Farang Runing A Business In Thailand

[keithk2007]

Hi everybody

I am considering opening a business here in Thailand. I am a farang so as far as I know I can only own 49% of this company. I am not American so am not able to avail of the Amnity Treaty. So what I am looking for is advice and people's experiences of operating a business in Thailand whilst only legally owning 49% of the company.

What are the pitfalls? What are my limitations? Can you share with me any good or bad stories that you have heard or experienced. At the moment I am looking as opening a very popular franchise, don't know if that makes a difference.

Edited August 6, 2007 by keithk2007

[peter991]

Hi there Keith. There's a few pluses and lots of minuses in operating a business in Thailand. To give a brief reply I would have to ask the following questions.

1) Are you using a business broker? I highly recommend one of Thai Visa's advertisers - Sunbelt Asia

2) Have you lived in Thailand before - or just visited as a tourist? There is a big difference between the two.

3) So you have a Thai partner you have known for a long time? It is 100 times harder to live and work in Thailand by yourself.

4) How old are you? If you are over 50 years of age, visa requirements are different.

5) Where is the franchise located - tourist area or off the beaten track? How close is the nearest franchise to the business you are interested in buying? Do you have exclusive rights to a certain area? Have you visited other franchisees to see how they are coping?

I am sure other members wil have different questions and hopefully between you answering our questions and us asking you questions we can help you make up your mnd.

Peter

[GuestHouse]

This is observation, not from personal experience, from the experience of foreigners I know who have run businesses in Thailand.

1. If you have a sucessful business idea it will be copied (and your prices undercut) - sometimes right next door by someone using a very similar sounding name - So you open the 'Pizza Palace Restaurant' and a year later 'Somchai' (that highly educated Chinese/Thai guy who came to work for you at a low salary) leaves your employ and opens the 'Pizza Temple Resataraunt' right next door.

2. If you compete with the Thais in a businesses they are already doing you will have problems.

3. If you employ your Thai family they will come to regard the business (and its proffits) as their own, and you as an inconvenience that can be got rid of.

4. If you don't employ Thais in the management of the business you miss out on the magic mix of Thai and Farang partnership, each bringing something special to the pot - but if you do employ Thais and the business does take off you must reward them for their contribution.

5. Your business's small contracts (stationary/car hire/food purchase/staff hire/cleaning services etc) will be rigged by a member of your staff taking a back hander.... or two.

[GuestHouse]

And get a copy of this ..... Start-up and Stay-up in Thailand Truly inspirational

[keithk2007]

Hi there Keith. There's a few pluses and lots of minuses in operating a business in Thailand. To give a brief reply I would have to ask the following questions.

1) Are you using a business broker? I highly recommend one of Thai Visa's advertisers - Sunbelt Asia

2) Have you lived in Thailand before - or just visited as a tourist? There is a big difference between the two.

3) So you have a Thai partner you have known for a long time? It is 100 times harder to live and work in Thailand by yourself.

4) How old are you? If you are over 50 years of age, visa requirements are different.

5) Where is the franchise located - tourist area or off the beaten track? How close is the nearest franchise to the business you are interested in buying? Do you have exclusive rights to a certain area? Have you visited other franchisees to see how they are coping?

I am sure other members wil have different questions and hopefully between you answering our questions and us asking you questions we can help you make up your mnd.

Peter

Hi Peter

Some answers to your questions:

1) No. I'm not dealing with a broker but dealing directly with the franchise companies representative for Thailand. I am not purchasing a business from somebody but paying for a franchise and opening up a new location.

2)I am living in Bangkok about 5 months now(studing thai at the moment). Previously I have only visited as a tourist(about six times).

3)The only thai person that I know for any length of time(longer than 1 year) is my girlfriend so I would like to know my options if I had her as my thai partner or if I use a trusted lawyer(don't have one yet). Advantages and disadvantages anyone?

4)I'm 26.

5)This business will be in a tourist location. I will be exclusive rights to a chosen location. I have not visited any other franchisees yet, I am only at a very early stage with this(first contact).

[anonymouse]

Get yourself a good lawyer

Read-How to Establish a Successful Business in Thailand by Philip Wylie, this book was only published recently but has a good chapter on franchises in Thailand as well as a good section on the pitfalls of running a business in Thailand.

Your girlfriend may not be the person best suited to being your business partner

Finding good loyal staff in Thailand is not always easy

ditto the other posters replies

good luck

[Smithson]

Keep learning Thai. Speaking, reading and writing is an asset that is often underestimated. Have you girlfriend speak to you in Thai, this will help a lot with fluency.

