Free Essay

Thailand Business

In: Business and Management

Submitted By sofiajusto
Words 10148
Pages 41
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THAILAND

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Ana Sofia Da Silva Justo
Pedro Renato Da Costa Faria
Joao Miguel De Carvalho Iglésias
Killian Belleil
Introduction

Recognized as one of the most beautiful country in the world, Thailand attracts both tourists and foreign investors. Its landscape, history, culture and hospitality of Thais make this country very attractive. That’s why we call Thailand : « The Land of Smiles ».
Of many reasons foreign investors want to do business in Thailand. However, the famous Thai hospitality can quickly become a problem for those trying to break into the closed sphere of Thai trade. Indeed, many investors who have tried have failed because of the many administrative tasks.
On top of that, many sectors are reserved for work by Thai nationals only if foreigners are restricted in the types of activities they can perform. It would seem that the best way to start a business in Thailand is to know someone on the territory that is able to help us.
But we behave as ambitious entrepreneurs. So let’s make our own idea with this following market analysis.
First, we will focus on the country's history and key events that affected its economy. Then we look at the factors affecting the development of the country through two analysis tools. We will discover the culture and ways to behave to do business. We’ll end our analysis by doing an analytical report on a mega-size environmental challenge.

Contents

|Parts |Topics |Main components |Pages |
| |General overview over the country’s history and |History, politicians economy, | |
|1 |historical events that play a major role in country’s |authorities crisis |4 - 8 |
| |economic development | | |
| |Factors that hace affected positively or negatively to |Strenghts, weakness, | |
|2 |the economic development of Thaïland (SWOT & |opportunities, threats. |9 - 16 |
| |PESTLE-analysis) |Politic, economic, social, | |
| | |technological, legal, ecological | |
| | |– factors. | |
| |Main characteritics of business cultures and business |Religion, life style, status & | |
|3 |nogotiation style |rank, relationships, business |17 - 27 |
| | |negotiation. | |
| |Analytical report on one of the mega-size environmental |Water pollution, resources, | |
|4 |challenge in Thailand |surface water, ground water, |27 - 34 |
| | |sources & effects of pollution, | |
| | |measures, recommendations. | |

- Part 1 -

T he geographical center of Asia South East, the Kingdom of Thailand is more than a vibrant tourist destination paradise. It is one of the largest and most developed economies in the region. Highly export-oriented, Thailand is known for opening its economy and acceptance of foreign direct investment.

Previously known as Siam (Luang Plaek Phibunsongkhram change it to Thailand in 1939), Thailand was since a long time ago a business and trade center. Among the most glorious periods in its history is the reign of Ayutthaya, which was founded in 1351 by King Ramathibodi, that was classified as one of the greatest centers of trade and commerce in Southeast Asia.

The most famous of the Thai monarchs was, with no doubt, Mongkut who came to the throne in 1851 after spending 27 years as a scholarly Buddhist monk. He was quite a remarkable man in terms of intelligence and vision. He was determined to preserve the independence of his kingdom in the face of French and British acquisitions of the surrounding territories. He recognized the need for Siam to acquire Western learning, technology and institutions in order to fend off the French and British imperialists. So, King Mongkut (Rama IV) developed a strategy that enabled Siam to avoid the yoke of imperialism that overtook his kingdom’s closest neighbors. The King’s strategy was simple: his ministers signed unequal treaties that gave free trade, extraterritorial rights and special privileges to those imperial powers. The result was that by playing each one of these powers against another, Siam managed to maintain its independence. In 1932, a peaceful coup turned the country into a constitutional monarchy.

Overall, Thailand can be regarded as one of the fastest growing economies among developing countries. The average annual growth rate between 1952 and 2000 is a respectable 6,6 percent. (FIGURE-1) Of course, high growth rates were not achieved year in year out, and were not identical between sectors of production, however, not a single year of negative growth of real output per hear of population was experienced over the four decades between 1958-1996, a unique achievement among oil-importing developing countries. Poverty incidence has declined dramatically, but economics inequality has increased. Economic progress has been reflected in very significant improvement in non-economic indicators of well-being such as life expectancy, infant and maternal mortality, and literacy. Nevertheless, the performance of the education system is chronically poor.

FIGURE -1
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One of the most important periods for Thailand’s growth process is probably the one between 1950 and 1973, which was the period when Thailand laid foundations for the subsequent high and stable economic growth.

In 1950, Thai economy found itself in state of recovering from the severe damages left over from the Second World War. This turbulence was only put to an end in 1958, when Field Marshall Sarit Thanarat took complete control of the power through a coup d’etat. Sarit brought with his premiership a vision to run the country according to the international standard, which was a combination of a idea to promote economic growth through macroeconomic management, favorable business environment, and institutional strengthening; and a strong sense of fiscal discipline. The fiscal discipline, exhibited mainly by the curb on public debt creation, was an indispensable ingredient to the uninterrupted process of high and stable economic growth during one and a half decades that followed. In this regard, Thailand was lucky to be able to build such vital fiscal discipline under the corrupt military rulings.

One of the consequences of this development was the soaring government budget deficit, arising from the increased government expenditure, which eventually led to the serious public debt problem during the first half of the 1980s.

The economic hardship caused changes in politics. In 1980, General Prem Tinnasulanon took the office of Thailand’s premiership, where he stayed for the next eight years. His term is considered one of the most stable political in Thai History, in spite of the number of coup d’etat attempts. To worsen off even more Thailand’s economy, the rapid movements in some of the world major currencies affected in a great way Thai’s economy. After the collapse of the Bretton-Wood system, Thailand chose to continue pegging its currency with the US dollar. This decision proved to be costly when the US currency appreciated against other major currencies between 1978 and 1985. As a result, the Thai baht was appreciated which contaminated the country’s competitiveness. Thai government was forced to devalue the currency by 15% in 1981, and went on to abandon the single-currency fixed exchange rate to the basket system in 1984, which amounted to an effective devaluation against US dollar by another 15%.

