Business Difficulties As A Farang

[twix38]

torrenova,

I suspect most bright eyed (under informed) foreign investors would indeed not fit into the larger business operations and as you rightly point out and would find themselves further impinged by a lack of inward capital and building sufficient critical mass in their struggles.

There are also requirements to be reached on having made enough profit to continue with the visa, I believe.

I think it's along the line of a certain amount of profit (or turnover) in a 2 year period.

The downturn is another fundamental part of the risks involved, as there is potential political instability here which should never be overlooked as a possible source of future problems for foreigners.

Edited December 6, 2007 by twix38

[twix38]

Soundman,

I would be interested in a reply to post 24.

On reading a few other stories (one of a dog-kidnapp and 5,000 Baht finders reward springs to mind) I am of the opinion that we forigners should in future refer to Thailand only as LOS. Being in our case Land Of Scams!!!!

[soundman]

Soundman,

What is the nature of your work? Does it require premisis in Thailand? Employing staff? (4 Thais must be employed for every foreigner), dealing with other Thai companies? Selling to Thais? Do you get the occasional visit from the Police to contribute?

This list could be enormous.

My point is that some business operations better suit Thailand because they are usually the ones that have least to do DIRECTLY with Thailand as a location or Thai suppliers etc. Not needing premises is another bonus of course and all that I have already refered to..............Your business model and operation are the key to your success and nothing to do with operating or a good business environment provided by the Thai authorities etc imho............. and then again some still succeed in spite of it all with a good business and good luck.

Nobody answered my previous question on the rule and law revisions we have regularly and how they all tighten up and make things harder for foreigners or put it another way, when was the last time a rule or law was initiated or inforced to help foreigners investing in business here. Ummm I can give lots of poor examples of visa rule updates, FBA proposals, company scheme enforcements, corruption examples..........................................

I'd like to do an internet business or a few others I can think of that cuts out large parts of the Thai hassle/corruption factor.

I suspect that your business success has nothing much to do with operating from Thailand in reality and you have overcome the obstacles and you mention a few new ones too. Thanks.

All credit to you, as you had a tested formula already and you are one of the lucky few or managed to bypass and overcome the host of deliberate (both just and unjust) limiting factors faced here as foreigner investors.

Sorry for the tardy reply, been very busy lately & while still scanning the forum, I haven't had time to sit and make some reasonable repies, just comments on the run....

I own & run a business building professional audio systems - PA, concert & nightclub stuff. The business was originally set-up to export, however, after indepth analysis of the Thai market & how much larger it was than the market I was trying to export to, that is obviously where the focus drifted to.

We (wife) own the property where our business is situated.

We built the premises from scratch including running all the required utilities.

95% of my sales are to Thai customers.

90% of my purchasing is made to Thai businesses.

Business is seasonal 60% of yearly sales in four months - we employ between 12 - 45 Staff - all Thai.

Sure there are day to day problems ranging from staff stealing, to customers not paying to errant "off duty" police officers finding minor infringements that no-one, including my Thai management, ever thought exhist. Sure there are many lessons to be learn't the hard way. Not too unlike Melbourne, Australia. Point being, different country - same sort of problems doing business.

Funny note: While police harassment has been extremely rare, the one or two incidents that have occured, we have just told them to piss off (politely but firmly) and have never heard back from them again. Lesson learn't - the police officer is off duty (easy to tell when they arrive un-accompanied) & not supposed to be there in the first place & that in itself is something one might complain to his superior about. Intimidation is the name of the game & if that fails they will usually just move onto the next target.

Things that I think are limiting factors for a foreigner doing business in Thailand:

Not being able to own property - therefore not being able to organise finance at short notice such as quick loans / overdrafts to cover a large sale or promotion. Two ways to look at this - own property in wifes name & put up with wife hassels or all surplus cash is wound up in extra stock or, heaven forbid, the share market.

WP concerns as they are job specific. If you are a managing director of your coffee shop business & one day no staff show up to pour coffee, you cannot, according to your WP, go and pour the cofee yourself. If you do you will be working illegally unless "coffee pourer" is listed on the WP. In a nutshell for the hands on business owner, such as myself - lots of un-neccessary WP related risks.

Serious communication problems for those just starting out & I'm not just talking about the language barrier. In a nutshell - learning the Thai mentality. It is the Thai way or the highway. Only one solution to this is to live & learn it. Apparently Toyota had to adjust their management techniques to adapt to the Thai workforce - not vice versa.

on the other hand....

A foreigner who is very good at what they do, has succeeded at some sort of business before whether it be through skill, luck or a combination of both, has very good street sense, easily adapts to the Thai mentality & doesn't get too fussed about the extra red tape with WP's & visa's etc. I honestly believe will do quite well in Thailand.

Following this thread with interest & would like to move it into SME forum in the future (after it has run its course here ) because there are many points raised that are of concern to potential SME business owners.

Cheers,

Soundman.