[sukanyacondo]

Guesthouse is correct in some of his points, getting a Thai wife is a good start for a good business but only if you trust and love her and she you 100% Other Thais ect will try and steal all they can from your business inc photos off your website etc etc This is what we have found but they have problems matching customer service and understanding the farang market to the same degree as a mixed marriage can do and this is where we can hold a big advantage.

Price is not a 100% concern for our customers but customer service is.

[BackinBKK]

Keith,

If I were you, I would be talking to the other franchisees in your area (or all of Thailand) in order to get a much better picture of the franchises operations, strengths, and weaknesses from the people who have experience with this. Depending on what the franchise is, the financials and other factors may be based on US/European stats but not really applicable in the same form for Thailand.

Also, as a newcomer to Thailand with no real Thai partner, you will be mostly going the setup phase alone which as almsot anyone who has started a retail/F&B business tied to location can attest is no less than a nightmare. The legal side of things is just as difficult, but those problems can be LESSENED by hiring a GOOD attorney. Believe me, this is not easy to do, but take some recommendations and do some searching online.

You may be well served to ask the master franchisor or whomever is looking after the development of the franchise in Thailand if there are any resales available. This way, if you agree with the location, you could basically walk in from day one and begin working and earning a return on your initial investment. Depending on the reason for sale, I would say that this is a MUCH smarter way of going about things unless you already have a great location which you are sure will do very well.

What kind of franchise is it if you dont mind?

[keithk2007]

Guesthouse is correct in some of his points, getting a Thai wife is a good start for a good business but only if you trust and love her and she you 100% Other Thais ect will try and steal all they can from your business inc photos off your website etc etc This is what we have found but they have problems matching customer service and understanding the farang market to the same degree as a mixed marriage can do and this is where we can hold a big advantage.

Price is not a 100% concern for our customers but customer service is.

Thanks sukanyacondo

Yes I know I can trust my girlfriend 100%. But what I was trying to get at is what the advantages/disadvantages are by having my girlfriend as my majority thai shareholder as appose to having a thai lawyer. Can anyone share their experiences? Good or bad, for or against....Has anyone lost out by have a thai lawyer as their major shareholder?

[keithk2007]

Keith,

If I were you, I would be talking to the other franchisees in your area (or all of Thailand) in order to get a much better picture of the franchises operations, strengths, and weaknesses from the people who have experience with this. Depending on what the franchise is, the financials and other factors may be based on US/European stats but not really applicable in the same form for Thailand.

Also, as a newcomer to Thailand with no real Thai partner, you will be mostly going the setup phase alone which as almsot anyone who has started a retail/F&B business tied to location can attest is no less than a nightmare. The legal side of things is just as difficult, but those problems can be LESSENED by hiring a GOOD attorney. Believe me, this is not easy to do, but take some recommendations and do some searching online.

You may be well served to ask the master franchisor or whomever is looking after the development of the franchise in Thailand if there are any resales available. This way, if you agree with the location, you could basically walk in from day one and begin working and earning a return on your initial investment. Depending on the reason for sale, I would say that this is a MUCH smarter way of going about things unless you already have a great location which you are sure will do very well.

What kind of franchise is it if you dont mind?

Hi BackinBKK

I definitely intend to speak to other franchisees as soon as is possible. I would hope by hiring a good lawyer that a lot of the hard work that is associated with company formation in Thailand will be done without too much effort on my side as I would like to put as much energy as possible into other sides of the business. Any recommendations for a good lawyer, anyone?

At the moment I don't think that there are any resales available as this is a very popular franchise chain so I have to open a new location. I would rather not reveal the name of this franchise but will say that it is in the food industry as I am still at the early stages of the process. Thanks for the reply.

[RAZZELL]

I would rather not reveal the name of this franchise but will say that it is in the food industry as I am still at the early stages of the process. Thanks for the reply.

A guess... Subway?

RAZZ

[thwock]

if its a success keep quiet about it or they will get jealous and stir up trouble for you .

and only invest what you can afford to lose and walk away from laughing like a hysterical hyeena on red bull .

the failure rate is high and the sucess rate is low ..

the learning curve is long

[terryp]

Been there got the t-shirt…My advice is not really what you would like, but forget the idea…..unless you have a pot load of money to throw down the drain.

Serious investment means serious business anything less than 10 million baht is really a hobby.

Many international franchise chains have failed in Thailand.

Firstly you have very little experience in Thailand & I can guarantee you know even less about the mentality of Thais. You need years of living here to even start to understand the system & then most people would never even consider investing into a business

Upset a Thai working for you and you will always be watching your back. ESPECIALLY from workers in the hard tourist areas

You will have many on TV who will say I am talking rubbish….but are they in real business here and are they making any money……very easy to say yes not so easy to be truthful

[bonviveur]

Keith, sounds like you are on the right path, researching, asking questions, learning Thai those are all good things. I was where you are now two years ago but something personal came up I had to drop the plan.