In contrast with the previous period, the 1986-1996 can be considered the most prosperous time of Thai economy, if we pay attention only on aggregate numbers. The good time was most probably triggered by external events. The first event was the 1985 Plaza accords that had effectively realigned major currencies, where dollar began to depreciate. Thai baht therefore depreciated likewise, as the U.S. dollar represented high weight in the basket system. The second external factor was the sharp decrease in petroleum products since 1986, which remained low until the invasion of Kuwait by the Iraq in 1991. Both accounts on the external front greatly benefited Thai exports, especially the manufactured ones. Weak currency together with reviving world economy from lowered oil prices accelerated the manufactured exports.
Another important byproduct of the exchange rate realignment was the re-location of industrial productions from Japan, Taiwan and Hong Kong, whose currencies had been rising and needed to find new locations that were more cost-effective. Thus, investment capital in the form of FDI flooded into Thailand at an unprecedented magnitude.
Thailand was sufficiently fortunate that despite the tendency among politicians and military rulers to engage in big-scaled corruption, the fiscal discipline remained largely intact during this period. There are possible three reasons for this remarkable achievement. First, the hardship associated with tight fiscal policy in the first half of 1980s, which was the result of lax fiscal policy during 1970s, was perhaps still a fresh memory. Second, governments of the time regarded turning the fiscal budget into balance and surplus a political achievement. Third, and perhaps the most important, reason was that the foundation of budgetary process that was put in place since early 1960s prevented systemic imprudent fiscal spending.

All this growing was put in danger when Thailand was affected by the 1997-1999 crisis. Domestically, the economy was in disarray: output and investment were contracting; poverty incidence was rising; the exchange rate had collapsed, following the decision to float the currency in July 1997; the government had been compelled to accept a humiliating IMF bailout package; the financial system was largely bankrupt; and confidence in the country’s economic institutions, including the Bank of Thailand, was shattered. Internationally, Thailand was now characterized as the initiator of a contagion effect in Asian financial markets, undermining economic and political stability and bringing economic hardship to millions of people.
Thai authorities failed to review and adjust its exchange policy in a timely fashion, including the overoptimistic view they took when assessing the probability of successfully counter-attacking the speculative attacks on Thai baht during the first half of 1997.
What happened to economic growth after the crisis broke were more or less the results of the responses to the crisis by the government itself. The very tight monetary and fiscal policy stance, guided by the IMF, immediately adopted has shrunk the economy to the point that, together with the ballooning debt burdens from the rapid devaluation of baht, the quality of most private companies’ balance sheets deteriorated quickly and severely. This problem is reflected most notably by the figures of the non-performing loans appearing on the asset side of the commercial banks’ financial balance sheets.

The economic damage done by the crisis of 1997-99, and the hardship that resulted were both substantial. The crisis eroded some of the gains from the economic growth that had been achieved during the long period of economic expansion, but it did not erase them. At the low point of the crisis in 1998 the level of GDP per capita was almost 14 per cent lower than it had been only two years earlier, in 1996. Nevertheless, because of the sustained growth that had preceded the crisis, this reduced level of 1998 was still higher than it had been only five years earlier, in 1993, and was seven times its level in 1951.

Since the crisis, Thailand’s economic recovery has been moderate. The rate of growth of real GDP has been somewhat below its long-term trend rate and it was not until 2003 that the level of real GDP per capita had recovered to its pre-crisis level of 1996. Foreign direct investment (FDI) has declined dramatically since 1998 and private domestic investment has remained sluggish. Despite the slower than expected recovery, in 2006 the level of real economic output per person was 19 per cent above its 1996 pre-crisis level and almost 10 times its level 55 years earlier.

The experience of Thailand over the past half century confirms the importance of sustained economic growth, at least in poor countries, for the achievement of the basic social objectives of poverty reduction, improved education and public health. Thailand’s recovery from the crisis of 1997-99 is now complete, despite several unexpected setbacks (like the political violence in the South, the tsunami of 26 December 2004 and the political turmoil in 2006).
Thailand’s economic experience confirms the value of an open economic system in promoting long-term growth. The contrasting experience of neighboring Burma/Myanmar illustrates this point. As recently as 1960 the two countries were impoverished. Since then, Burma’s economic policies have been closed and deeply suspicious of the outside world. Internally, markets have been suppressed and control-oriented solutions have been favored for most economic problems. The difference in living standards today is stark. The majority of the Burmese people remain poor to an extent that is only a distant memory for the Thai population.

But what about today? Each country has to live with his experience. Is Thailand managed to use the resources to succeed? What are the strengths at its disposal in relation to its neighbors? What are the area where efforts are required? What opportunities should be seized, and what factors can affect its development? - Part 2 -

L et’s start by addressing this point are looking already at the first analysis tool following : SWOT. It’s an useful technique for uderstanding the Strengths and Weakness and for identifying both the Opportunities open to us and the Threats we face. Used in this context SWOT analysis we’ll help us uncover opportunities offered to Thailand and how to exploit these opportunities to develop better the business in this area.

We expose in the following table the main factoring, then we’ll detail.

| | | | |
|STRENGTHS |WEAKNESS |OPPORTUNITIES |THREATS |
| | | | |
|Outstanding geographic location |Political and government |A strategic location that benefits |Political risk that comes against the|
|(center of the South of East |instability |negotiations |good business development |
|Asian). | | | |
| |Corruption |Great potential in the field of |Political risk that harmed business |
|An attractive country in some | |green technologies of power |development |
|fields. |Terrorism | | |
| | |Thailand as a new location for |Considerable public debt depends on |
|Geographical advantages both |Poor Intellectual property rights|investment for foreign companies |the measures taken by the Government |
|thanks to the climate and |protection | | |
|location | |Recent means used to develop the |Violence and terrorism still affect |
| |Poor english Literacy |agricultural sector |the business |
|An attractive country for tourism| | | |
| |Pollution |Government reforms deployed to |Doubt remains regarding the choice of|
|A cheap labor that benefits the | |support household consumption. |investing in Thailand for several |
|hiring |Difficulty of finding agreements | |reasons |
| |between the various departmental | | |
|Medical service of high quality |authorities | | |

STRENGTHS

To begin let’s talk about the outstanding geographic location. Thailand is located at the center of the South of East Asian region allowing some availability in the logistics and transportation of goods.
We can see on the picture against the two main roads. The blue one is The North South Economic Corridor (NSEC) liking Thailand, Laos, Myanmar and Southern China. The yellow one is The East West Economic Corridor (EWEC) passing from Myanmar to Thailand to Laos and to Vietnam.