[Gary A]

If you are wanting to open a business which attracts farangs, you might be far better off opening the business in Hua Hin. The number of farang visitors to Hua Hin is many times the number of farang visitors to Pattaya. Hua Hin is a three hour bus ride from the southern bus terminal (sai tai mai) and the bus stops in the middle of the city. Take a trip and oogle at the number of visitors in Hua Hin!

Exactly WHERE did you get the information? You must have been talking to someone from Hua Hin that wanted to sell you a business.

[N47HAN]

Its nice to see the continual and almost habitual negative responces about running a buisiness here succesfully and how hard it is and dont bother.

Long may this attitude be alive so that the ones that commit and actually draught out a buisiness plan and succeed may continue with limited foreign competition.

Being a foreign run buisiness here in certain sectors gives your buisiness a major advantage over Thai owned/run operations in the same market.

Long live the always positive outlook from most !

[twix38]

Soundman,

I see your handle is business inspired too ;-)

You present a very fair and reasoned response. However, I am addressing the average foreign businessman who probably never thought about running a business until after he arrived in LOS.

Seems to me in summary that.......

If a business is prepared for the additional Red Tape, the expected additional foreigner issues (WP, visas etc), adhering to the Thai way (work mentality/degrees of corruption) and accepts in principle a degree of extra burden and financial calling, and all that has been listed in its various forms throughout this thread. Then with a good business model, political stability and enough finance and commitment, it can succeed.

I suspect that with hindsight even many relatively successfull operations may well say that they would not do it all over again if they had the knowledge then, that they have now.

Foreigners with a success story, content with their business lot in life and making a decent profit are rare enough and deserve applause for frankly having battled against the odds.

Just make sure the wife (&/or workers) doesn't then steal funds or the business premisies, that you either had to put in her name or perhaps fortunately you paid for a company and pay tax and meet the income requirements. Also make sure that jealous Thia's don't ruin the life of a successfull foreign enterprise who they deem to be doing too well and/or stealing clients. It's also well known here for the few who openly appear to be doing too well. Plenty of downside to business in LOS where the basic rules give control to any Thai involved (partner in the home and/or business) or you pay for the privalige to operate legally with a strict WP that is specific to your allowed role. I am not in business here (surprisingly) and accept I may get small details wrong, but you get the general and irrefutable point, at least on just how difficult and biased it all is. Perhaps rightly so for the indiginous population, but that does not mean you have to be one of the many foreign business failures here whose dreams die and whose finances are depleated.

Back to my core point, because most foreigners enticed by Thai life are ill-prepared for business anywhere, let alone here. It is the early impressions of ease, friendly locals, cheap living and good opportunities that entice, but they still need to generate an income to live here, so many foreigners look at business opportunities. Opportunities is the wrong word, as it should most often be replaced by the phrase "wealth destruction schemes".

We have not even mentioned key money and a legal system that works very differently to our own. There are different forms of title deeds and many ownership and business disputes arise that could not do in your home country. Care must be taken every step of the way and efficient translations of legal documents obtained.

I would speculate that around 85% to 95% of foreigners looking to set up or invest in a business in the Land of Scams (LOS) are unprepared and out of their depth, for all the above reasons and more. They are not going to make it work satisfactoraly in the end and to do so is extremely hard work and long hours. No fun at all and certainly nothing along the lines of a working holiday.

I would guess many regret their decision to invest in a business for all sorts of reasons, starting with their own stupidity at being so dreamy-eyed, gullible and niave moving through all the business headaches, stress and dissapointment through all that has been said (and still not yet said ) in this thread and problems with Thai employees and finally, in too many cases to financial loss and heartache.

A sad reality to keep in mind is that pride (or trying to sell on a business) often stops the foreigner admiting to certain facts and telling the truth of their business experience. Nobody likes to admit to their cock-ups for all to see. Especially when going home broke and, in just some instances, in crushing despair.

Motto: It is harder to run a successfull business here and not easier, as first impressions and salesmen often have you believe.

Edited December 11, 2007 by twix38

[Manchester]

If you are wanting to open a business which attracts farangs, you might be far better off opening the business in Hua Hin. The number of farang visitors to Hua Hin is many times the number of farang visitors to Pattaya.

Rubbish.

I,ve lived in both towns and Hua Hin is nowhere near Pattaya in terms of tourists.

[soundman]

I would speculate that around 85% to 95% of foreigners looking to set up or invest in a business in the Land of Scams (LOS) are unprepared and out of their depth, for all the above reasons and more. They are not going to make it work satisfactoraly in the end and to do so is extremely hard work and long hours. No fun at all and certainly nothing along the lines of a working holiday.

Motto: It is harder to run a successfull business here and not easier, as first impressions and salesmen often have you believe.

The motto is debateable, however, all things considered, I suppose I have to agree with it.

The psychological pressures can be far more intense & self consuming in Thailand when you don't have your usual network of friends around for close support.

