at a faster pace, thanks to relentless efforts and proactive policies set by the Thai government for stimulating demand. By the early half of 2021, the vaccination programs started to translate into a herd of foreign tourists restarting their travel, helped by a recovering economy and new entrepreneurs starting a business in Thailand contributing to the strong growth potential in Thai hospitality industry.
In the post-pandemic world, hospitality players are moving swiftly to overhaul their business operations onto a more sustainable footing by adopting modern technology and developing their understanding of diverse and varied consumer needs and feeding this information into their advanced tech-driven models to offer their consumers customized travel experiences.
The hospitality sector in Thailand has a central role in its economy because it is among the most popular tourist destinations in the world. This is partly due to the world-class quality of hospitality the country offers to its tourists. As per The Travel & Tourist Competitiveness Report, 2019 by World Economic Forum, Thailand tops almost all the KPIs in the region as shown in the image above. The Thai hospitality sector has been the frontrunner in driving revenue for the country as well as offering business opportunities in Thailand to domestic as well as foreign players.
In addition, Thailand benefits from competitive pricing for accommodation and commute, offering a low cost of living for travellers as well as ex-pats. Beyond this, the Thai hospitality industry benefits from its comprehensive, extensive transportation network, national infrastructure that is being upgraded at a rapid pace, along with the rising number of low-cost carriers serving the domestic market. These factors have offered it an edge over its competitors. The Travel and Tourism Competitiveness Index compiled by the WEF ranked Thailand on the 31st spot out of 140 nations.
For hotel operators in Thailand, their main revenue generating source is room charges which account for approx. 65%-70% of their total revenue. The remainder is generated majorly from the sale of food and drinks.
Hotel Chains in Thailand
The Need for Digitalization Driven by Pandemic
It’s no secret that expectations from consumers are changing the guest experience fundamentally throughout the hospitality sector. Anyone who has travelled to Thailand in recent times can attest to the way the hospitality industry has changed dramatically over the last few years, largely in response to the pandemic and customers’ expectations. The restrictions due to pandemic together with customer expectations have heightened the ease and simplicity of technologies such as mobile, social media and cloud which have helped hospitality companies to deliver instant access and services to their customers.
Improving Guest Experience Through Technology
The notion of improving guest experience has revolutionized the use of technology and has changed business conversations at the strategic level. Companies are gaining enormous benefits from the data collated by all the smartphone apps, social media posts, lobby sensors, etc. However, companies must ensure that they focus on the vision that has been rebuilt around their guest. It’s all about knowing your customer and using innovative technologies to create a personalized experience for them.
Hospitality companies are establishing enterprise-wide digital business strategies for delivering the same.
Such technological and digital transformations have spawned foreign investment in Thailand and some fascinating shifts in the Thai hospitality space are listed below:
Personalization with integration
Your guests won’t think in terms of your line-of-business functions, so there’s no need of organizing information in silos. Putting your guest engagement first, however, requires businesses to understand their guest as an individual, making their systems integration crucial. For instance, most leading hotel chains in Thailand have integrated their restaurant food and beverage (F&B) and leisure systems with their hotel application. They have integrated that data as a key element in their digital strategy. Once that information is aggregated, it could be served as well as accessed by guests using their own devices, allowing them to book a spa treatment, a table at your restaurants or check out any time during their stay.
Mobile Devices and Apps
Mobile devices also play a significant part in enabling guests to personalize their experience with the help of their own devices. For instance, at some Thai hotels, guests can plug their own devices into the in-room entertainment systems so that they could easily access media of their own choice.
Data-Driven Consistent Guest Experience
Consistency remains one of the key challenges for Thai hotels and F&B operators when it comes to the customer experience. It takes a huge effort to create and manage any successful restaurant, so how do entrepreneurs repeat that success? The answer is the technology that does the work for you. Rather than storing all the business and customer-related information on an isolated on-premise point-of-sale (POS) system at every, hotels and restaurant chains are shifting to cloud applications that could be deployed and accessed from anywhere.
It’s one of the major trends designed to improve the customer experience. The business could leverage better and centralized reporting for analysing all sorts of issues, from food costs to guest preferences. One restaurant chain, for instance, uses a cloud application for tracking and managing data on the vendors it uses globally. A restaurant’s brand reputation is based on how well it knows its own ingredients and where they’ve sourced from. Such centralization of information using cloud technology offers them a view of what’s happening in their supplier pipeline.
Brand Recognition and Direct Relationships
Brand recognition is the crux to customer loyalty, as hotels are using digital technology through improved loyalty programs and better guest recognition with the help of analytics, and guest-facing apps. By improving customer relationships, they also improve the chances of their guests booking rooms directly with the hotel instead of routing through Online Travel Agents. The guest engagement landscape is changing and would continue to do so over the coming years. A direct relationship with the customer becomes relevant to stay competitive. Ultimately, customers would gain big from this as they’ll see an even more range of services that are customized to their personal preferences.
To continue the momentum, the hospitality industry in Thailand would need to continue building on its digital strategies for reaching more customers and new markets, such as:
Technological advancements are having a large impact on the Thai hospitality sector. Along with a persistent commitment to low tax rates, stable currency, committed government, and sensible regulation, the Thai hospitality sector gearing up for a powerful comeback. Painful as the pandemic has been, huge opportunities await for start up business in Thailand and corporations alike for creating fresh innovation, as the Thai industry emerges from the pandemic.