If we were talking about economy now, it should be noted that the Thai economy was able to withstand many political unrest. The overall GDP growth, exports, foreign direct investment and tourism have all exceeded expectations that were made.
It is true that Thailand is still a country in which advance the reputation of attracting direct foreign investments particularly in the automotive, manufacturing and other industries oriented towards the export of goods electronic.

Thailand possess geographic advantages both climate and location which allows to present a competitive advantage in agricultural production (rice, sugar, cane, maize, cassava, various tropical fruits).

Thailand offer an impotant variety of tourist attractions ranging from unique cultural places to charming nature. And Thai people’s hospitality and service-minds.

Job offers are multiple and labor at a relatively low price. It is easier and cheaper to hire.

Finally, Thailand is a world leader in medical services. It’s becoming an important source of foreign exchange for the country and generating "medical tourism". Doctors are available, equipped and mostly foreign-trained and are able to provide high quality cares with surprisingly affordable prices.

WEAKNESS

First, let’s talk about the political and government instability.
Political risks are likely to remain high until the new government shows it can withstand challenges to special interest groups, including the military. Uncertainties strong as the country does not show it can manage a succession to the monarchy without experiencing political unrest or social unrest. The army took a major role in the political life of Thailand which sometimes harm it and reputation of other institutions such as the judiciary were also damaged during the major political movements.

But the the most problematic factor doing business in Thailand seem to be the corruption. The cost of corruption is around 35% to any investment. It costs the country about 100 billion bath a year. Needless to say that it may discourage foreign investors to invest in Thailand.

The supply of skilled technicians is less important than in other neighboring countries, with the exception of Indonesia. The level of English in Thailand is one of the worst. We’re talking about a really poor English literacy. The English proficiency index : 55th out of 60 countries among non-english speakers countries. So It can be difficult to recruit and retain experienced staff.

More, acts of terrorism are common in Thailand. Most often they are linked to the insurgency in southern countries, which lasts for decades. Sporadic incidents have also occurred elsewhere, mostly in Bangkok.

Thailand also faces a problem with pollution. The cost of renewable energy technologies is high and remains at a stage of development in Thailand where progress is expected.

Last but not least inconvenience is bureaucracy. It is difficult to reach agreements, cooperation between different ministries.

OPPORTUNITIES

With a strategic location in the center of ASEAN (Association of SouthEast Asian Nations), Thailand can play this advantage to gain more opportunity for negotiation with other markets. It can move or expand the production base to other ASEAN countries and enjoy the law and investment resources.

After chronic shortages in recent years and an energy economy based on import, Thai utility Electricity Generating Public Company (EGCO) announced plans to invest $ 1 billion to expand its production capacity hollow of 2014 electricity industry experts say Thailand has a huge potential of solar energy and other "green" technologies of power, which can be used to meet the growing energy demand.

The recent increase in labor unrest and rising wages in China will give Thailand a chance to market themselves as an alternative investment location for foreign companies.

Recently steps have been taken to improve the country's agricultural production as a series of large-scale projects involving the application of nuclear techniques. This is an ambitious and challenging project technically which includes no less than sixty scientific and organizational activities: field studies, experiments, and others ... So much effort that will possibly soon be bringing new skills and investment in the country.

Recent government reforms to support the consumption of Thai households. Objective: to stimulate consumer spending, which have deteriorated in recent years due to social unrest and political instability.

THREATS

Political risk is the major problem in good business development in Thailand. Solicitating regarding investments in infrastructure, and military spending which become excessive.

The size of the public debt could become a bigger problem if the new government remains as severe as regards political spending.
One problem that affects particularly the country particularly in the proper development of business and capital inflows remains that of violence and terrorism. These latter are increasing in the south.

The United States as Japan or the European Union may affect the growth of Thai exports and insist the foreign investors to doubt as to the business development in Thailand.

L et’s focus on a different analysis tool which allow us to analyze the environment facing Thailand in different aspects. To do this we will use the PESTLE analysis tool. Originally known as PEST analysis, it is a macro environment used framework for understanding the impact of external factors on the organization and is used as a technique for strategic analysis. PEST stands for "political, economic, social, technological." In our analysis, we also take into account the legal and environmental factors.

POLITICAL Thailand has had seventeen charters and constitutions, reflecting a high degree of political instability. After several moves, military regimes were repealed and existing constitutions were promulgated in interim charters. Negotiations between the men of influence and became interim general factors of political stability. Political instability affects the business environment for both investors and customers. This governmental instability impact investment and the rate of development of the economy also.

ECONOMIC The economy of Thailand is an emerging market economy, heavily dependent on exports, which account for over two thirds of GDP, which is in PPP $ 627 billion. The recovery in Thailand since the Asian economic crisis of 1997, is particularly expressed by specializing in certain export sectors such as automotive, food processing, electronics that make large amounts of currency return as tourism and although the majority of the workforce in Thailand is still engaged in agriculture. GDP growth of Thailand has been running for a decade between 4% and 7%, suffering the consequences of tensions in southern Thailand, the natural disasters and the political instability …

Thailand’s GDP expanded 0.4 percent from a year earlier in the second quarter of 2014, rebounding from a revised 0.5 percent contraction in the previous quarter and beating market expectations. Domestic consumption rose for the first time in four quarters and exports of goods increased at a faster pace.
We must admit that the economy of Thailand is recovering significant flooding that hit in 2011, real GDP fell by 8.9% year on year, the sharpest contraction since the Asian financial crisis of 1997-98. But now, Thailand seems to be on track to become one of the fastest growing economies of Asia.
However, the consumer spending slump mostly reflects increased political and economic uncertainty. This has led households to postpone purchases of expensive items, such as cars. Commercial banks, meanwhile, have tightened up consumer lending.
Inflation seems to decrease from year to year. In 1994 it was 4.3%, 3.1% in 2004 and 1.9% for this year, 2014.
The unemployment rate which measures the number of people actively looking for à job as a percentage of the labour force. It’s about 0.8% in Thailand, a good number compared to others neighbours countries.