From personal experience of nearly going belly up in my sound business to trading insolvent on the odd occasion (ordering stock when you have no idea how you are going to pay for it), through to making more money in a month than I have done in a year in Australia really can do one's head in from time to time, especially when one doesn't have close friends or simirlarly placed associates that are also the personal support network to each other. Can be tough on the brain.

N47HAN - IMO you are correct in that some aspects of being a foreigner doing business in Thailand is an advatage. The biggest advantage I find is around the negotiating table. The Thai's cannot read a good western "poker face". Absolutely no idea. In fact, a definate advantage is to appear aloof, unpredicatable, naieve & gullible in front of them & watch them shoot themselves in the foot whilst negotiating.

Cheers,

Soundman.

[N47HAN]

N47HAN - IMO you are correct in that some aspects of being a foreigner doing business in Thailand is an advatage. The biggest advantage I find is around the negotiating table. The Thai's cannot read a good western "poker face". Absolutely no idea. In fact, a definate advantage is to appear aloof, unpredicatable, naieve & gullible in front of them & watch them shoot themselves in the foot whilst negotiating.

Must agree ,

Only a few months ago we were bidding for a contract with our usual mark up on our final figure.

We offer both product and installation services , and recently switched the layout of our quotes so that the figure shown included both product and install combined as a total figure and not as seperate costs.

During the discussions of costing , it became clear that the managers we were talking too had assumed the cost of install had not been included

We were then asked how much we would charge per sq.m of install there budget was only slightly more than our quote. They agreed to show the Boq they had set aside for our particular product and informed us if we could meet this price including install we would be awarded the contract

Now im guessing at this point there will be two train of thoughts on what to do next.......

The difference was 450,000 THB what would you do ?

Rightly or wrongly I chose to inform them that price actually was final and that they do not have to pay extra.

Bloody hard thing to do actually , knowing that we would of been given the extra without question .

However I have an unfortunate inability to do buisiness other than as a person i feel is correct. Though I firmly beleive the fact we pointed this out and did not request the extra will ultimatley only pay dividends in the longevity of our buisiness.

But god was I tempted !

[linglop]

If you are wanting to open a business which attracts farangs, you might be far better off opening the business in Hua Hin. The number of farang visitors to Hua Hin is many times the number of farang visitors to Pattaya. Hua Hin is a three hour bus ride from the southern bus terminal (sai tai mai) and the bus stops in the middle of the city. Take a trip and oogle at the number of visitors in Hua Hin!

Exactly WHERE did you get the information? You must have been talking to someone from Hua Hin that wanted to sell you a business.

I get my information from personal visits to both places from my lad prao address. There is no way would I invest my hard earned money in a business in either location however it is clear from recent visits to both places that foreign tourists in hua hin way outnumber those in pattaya. Just take a trip to Hua Hin and have a look. No need to blink, just ogle the number of tourists in Hua Hin.

[chesternim]

Most foreigners have never heard of Hua Hin - but Pattaya is well known across the globe. So I'd go for Pattaya if you want raw numbers.

Regarding doing business - whether in LOS or anywhere in the rest of the world - 95% fail within 5 years. Most businesses fail for 2 principal reasons: i) insufficient capital ii) lack of management skills.

The lack of common sense driving up rents is just a fact of the market place. No point crying foul.

If the business is viable it needs to work within the framework of the real world - not a dream of what things should be.

Do your homework, get skilled and make sure you have sufficient capital before diving in. If you think rents are artificially too high then capitalize on that fact and go to where the economics make your business viable.

Edited May 20, 2011 by chesternim

[TravelerEastWest]

"Motto: It is harder to run a successfull business here and not easier, as first impressions and salesmen often have you believe."

If you do not speak Thai and understand the culture you may indeed find it difficult to do business here. Otherwise I disagree with you.

However, if you are a skilled businessperson with capital and you work long hours, Thailand is not so different from anywhere else.

Accounting and taxation are not that different from the West.

Labor costs are lower here

As other posters have mentioned startup failures are normal worldwide.

[Jdietz]

Mods should look into auto-locking ancient topics, this one is 4 years old.

[Rumpole]

Mods should look into auto-locking ancient topics, this one is 4 years old.

Why? I found it to be a very interesting read, with some excellent caveats for starry-eyed innocents intent on starting a business in Thailand (not something *I* would ever contemplate, by the way).

Edited May 21, 2011 by Rumpole

[ThaiPauly]

It takes money to make money. IMHO if you have enough money to buy a good business, you have enough money to retire on. Regardless of what the promoters say, it is NOT a level playing field. If you do happen to be successful, you will be working harder and longer hours than in your home country.

Good post

[EricMorisky]

It takes money to make money. IMHO if you have enough money to buy a good business, you have enough money to retire on. Regardless of what the promoters say, it is NOT a level playing field. If you do happen to be successful, you will be working harder and longer hours than in your home country.

if u know how i can retire on 3 million baht ,please tell me.

Good post

[raro]

as this topic is years old and has just been resurrected again, we rather close it indeed.