There are immense opportunities for starting a company in Thailand in the hospitality space or as a tech service provider to these companies. One thing is definite as Thailand is powering up as an innovation and technology powerhouse, the moment of digital reckoning for its hospitality sector has begun.
Source: Asian Correspondent
Thailand, the second largest economy in ASEAN after Indonesia, is an upper middle-income country with an open economy, a gross domestic product (GDP) of $503.5 billion and a negative 6.1 percent annual growth in 2020. Thailand is an export-dependent economy. Reports suggest that Thailand had exported a total of $226.7 billion worth of goods in 2020. The top export items in terms of value are motor cars, parts and accessories (9%), electronic goods and computers (8%), precious stones and jewelry (8%), rubber products (5%), and plastics (3%).
Trade relations between India and Thailand have grown by leaps and bounds during the last few years, though it halted momentarily due to the global pandemic. In 2019, India did not export any services to Thailand nor did any export happen from Thailand to India.
The Thai economy is projected to grow by one to two percent in 2021 as the negative impact of a surge of COVID-19 in Thailand offsets the positive effects of the recovery of the world economy and global trade volumes, and government stimulus measures. Thailand owes its close trade and diplomatic ties with India to historic, cultural and social reasons.
Two-way trade in 2018 totalled USD12.46 billion with USD7.60 billion in Thailand exports to India and USD4.86 billion in Indian exports to Thailand. Thailand ranks as India’s fifth-largest trading partner in ASEAN.
The ASEAN Economic Community (AEC) blueprint 2025 is projected to boost investment and business opportunities in the coming years. The ultimate aim of the AEC blueprint is to achieve the ASEAN common market with intermediate steps taken to gradually bring greater integration among the member countries.
The benefits of this blueprint to countries doing business with ASEAN would be in the form of seamless movement of goods, tariff rationalisation and a more open and predictable investment regime in all ASEAN countries. This broadens up the opportunity for Indian companies to access the USD 2.8 trillion ASEAN markets through Thailand.
An ASEAN common market has huge potential for anyone trading with it. Economists predict it to become the fourth-largest economy in the world by 2030 surpassed only by the US, China and the EU.
Both Thailand and India have been touted as beneficiaries of the protracted trade war between the US and China. There is no sign of this abating any time soon. Thus many businesses are planning to or are already in the process of re-siting their manufacturing facilities to other locations including India, Thailand and Vietnam (which is an ASEAN country).The SEC is developed with the vision of it becoming the gateway to South Asia. As part of this vision, the Port of Authority of Thailand(PAT) aims to make Ranong Port the logistics gateway between Thailand and India. The capacity of Ranong Port will be increased by six and a half times to reach a capacity of 500,000 TEUs per year by approximately 2022.
In 2019, India exported $4.39B to Thailand. The main products that India exported to Thailand are Diamonds ($653M), Combustion Engines ($401M), and Vehicle Parts ($173M). During the last 24 years the exports of India to Thailand have increased at an annualized rate of 8.6%, from $605M in 1995 to $4.39B in 2019.
In 2019, Thailand exported $7.06B to India. The main products that Thailand exported to India were Air Conditioners ($317M), Vehicle Parts ($295M), and Polyacetals ($282M). During the last 24 years, the exports of Thailand to India have increased at an annualized rate of 14.1%, from $297M in 1995 to $7.06B in 2019.
In 2019, India ranked 44 in the Economic Complexity Index (ECI 0.59), and 15 in total exports ($330B). That same year, Thailand ranked 31 in the Economic Complexity Index (ECI 1), and 23 in total exports ($249B).
Top Items exported from Thailand to India include
Items coming the other way from India To Thailand are
In 2019, the products from India that paid the highest import tariffs to enter Thailand were Food preparations (150%) and Grape wines, sparkling (150%).
The fast growing Indian market remains attractive for Thai investors, given the vast opportunities available in the infrastructure sector, tourism and retail industries. India continues to remain an interesting market for the export of goods from Thailand. Currently, Thai goods have benefited from tax reduction under ASEAN-India FTA in goods. For Thailand, India is like a gateway to South Asia and beyond. As a result of the reduced tariff rates and new initiatives adopted by both countries, trade between the two countries increased manifold in recent years.
Major Indian Companies in Thailand include Tata group – Tata Motors (Thailand), Tata Steel Thailand and Tata Consultancy Services, The Aditya Birla Group, Mahindra Satyam, Ranbaxy, Dabur, Lupin, NIIT, Kirloskar Brothers Ltd, Punj Lloyd Group, Polyplex (Thailand) Public Co. Ltd, Precious Shipping PCL and Usha Siam Steel Industries PCL. It is known that companies like Jindal group [steel], Ashok Leylands [automobiles], Mahindras [automobiles], Escorts, D.R. Hotels (Nellore) Pvt. Ltd. and D.R. Utthama (Thailand) Co. Ltd., are also keen to expand their operations into Thailand.
Leading Thai companies in the fields of Agro-processing, construction, automotive, engineering and banking have an active and growing business presence in India
The two countries need to further expand their strategic, security, defence, and economic cooperation gave the geostrategic challenges as well as huge untapped potential. Both sides should invest the necessary energy, focus, and political capital in the relationship so that it can prosper rapidly to the advantage of the people of the two countries. Both Thai and Indian leaders are aware of the threats and impediments ahead and are determined to overcome them. They are also conscious of the huge existing opportunities and strengths and are resolute to harness them to mutual benefit and advantage.
Source: Asian Correspondent