SOCIAL The population is becoming more again…
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Thailand is among the 20th largest population in the world.
Religions are divided approximately as follows Buddhism 95%, Muslim 3.8%, Christian 0.5% , Hinduism 0.1%. The ethics are really strong too.

In 2030, the population of Thailand will reach 71.2 million, an increase of 4.9% from 2012. The population will age rapidly in 2012-2030 and this will be compounded by falling birth rates.

Thailand’s consumer outlook remains essentially healthy, with a growing middle class willing to spend not just on household essentials but also on leisure activities and luxuries. Thais are also enthusiastically embracing e-commerce, especially on their mobile phones. But the on-going political unrest is a cause for concern and is expected to have an impact on consumer behaviour.

While the overall reduction in poverty during 1988-92 is encouraging, the increase in income inequality is less reassuring. Just as consistently as poverty fell, income distribution in all regions became more skewed.

TECHNOLOGICAL Regarding education in Thailand, we can agree to say that the level of education is not very high, or even bad. Thailand is among the 10 ASEAN nations which are at the lowest. Thailand even lower than Vietnam and Cambodia level. However, costs investits in educations are significant but low yields remains ... Education is not yet widely promulgated among Thai citizens. To date, the Department of Education estimates that up to 1.6 million Thai children are unable to read or write.

Counterfeiting in Thailand is real.
Many contrefais products are sold all over the city that are either in the shops or on the streets. This is most often branded clothing, jewelery and electrical equipment value.
Counterfeit products are attractive to many tourists who stay in Thailand..
Internet piracy is a major concern in Thailand, which increases with the rise of smartphones and other new technologies.

LEGAL Thailand has announced major tax reforms to encourage investment and support the market through increased domestic consumption. Tax reforms are expected to increase tax revenues as well as helping increase business investment in the country.

ECOLOGICAL Thai government to make environmental protection a priority. She presented a seventh development plan economic and social in particular in the areas of petrochemicals, engineering, electronics and basic.
But Thailand is also facing problems of air and water pollution, declining wildlife populations, deforestation, soil erosion, scarcity of water, and hazardous waste issues .

- Part 3 -

L et’s talk about business cultures and business negotiation

In international business negotiations, cultural differences are inevitable between negotiators from different countries. Cultural values can influence in significant and unexpected ways, from the first to the last stage, a negotiation. The diversity of values of partners results in different approaches used in the negotiation process and variable expected outcomes. Successful international business negotiation is not guaranteed by following practical negotiation tips. In fact, it would be more useful for negotiators if the most critical success factors of international business negotiations in a particular culture could be identified in advance. In Asia the traditions, values and customs of each nation must be recognized and they must be respected.

In Europe, North America or Australia a typical negotiator likes to be viewed as tough, realistic and assertive. It is also usually to politely criticize our negotiating and business partners while searching for a solution to a problem. Criticism can be part of a negotiation strategy. Among Westerners the discussion climate in business relations can be relatively aggressive without anyone being insulted or taken aback.

To do businesses in Thailand is completely different, therefore we need to take a closer look at the Thai value system and its influence on daily and business life.

BRIEF INTRODUCTION OF NEGOCIATION IN THAILAND

Situated in the heart of Southeast Asia, Thailand has become a popular destination for international business expansion and relocation. In this country around 75% of the country’s population is Ethnic Thais and the majority of the others in this pluralistic culture are Chinese. Centrally located and boasting a strong and stable economy, Thailand is an ideal location for establishing a manufacturing base and support centre for customers in the Asia Pacific region. With highly among of its GDP dependent on exports, the Thai business environment is internationally minded and open. However, business relations and practices in this country are intricate and unique; many of the businesspeople belong to the Chinese minority which can sometimes make it necessary to close a deal both in Thailand and China; the Buddhist religion, practiced by roughly 95% of the Thai population, plays a critical role in all aspects of life, and business decisions are often highly influenced by religious customs and rituals. Cultural and religious understanding and sensitivity are critical for establishing positive and productive business relationships with Thai counterparts.

The country consists of two former kingdoms, Thai Lann to the North and Siam to the South. Power centres among the Thai elite still follow this division, so doing business countrywide often requires negotiating separate deals.
Businesspeople and officials in Thailand, especially outside of Bangkok, usually have only limited exposure to other cultures. When negotiating business here, there is need to realize that people may expect things to be done ‘their way.’ However, some among younger generations may have greater international experience and can be very open-minded.
Thailand is the only Southeast Asian country that was never been colonized by European nations. And they are really proud of this fact. Thai means free. There is a strong allegiance to the King and his family. The country’s government, though, has been the subject of many coups throughout its history. Government contracts may therefore not be secure in the long term. In addition, the country is divided into several provinces whose local governments may be very influential, especially away from Bangkok.
There is a success ensure of international business venture by learning more about doing business in Thailand and the Thai business culture.