Franchise might be the best way to get your feet wet in Thailand, you have someone watching over you holding your hand in some cases. They will be your best partner since your success is their success they have almost as much to loose as you do.

You are 26 and at this age you can start over a few times, there is no better time then now. Hope in a few month I will be where are now, I rather put the 10 to 13 hours I am doing now on something that belongs to me.

I wish you all the luck in the world, please keep us posted.

Bonviveur

[Smithson]

Yes I know I can trust my girlfriend 100%.

Don't mean to sound rude, but that's a strong statement for someone who's been hear 5 months. As others said the learning curve is long....years and years. It's not just a farang - Thai thing, you won't find many Thai's who'd say the same about thier GF's

[keithk2007]

Franchise might be the best way to get your feet wet in Thailand, you have someone watching over you holding your hand in some cases. They will be your best partner since your success is their success they have almost as much to loose as you do.

This is exactly what I am thinking. I can learn from their experience in the thai market as they are already here. I feel that I would be getting a head start by partnering up with them.

You are 26 and at this age you can start over a few times, there is no better time then now.

This will be my second business venture as I opened my first company when I was 20. Sold it last year after running it for 5 years. So hopefully I can take some knowledge from that experience and put it to good use in this new venture.

Edited August 10, 2007 by keithk2007

[Dr. Burrito]

Personally, I think the better business ventures here are ones providing a service or a product to companies or people from overseas, especially in the areas of outsourcing. That said, in certain areas at present, Thailand is coming face-to-face with cheaper labor from around the region as evidenced by the recent closure of several factories in the areas of textiles and shoes.

I think the Thais are quite adept at higher skilled services (programming & animation) to mention a few that still make the service offered competitive in comparison to regional neighbors.

Find some way you can solve the problems of consumers or companies where you come from and I think you might have a winner.

Getting into local competition with Thais isn't something I would personally recommend, but I can't say it will cost you your socks either. I think someone earlier said hiring was tough and I couldn't agree with that more strongly. You have to really hire smart here and you will still lost people as you work to get it right. That said, once you have a solid crew, they are solid indeed.

We compete with Thai companies, but in a more international setting, and other than the typical gossip related issues to hurt us locally, we have never had a problem with petty jealousies that have caused us any headaches.

Best of luck with whatever venture you choose.

Dr. B

[twix38]

Do NOT srtart a business here in Thailand. Must be about a 5 % chance of things going well and making a reasonable profit.

If the playing field was slanted to the degree it truly is in Thailand, in your home country, you would just laugh at the fools who got biten by the bug and thought it cheap and easy to "have a go" at business or even the professional who doesn't really have a clue in Thailand.

Beleive me. It is the quickest way to make a small fortune, .........................when starting out with a big(er) one.

Edited August 12, 2007 by twix38

[keithk2007]

Do NOT srtart a business here in Thailand. Must be about a 5 % chance of things going well and making a reasonable profit.

If the playing field was slanted to the degree it truly is in Thailand, in your home country, you would just laugh at the fools who got biten by the bug and thought it cheap and easy to "have a go" at business or even the professional who doesn't really have a clue in Thailand.

Beleive me. It is the quickest way to make a small fortune, .........................when starting out with a big(er) one.

Just wondering what your advise is based upon, personal experience or hearsay? I know everyone has their own opinions but I believe that if you have a sound business idea, enough capital, are business minded, understand thai culture and have a strong desire to suceed you can do very well in Thailand.

[bangkoksingapore]

most 'easy to run' businesses in Thailand will have very small profit margins.

[bangkoksingapore]

you will also find that quite a few farang make a living in thailand selling businesses to other farang.

its funny looking at sunbelt how none of the captions read

"business is unprofitable, owner wants out"

instead everyone has 'other interests' is locating to a different location, is sick, etc.

Edited August 12, 2007 by bangkoksingapore

[midas]

Do NOT srtart a business here in Thailand. Must be about a 5 % chance of things going well and making a reasonable profit.

If the playing field was slanted to the degree it truly is in Thailand, in your home country, you would just laugh at the fools who got biten by the bug and thought it cheap and easy to "have a go" at business or even the professional who doesn't really have a clue in Thailand.

Beleive me. It is the quickest way to make a small fortune, .........................when starting out with a big(er) one.

Just wondering what your advise is based upon, personal experience or hearsay? I know everyone has their own opinions but I believe that if you have a sound business idea, enough capital, are business minded, understand thai culture and have a strong desire to suceed you can do very well in Thailand.

