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CAPTURE THE OPPORTUNITIES IN THAILAND - …€¦ · CAPTURE THE OPPORTUNITIES IN THAILAND ......
Transcript of CAPTURE THE OPPORTUNITIES IN THAILAND - …€¦ · CAPTURE THE OPPORTUNITIES IN THAILAND ......
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
19 AUGUST, 2015 BUSINESS SWEDEN 4
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
19 AUGUST, 2015 BUSINESS SWEDEN 5
SOURCE: BOI, MINISTRY OF COMMERCE, DESKTOP RESEARCH
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
INTRODUCTION TO THAILAND
IDEAL LOCATION FOR SETTING UP MANUFACTURING FACILITY TO COVER ASEAN COUNTRIES
KEY INDUSTRIAL AREAS IN THAILAND
DESCRIPTION OF THE INDUSTRIAL AREAS
19 AUGUST, 2015 BUSINESS SWEDEN 6
THAILAND’S INDUSTRIAL AREAS ARE CONCENTRATED
IN CENTRAL THAILAND
SOURCE: BOI, MINISTRY OF COMMERCE, DESKTOP RESEARCH
Ayutthaya
Chonburi
Rayong
Bangkok
INTRODUCTION TO THAILAND
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.
Key industries are agriculture,
automotive, electronics, and plastics
Samutprakarn
Rayong
Ayutthaya
Key industries are agriculture,
automotive, electronics, plastic, and
steel. Thailand largest sea harbor is
also located here.
Chonburi
OVERVIEW OF THE ECONOMIC DEVELOPMENT OF THAILAND
BUSINESS SWEDEN 19 AUGUST, 2015 7
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
INTRODUCTION TO THAILAND
TRADE LIBERALIZATION AND INTERNATIONAL ECONOMIC INTEGRATION ARE KEY WORDS FOR THAILAND
BUSINESS SWEDEN 19 AUGUST, 2015 8
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
19 AUGUST, 2015 BUSINESS SWEDEN 9
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
19 AUGUST, 2015 BUSINESS SWEDEN 10
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
19 AUGUST, 2015 BUSINESS SWEDEN 11
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]
BUSINESS SWEDEN 19 AUGUST, 2015 12
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
BUSINESS SWEDEN 19 AUGUST, 2015 13
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
BUSINESS SWEDEN 19 AUGUST, 2015 14
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
BUSINESS SWEDEN 19 AUGUST, 2015 15
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
19 AUGUST, 2015 BUSINESS SWEDEN 17
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
BUSINESS SWEDEN 19 AUGUST, 2015 18
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
19 AUGUST, 2015 BUSINESS SWEDEN 19
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
W: www.business-sweden.se
BUSINESS SWEDEN IN THAILAND