THE IMPORTANCE OF BUDDHISM

Thailand is predominantly Buddhist, about 95 per cent of the population, except in some parts of the south where many people are Muslim. Buddhism is not only a religion, but also a life style, therefore has its strong effects on business as it does on all aspects of life.
In this country the more dominant strand of Buddhism is the Hinayana that pursues the happiness and longevity. And the main object is to enlightenment or nirvana. But a lot of businesspeople in Thailand come from China, so it is important to know the other strand of Buddhism: Mahayana, which pursues happiness, longevity and wealth, this extra characteristic is very important in the business world.
The average western style businessperson is motivated by a desire of succeed and a craving to get ahead. This attitude is really contrasting with the Buddhism approach, which teaches that all desires and selfishness result only in suffering and love bring happiness and well-being, consequently the true path to peace is to eliminate all desire - a condition defined as “nirvana”, an indescribable state free of desire, suffering, or further rebirth, in which a person simply is, and is completely at one with his surroundings. According to Buddhist teaching, life does not begin with bird and end with dead, but rather that every person has several lives based upon the lessons of life not yet learned and acts committed (karma) in previous lives. What one achieves is the sum total of one’s meritorious and evil behaviour in both this life and stored up from past. The Buddhism and the concept of reincarnation give Buddhists a feeling of not being completely responsible for their own lives, and so they do not have a lot of ambition, reflected in the business life. As far as most Thais are concerned, the past and the future are not as important as the present. This can explain the Thai way of dealing with personal finances – money is for spending and not for saving.
The way that change is viewed is also very different. In the western culture change must be created. For Thais, by contrast, change is inevitable. In Buddhism change is a fundamental principle – all things must change regardless of one’s efforts. To attempt to direct the change would be futile, whether than change is trying to stop the change state from death to life or any other event, including business. That is the reason why the negotiation process is so slowly.
Thais have a strong emphasis on tolerance based in the Buddhist precept that all things, including people, are essentially unimportant. Therefore, they have a very tolerance attitude in the business situations.
An important aspect in Thai culture is that most Thai men will have spent a period as a monk – buat phra. One usually enters the monkhood just before marriage or before taking on a first major job. Monkhood is often seen as a sort of way to enter into the more responsible positions of work and family life. Nevertheless, Thais may enter the monkhood several times in their lives and for any number of reasons. The practice is so common that banks and government jobs are required to give leave for employees to make merit as monks, a practice followed by many Thai companies as well. Accordingly, it is really not surprising that most of the successful Thai business people are from Thai-Chinese families or have studied abroad and have a good working network with contacts around the world. Their upbringing makes business life easier for them; they are less inhibited by Buddhism and better able to deal with a rougher, more aggressive business culture.

STATUS AND RANK

Thai society is hierarchical, where social relationships are defined as one person being superior to the other. Thais achieved increased social status with income, occupation and education, age, clothing, social connections and family names. A person of higher status is to be respected, regardless of how good or bad their performance may be. Royalty and monks always ranks highest. Therefore, negative criticizes about the members of the Thai Royal Family are never appreciated and can ruin the business process. Any image of Buddha should also be treated with extreme respect. Soles of feet should not be pointed in the direction of a Buddha. And never touch or deface any image or statue of a Buddha or monk.
The family unit is the cornerstone of Thai community life and remains particularly strong, especially in rural areas. Despite the advent of the commerce and tourist, and the pursuit of material wealth, children are taught to honour their parents and elders and to depend on the extended family for mutual support.
It is very difficult for Thais to have a conversation with a person whose status in unclear, so when Thais first meet someone, they immediately try to place them within a hierarchy so they know how to treat the person. So in an effort to discern a person place in hierarchy, Thais may ask questions about marital, status, salary, or other topics that are considered very personal by Western standards. Speech is modified depending on rank and status.
Some responsibilities and attitudes are expected from a higher-ranking individual, as picking up the tab at dinner, dressing your role, trying not to avoid your position, being courteous to those of lower status, etc. Business leaders may have a high sense of self-reliance and can be very autocratic and authoritarian. If an individual is from the inferior ranking it is expected to obey and listen to the superior, sometimes without questioning or interrupting, because it can be seen as arguing. In business meetings, the highest ranking person should sit first. To avoid misunderstandings is really important that a person provide clear their rank and status, and inform participants of whom you report to. Thais expect the highest ranking senior official to conduct the business conversation, and will not understand if subordinates interrupt.
A Thai does not comprehend when a person criticizes someone for their authoritarian behaviour or when someone does not accept that higher status individual is by definition “right”. At the same time, one should forget that Thailand and its social structure are changing. In urban centres like Bangkok it is possible to find a well-educated middle class influenced by Western social values. But it is not expectable this behaviour outside of large Thai cities.
The innate respect that Thais have for older people can be showed in business, manly when a Thai businessperson is significantly younger than their partners, they will be especially polite and respectful. But they are just being polite. The partners have to work to earn real respect from Thai businessperson.

RELATIONSHIPS AND TRUST

Most Thai business are owned by Thai families of Chinese descend. The Thai families know each other well and are often related through marriage. Therefore, Thais are most comfortable doing business with people they know and respect. New business relationships, manly with foreigners have a slow development, it may take several meetings. Establishing good personal and lasting relationship is the fundamental to a successful business relation in Thailand, who often expect establish strong trustable bonds prior to closing any deals.
Thailand’s culture is strongly group-oriented. Individual preferences are viewed as less important than having a sense of belonging to a group and maintain the harmony among its members.
Relationships are based on familiarity, respect, and personal trust, which can take a long time to establish. Good contacts are a great help in the process. They can act like references. References and good networking are crucial in doing business in Thailand – guanxi - and having the wrong contact can lead to the end of an otherwise promising business relationship.
Business relationships in Thailand exist between people, not necessarily between firms. If someone has the friendship and trust of the business partner, it does not necessarily mean that they trust others from the company. Thus, it is very important to keep firm interfaces unchanged, because changing a key contact may really slow down the relationship building process and in the worst case end the negotiation.
Harmony and the avoidance of conflicts are essential elements in this country. Respect for other people’s feelings and the importance of personal reputation are so important that any criticism should be avoided and emotional restraint is held in high esteem. Saving face is essential for every Thai. Causing embarrassment can be disastrous for business negotiation.
Reputation and social standing strongly depend on a person’s ability to control emotions and remain friendly at all times. The importance of diplomatic restraint and tact cannot be overestimated. In a negotiation the partners never should show openly that they are upset.
Thais are productive and hardworking while at the same time happy what they are and what they have materially. Mai Pen Rai – never mind – is the Thai expression which characterizes the general focus of life – it is to enjoy. Control of emotion should never be lived, and a person should never be overly assertive. Admired personal traits include politeness, modesty, sincerity, honesty.