I dont know how twix38 will respond to your question but as a matter of interest,

have you been keeping up with the developments last week when they tried to introduce the

Foreign Business Act ? see the thread :-

http://www.thaivisa.com/forum/index.php?sh...5&start=105

What puts me off is that have now shown their hand..............I dont really think small time

foreign investors are welcome here - maybe it was different 10-15 years ago

but not today

[mokwit]

I would endorse the views of Guesthouse terryP and twix 38.

Once I had been here long enough to start a business here I had also been here long enough to not want to anymore.

I accept that there are people out there who do well but when I tell people who started a conventional business here why I avoided that and what is viable they look at me and just give me this envious 'you smart cookie, you sussed it right from the start' look. They are not happy with the additional level of complexity they are dealing with. I ruined someones day by pointing out if they had put that much equity and time into a business in a competitive market like the US they would be a multimillionaire by now. What appear to be unfilled niches are often unfilled for a reason.

What works is a business that can be done remotely and which pays offshore, internet business fits this - getting mired in the local quagmire is tough. Manufacturing here and selling abroad appears to be a viable second best but this can be tough (assuming you already know how to make money in your speciality). Your customers may not share Thai relaxed attitudes to deadlines, specifications etc. I have friends in the jewelry business, one tells me all his customers have lived and worked here - they pay him to deal with the problems they want to avoid and regard the loss of margin from paying him as money well spent.

You might also want to bear in mind that Thailand seems to have noticed how many foreigners are running small business here and decided that they are competing aginst Thais, or more accurately using a small business to obtain de facto long term residency. It seems they now are making things more difficult for small businesses. They really only want large blue collar employing factories or technology transfer (to them). You must now employ 4 Thais minimum and the investment visa is gone. Think about which way the wind is blowing. No way would I invest my cash to have my visa/WP renewal refused just as I stood to reap the rewards. Thailand has the right to dictate the terms of investment, what they will increasingly see is that foreigners, including multinational corporations have the right to say sorry, but I don't like your terms.

[PuaSai]

Yes I know I can trust my girlfriend 100%.

Don't mean to sound rude, but that's a strong statement for someone who's been hear 5 months. As others said the learning curve is long....years and years. It's not just a farang - Thai thing, you won't find many Thai's who'd say the same about thier GF's

Just curious.. What do you base this on? It is quite a blanket statement and you will find many men and women of all nations who you can't trust, to include family members, when it comes to business. Why did you just target Thai females?

[blizzard]

first things first, why dont you marry your (bargirl), i mean girlfriend...............lol.

you only 26 dude, sounds like you should forget about business ownership for a while.

[keithk2007]

first things first, why dont you marry your (bargirl), i mean girlfriend...............lol.

you only 26 dude, sounds like you should forget about business ownership for a while.

Thanks for your 'brain-dead' comment! If you want to go bad mouthing thai women this is not the correct forum for it. I didn't start this topic for anyone to question my relationship with my girlfriend/partner but to seek advice from those who have had experience in thai business. Please stick to the topic.

Edited August 14, 2007 by keithk2007

[JimsKnight]

Keith, listen to these people man, they mean the best and aren't out to see you fail. I know they sound a bit rude but its a rude business style out in LOS man!

I was just like you two years ago, full of big ideas and believed I was master of all I surveyed with the money I was bringing into Thailand. Hit BKK like a man on fire ready to go! Very hard to make money in Thailand, very difficult.

How much are you investing into the business if you don't mind me asking?

You usually have to be investing heavy to make any real cash, and by heavy I'm talking 5 to 10 million baht otherwise it's tough.

Does your missus push for this or is it your own idea?

The novelty value of business start-up in LOS may sound good, but money invested at home is a lot safer

[blizzard]

these guys only want to be stroked. busnit with a gf is sooooooooooo lame(silly)

[englishoak]

For what it's worth I did business in BKK for about 4 years not big but enough to have a comfortable living. But that was from 2000 - 2004. After that it was either invest quite heavily to move to the next level or wind it down and move on. I chose the latter due to the fact that I would have got 0 security had I decided to invest and I could see the way it was going, I would be spending far too much time on worrying about this and that regulation. It also infuriated me that the number of times I had the opportunity to "branch out" into other business avenues was blocked by the fact it was always on the banned trading list. I just got fed up with it and decided it wasn't worth the hassle anymore.

Would I open another business In Thailand ? sure but only when I am able to run what business I want, how I wish to run it, with as many employees as I choose and some kind of stability/security that it will remain mine and I will be allowed to reside in the country for more than 1 year at a time.

It's hard to see the point in running up such a steep hill when say 7m bht can get you at least 450,000 in a basic savings accounts elswhere doing absolutely nothing and more importantly risking nothing too. And thats the kind of investment you need to make to start to get back decent returns IMO

I echo the rest of the posters and say you would do very well to live in LOS for at Least 2 Years before embarking on a business venture there.

If not, good luck and "welcome to the layer cake my son"