BUSINESS NEGOTIATION

Initial Contacts and meetings Before initiating business negotiations in Thailand, it is highly advantageous to identify and engage a local representative who can make the initial contact. This person will help bridge the cultural and communications gap, allowing conducting business with greater effectiveness. Without such an agent or business partner, even seemingly simple things such as getting items through customs can become very difficult and frustrating. The choosing of the representation should be carefully to ensure that they can accomplish what it is expected.
The first time contact with a Thai company is best done by formal latter, e-mail is not appreciated.
When planning business meetings, appointments are necessary and should be made at least one month in advance. Very often, issues will need to be repeatedly discussed, and at many different levels, before any decisions are made. Since people want to know whom they will be meeting, it is good idea to send a list of who will be attending the meeting and their credentials so that Thais know the relative status of the people attending the meeting and can plan properly.
Thais prefer to work later in the evening rather than early in the morning. While meetings may start considerably late, Thais expect foreign visitors to be punctual as it signifies respect for the person you are meeting. Displaying anger if you have to wait, which happens often, reflects very poorly on you.
Traffic in Bangkok is chaotic so it is better to allow plenty of time to get to an appointment.
Business negotiations usually start off with general small talk. This allows participants to become personally acquainted. Usually initial meetings take place over lunch or drinks and entertainment is part of developing business relationships. Thai people generally value enjoyment - kwam sanuk. The primary purpose of the first meeting is to become acquainted and build relationships. Business may be discussed, but should not be hurry. It is unrealistic to expect initial meetings to lead to straight decisions. Frequent meeting interruptions are normal and do not signal a lack of interest.
Presentation materials should be very attractive, with good and clear visuals, have hand-out materials translated to Thai is not a must, but it helps in get the messages across.
First meetings generally produce good humour, many smiles, polite conversation and few results. The second meeting should include a meal invitation. Negotiations may be lengthy. Process takes precedence over content. Slow information flow may delay discussions and decisions.
The most important thing to keep in mind is you must be patient.

Contracts and Safeguards In Thailand, as in other parts of the world, people set up written contracts, which become legal when signed by the relevant parties.
Nonetheless, in contrast to Westerners, Thais prefer contracts that leave more room for discussion and change. Trust is the basis of business. Too many clauses or the involvement of a lawyer are usually regarded as a sign of mistrust.
It is possible do business in Thailand simply on the bases of mutual trust. Sometimes a deal can be struck through a simple handshake. However, one should be careful with this kind of dealings. Women in business Men conduct most business. Women rarely attain positions of similar income and authority as men unless they work for the government. However, many traditional sex-barriers are disappearing. More and more women are holding executive positions in the workforce.
Female business travellers should exercise caution and act professionally in business and social situations. Displaying confidence and some degree of assertiveness can be effective, but it is very important not to appear overly bold and aggressive.

Business ethics As deeply Buddhist people, Thais place great emphasis on the outward forms of courtesy. Being self-effacing, modest and not embarrassing or intruding on others is an essential part of Thai culture. The smile is the most useful non-verbal tool and disarms as well hides a large variety of emotions and reactions. We need to make sure that we smile back. Many of their rules of etiquette are by-products of the Buddhist religion.

Greetings Thais still greet and say goodbye to each other with the traditional Buddhist greeting called the wai, in which the palms are pressed together and the fingertips brought to the forehead with a slight bow of the head and say Sawadee. The wai is a sigh of respect as well as a greeting, given by the person of lower status to the person of higher status. The low the head is bowed, the more respect is shown. It can mean “Hello”, “Thank you”, “I am sorry” or “Goodbye”.
Not all Thai are comfortable with touching strangers, and the wai allows people to greet each other without physical contact.
If you are greeted with a wai, you should reply with one, except to children or those in service roles, such as wait staff, drivers, etc. It is unusual for older people to wai younger people in return. The most common response would be a simple nod of acknowledgement.
In general, wait for your host and hostess to introduce you to the other guests. This allows everyone to understand your status relative to their own, and thus know who performs the wai and how low the head should be bowed.
As foreigners are usually not expected to know the wai etiquette, they will be pleased if you greet them with their traditional greeting, mistakes will be excused but if we are not sure how to do it, it is better not to wai at all. Just nodding in a friendly way is alright.
Educated cosmopolitan Thais and in the business world shake hands.

Communication and Body Language The official language of the country is Thai. Many businesspeople speak English, although not ways well, thus is appropriate to ask beforehand whether an interpreter should be present at a meeting.
When communicating in English, the sentences should be short and simple to help people with limited command of English. It is important to summarize the key points often, and to pause frequently to allow for interpretation.
Loud and boisterous behaviour is perceived as a lack of self-control. The speaking should be quiet and with gentle tones. Conversations may include periods of silence, which do not necessarily convey a negative message.
Direct confrontation is inappropriate, it is better to ask open questions. When responding to a direct question, Thai people may answer “yes” only to signal that they heard what you said, not that they agree with it. It is rare to wear a “no”. It is better to use a similarly indirect approach when dealing with Thais, as they may perceive as rude if the questions are too direct. You can ask them to explain things again – make it clear you are not sure if you have understood. This helps them to keep face.
A Thai who considers you a superior will likely tell you what he or she thinks you want to hear, especially when others are around. This is a way to save face and preserves honour. Similarly, if asked to give constructive feedback, people may resort to highlighting only the positives, in which case you should listen carefully for what is not being said.
Non-verbal communication is important: watch body language and facial expressions is really important because these will be believed over words.Touching between people of the same sex is more common in Thailand than in many other Asian countries. However, touching someone of the opposite sex is taboo. Do not show affection in public. In Buddhism the head is considered sacred and must be respected, therefore it is important to never touch or pass anything over anyone's head.
Since, Thais consider the left hand unclean, its use should be avoided, such as foots, thus it is unappropriated pointing to the feet or use it to move anything or touch anyone, the best to avoid this is to not cross the legs at all. It is common practice to remove shoes before entering a Thai home. Thai people are very conscious about cleanliness and wearing shoes inside is not appreciated
Physical contact may be avoid expect for handshake. Pointing with the index finger or the full hand is considered rude. Instead, gesticulate in the general direction of whatever you are referring to or point with your chin. Eye contact should be very infrequent. Thai people rarely look the other straight in the eye. Restrain your emotions and avoid any facial expressions that may suggest disagreement, such as grimacing or shaking your head. Thai people do not expect foreigners to smile as often as they do. Smiles and laughter do not always indicate amusement or approval. Frequently, they may mask embarrassment, disapproval, and other feelings of distress. Accordingly, Westerners may sometimes observe Thai people smiling or laughing at what they might consider inappropriate moments.

Names and Titles Thailand people often have very long names and it is general the use of the first name rather than surnames, with the honorific title Khun, for men and women, before the name, unless they carry a higher degree, such as doctor. Last names are only used for very formal occasions and written communications. Contrarily, nicknames are common in Thailand, especially if the names are hard to pronounce.
When Thais try to address the complete name of their business partner, it is polite to tell them that the use of the first name is ok.
Many Thai business people are Chinese. The order of Chinese names is different from Thai names. Chinese names consist of a family name and two personal names. Some people use assumed western first names, in which case they give their names in the order of first name followed by family name.
Properly pronouncing the counterparts’ names is very important.

Business Cards Business cars are exchanged after the initial greeting and should be offer to everyone present, but given to the most senior person first. Not having a card as a foreigner is viewed as unprofessional, even though Thais may not always give them cards.
Business cards should be of high quality and printed in English, with the other side translated into Thai. Professional title may be included on the card. Status is important.
A business card should be offered with the right hand, with the Thai side facing the recipient. Similarly, accept other’s card using only the right hand, and look at a business card for a few moments, and then remark upon the card and place it on the table in front of you or into your card case. It is polite to make some comment about the card. Never stuff someone’s card into a back pocket or otherwise treat it disrespectfully.

Dress ethics Thai society is divided into upper and lower classes. At formal occasions, dress is expected to match one’s social station. Appearance and wealth is greatly admired. Status symbols, like an expensive car, top brand watches and clothes and expensive accessories make a great impression in Thailand.
Your social status and success will be perceived by the Thai in the way you dress. Business attire is conservative – men should wear dark coloured conservative business suits and women conservative business suits dresses, high necked blouses, low heels and neutral colours.
Since Thai’s judge you on your clothing and accessories, ensure that your shoes are always highly polished. In casual settings, men should wear slacks and shirts, and women light dresses or skirts and blouses. Short-sleeved blouses are acceptable, but sleeveless ones are not. It is better to be overdresses than badly dressed.
You may have to take your shoes off when entering a Thai house or office, especially in presence of a Buddha image.

Gifts The Thai calendar is full of festive occasions. Once you are accepted as a long-term business partner, it is inevitable that you will be asked to attend some of these occasions.
Gift giving is common in social and business settings in Thailand, especially after signing a contract is viewed very favourably. If you received one, it is best to reciprocate with an item of similar value – Renqing, service that is done to you, must always be returned by bao service that you do to others - that is typical of your home country. In business items such as books, good quality chocolates, pens and brandy/liquors are appropriate. Gifts should be wrapped attractively – green, black or blue wrappings are used at funerals and in mourning; gold and yellow are considered royal colours, so it is a good idea to wrapping in these colours; red wrapping only is used if a gift is given to a Chinese Thai.
Gifts are not opened in the presence of the giver, unless invited to do so, and they should be given and received with the right hand (with both is also acceptable).

Table manners Business lunches and dinners are frequent and help advance the vital process of building strong relationships and growing the network. Business may not be discussed during these events; the main point of the social events is to deepening the relationship.
The meal will most certainly be paid for the Thai host, so is not polite to insist on paying. It is best to arrive on time and as a group, but social events do not require strict punctuality.
The host and the more senior members of the group should be seated first.
Table manners are very important, especially when dealing with Thai elite. It is appropriate not rush to eat, and avoid spilling food from the plate onto the table. Never grimace if served something strange or unfamiliar. Leaving a little food on the plate is usually good as it signals that there was enough of it, but never leave rice on your plate as it is considered wasteful.
During small talk and other social conversations, Thais can ask very personal questions. If you do not want to answer, smile or politely explain that such topics are not discussed openly in your culture.

- Part 4 -

L

et’s talk about a mega-size environmental challenge in Thailand : the Water pollution

Water pollution is considered the biggest environmental challenge that Thailand faces nowadays. In the past, water pollution was not a big concern for Thai population since the country was pretty abundant in fresh water. The need for water was quite low, adequate for the poor developed agriculture and suited the necessities for households. But the accelerated economic growth powered by agricultural and industrial expansion verified in the recent years changed the course of the situation. Those events associated with the increasing population and strong urbanization are considered the essential factors leading to the development of this problem.

WATER RESOURCES

The primary water sources used by Thai population are two: surface water and groundwater.

Regarding surface water, Thailand has 52 major water resources, 48 of them are main rivers and 4 are standing water sources. As we can see from Table 1 from the 2011 Thailand State of Pollution Report provided by Thailand’s Ministry of Natural Resources and Environment, only 32% of surface water resources were considered at a good water quality level. The rest 68% are distributed in Fair (45%) and Deteriorated (23%) levels. The first conclusion that we can take from the table is that surface water resources are mainly of poor quality. We can also see that there has been improvements in water quality.

Groundwater is the water found underground earth’s surface. It is stored in and moves slowly through geologic formations called aquifers. It is an important water resource for Thai population, and according to Figure 12 from the 2011 Thailand State of Pollution Report provided by Thailand’s Ministry of Natural Resources and Environment was at good level and consumable. But analyzing Figure 12 we can see that in the Bangkok metropolitan region, which is the most heavily populated zone, there are some areas that groundwater is meeting minimum consuming standard and exceeding consuming standard.

SOURCES OF POLLUTION

The pollution of water has two main sources, household and industrial waste.
Household waste is a big concern in Thailand. The country produces approximately 27 million tons of waste per day, and some of that trash is dumped in water canals (khlongs) and rivers. Figure 13 shows physical garbage in the form of plastic bags, coke cans and polystyrene lining the side of the khlongs underneath the houses and floating freely in the water. 80% of Bangkok’s sewerage enters the khlongs and river directly.
Concerning industrial waste, the main polluters are the sugar, pulp and paper, rubber, leather, and other manufacturing industries, which are mostly owned by Thai businesses. These industries release chemicals and solid waste directly to khlongs and rivers. The result is poor quality water that smells bad and has color.
Floods aggravate the problem. Regarding its interaction with water pollution, the flooding exposes people directly to the effluent and sewerage already evident in the khlongs, heightening the risk of disease as well as direct damage from the flood.

EFFECTS

This problem has some hard consequences. The three biggest consequences are diseases, animal extinction and lack of potable water.
Diseases related with water pollution are a major concern and must be taken serious. They can fall in the following categories, waterborne diseases, water-washed diseases and water-based diseases. Waterborne diseases, including cholera, typhoid, and dysentery, are caused by drinking water containing infectious viruses or bacteria, which often come from human or animal waste. Water-washed diseases, such as skin and eye infections, are caused by lack of clean water for washing. Water-based diseases, such as schistosomiasis, are spread by organisms that develop in water and then become human parasites. They are spread by contaminated water and by eating insufficiently cooked fish. Some of this diseases can lead to death.
Animal extinction is another effect of water pollution with the poisoning effect of the water mostly in fish, and the destruction of their habitats, for example coral.
Lack of potable water is the final main effect of water pollution and the one that can be the most important problem for Thai population in the following years. It is estimate that water scarcity will affect Thailand by 2025.

MESURES TO OVERCOME THIS CHALLENGE

Government of Thailand has four main Ministries: Interior, Industry, Agriculture and Cooperatives, Natural Resource and Environment that have been assigned to cover work in relation to water resources management. The Department of Water Resources of the Ministry of Natural Resource and Environment is the core agency in the formulation of policy and integrated water resources management plan in the river basin system.
As we can see on Table 2, there has been some legislation applied to overcome this challenge, with more commitment since 1992.
The most recent program developed by the government is the Ninth National Plan where priority on water resources management is given to shifting from the supply-side approach to the demand-side strategy, for the overall basin water management strategy be substituted to the project-by-project approach and to set up the institutional framework of water administration with users participation.
In 2010 the World Health Organization presented the National Environment and Health Action Plan in order to supply an adequate quantity of clean water for the consumption of all families, to all local communities have efficient disposal management systems for avoiding the contamination in the water resources and to encourage public awareness regarding consumption water, impacts of the polluted water problem, and efficient use of water.

Despite these measures, it appears that these policies so far have not had the desired effect, verifying the same levels of water pollution. This leads to a growing concern among the population, because it feels that this problem does not seems to have solution with the existing policy.

RECOMMENDATIONS

A way to minimize the pollution from the household side, is to create an awareness campaign in order to sensitize the population about throwing the waste into the rivers and khlongs. More control over the pollution made by industries, with law suits for those that do not meet the minimum standards is another recommendation to face this challenge. It is necessary to protect the clean water that is left. The country should develop a long-term plan and effective water management needs to be implemented, especially in effectively dealing with flood and drought problems.

The illustrations below complement and reinforce this analysis

(TABLE 1)
[pic]

(FIGURE 12)

[pic]

(FIGURE 13)
[pic]

(TABLE 2)
|Legislation |Regulated Activities |Responsibility |Remarks |
| | |Ministries | |
|Enhancement and |Regulates specified point sources for |MONRE |Amendment to NEQA; key environmental |
|Conservation of National |wastewater discharges into public water | |legislation to fill gap; no criminal or |
|Quality Act (NEQP 1992) |resources, or the environment, based on | |civil liability for violation of standards|
| |effluent standards | | |
|Factories Act of 1992 |Limits level of effluent discharged and |MoInd |MoInd also promotes industrial development|
| |restricts concentration levels of | |activities which creates conflicts of |
| |chemical and/or metal pollutants | |interest. An amendment to the Act is being|
| | | |drafts to require pollutants to pat for |
| | | |clean-up costs. |
|Navigation in Thai |Prohibits dumping of any refuse including|MoTC |Many cases have been successfully brought |
|Waterways Act (Volume 14) |oil and chemicals into rivers, canals, | |against polluters |
|as amended in 1992 |lakes or waterways that may pollute the | | |
| |environment or disrupt navigation in Thai| | |
| |waterways | | |
|Publics Health Act of 1992 |Regulates nuisance activities related to |MoP |Decentralized implementation to LGAs |
| |water pollution such as odor, chemical | | |
| |fumes, wastewater discharge system of | | |
| |buildings, factories or animal feedlots | | |
| |tht cause harmful health effects | | |
|Cleanliness and Tidiness of|Prohibits dumping of refuse in waterways |LAOs |Decentralized implementation to LGAs |
|the Country Act of 1992 | | | |
|Canal Maintenance |Prohibits dumping or discharging of |MoAC |Little used |
| |wastewater in canals | | |
|Building Control Act of |Regulates discharges of water pollution |MoInt |Decentralized implementation to LGAs |
|1979 |from building | | |
|Penal Code of 1956 |Prohibits adding harmful substances in |OAG |Little used |
| |water resources reserved for consumption | | |
|Fisheries Act of 1947 |Prohibits dumping or discharging of |MoAC |Difficult to prove intention for criminal |
| |hazardous chemicals into water resources | |liability |
| |reserved for fishing | | |
|Royal Irrigation Act of |Prohibits dumping of garbage or |MoAC |Limited jurisdiction |
|1942 |discharging polluted water or chemicals | | |
| |into irrigation canals | | |

Conclusion Thailand is a dream destination for many tourists. Indeed, Thailand attracts more and more people through these cultural varieties. Bangkok ranked first in the world ranking of the best cities to visit in the world but was made ahead there is few time for Kyoto and Siem Reap.
Political instability, corruption, terrorism, demonstrations, and street violence are the main causes of this decline.
But we are certain that Thailand has every chance to return to the top of the list if more drastic measures are taken at the political level. Tourism remains a privileged sector for Thailand.

Thailand has extremely competitive prices, while providing quality medicine and quick access to care. Indeed, most physicians practicing in urban hospitals studied in the United States or Europe. Hospitals often have the most advanced technologies. We are confident that the medical sector is a privileged sector in Thailand.

We realized that Thailand faces a major environemental problem: water pollution. In addition, Thailand is highly dependent on oil imports. We therefore believe that the field of renewable energies is carrying.

Thailand is a suitable area for business for foreign investors. But government instability and high courruption prevent some investors to get started in the business in Thailand even if new -less severe- regulations are in place to encourage investment.

In short, Thailand is full of pitfalls and should only be attempted by experienced and ambitious entrepreneurs. Foreign investment is always welcome, especially at this time, but if the risks outweigh the potential gains is a matter of serious consideration before jumping into any project.

-----------------------
Asia-Pacific as a Business Area
Project-Work…...

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