Better business potential in Thailand than Canada or modern countries?

[tool84]

This is my opinion based on observations I've had through my travels to Thailand, living there almost a year and currently living in Canada. What I've noticed is that it is extremely difficult to do business in Canada unless you have lot's of money, if you want to have a decent business where you can expect to make around 100k profits per year it will take many hundred thousand of investments. I am not talking about a service business where you sell your service that you can start with $0 or very little, more the brick and mortar like coffee, dry cleaner, restaurant, retail, hotel.

In Thailand, you can start those type of business for very little money compared to here. For example a Tim Horton or Second Cup franchise will cost you at least 500k to open, while here you could open a Black Canyon Coffee for probably less than 200k. The return on investment will probably be better in Thailand too since rent and staff are much cheaper if you look at rate of living, taxes. Plus you could open 2-3 franchise for same investment. Hotels here well the only thing I see opening are those multi million dollar investments from the likes of Marriott and others. In Thailand you could do something decent for a few hundred thousand investment and make good money. Not gonna happen in Canada.

For sure for a foreigner it's a little trickier since you need Thai partners to do business, but as long as you can open the business with someone you trust like your wife I think there is more potential in Thailand, I just don't see it here and so does my wife after living in Canada for a few years. Just looking at the growth in Canada it is pretty much non existant anymore if you count inflation. Asia is where the growth is, not just Thailand but there is huge potential with neighbour countries like Vietnam, Indonesia, Philippine, even Burma now.

What are your thoughts on business potential in your country compared to Thailand.

[WhizBang]

Personally, and as a business owner in the USA, I think the potential is far far better in N. America than in Thailand.

My business is a service business, but not one with $0 investment. In my case, I own and operate an environmental analytical laboratory. Equipment investment alone ran into millions.

I looked at opening a lab in Bangkok, but very quickly decided it was a no go, mainly due to corruption. Never mind the whole Thai partner aspect.

Perhaps you need to look at something other than franchises.

[canman]

You seem to be saying that a profit of 100K per year on an 500K investment is not good?? I'll take that any day!

[monty]

You seem to be saying that a profit of 100K per year on an 500K investment is not good?? I'll take that any day!

Not if it involves full time managing said company.

Managing a succesful company,along with all associated headaches and the fact you'll be working your behind off for 100 hours/week to make it work...

If you can make such company work, you're likely also be able to get hired as a high level exec. manager earning exactly the same without putting 500 K US$ in.

Sent from my GT-I9001 using Thaivisa Connect Thailand mobile app

[canman]

You seem to be saying that a profit of 100K per year on an 500K investment is not good?? I'll take that any day!

Not if it involves full time managing said company.

Managing a succesful company,along with all associated headaches and the fact you'll be working your behind off for 100 hours/week to make it work...

If you can make such company work, you're likely also be able to get hired as a high level exec. manager earning exactly the same without putting 500 K US$ in.

Sent from my GT-I9001 using Thaivisa Connect Thailand mobile app

Well, if you put it that way then no!

[Pib]

In Thailand, you can start those type of business for very little money compared to here. For example a Tim Horton or Second Cup franchise will cost you at least 500k to open, while here you could open a Black Canyon Coffee for probably less than 200k. The return on investment will probably be better in Thailand too since rent and staff are much cheaper if you look at rate of living, taxes. Plus you could open 2-3 franchise for same investment.

But you are making a BIG assumption that just merely being able to open a franchise operation, the more the better, that you will automatically make money in Thailand. Just opening a store doesn't automatically mean enough customers will buy at the store to make it profitable. Just as in any country, many businesses go out of business each month simply because the businesses were not profitable for many different reasons--but the main reason is still not enough customers buying enough of the business' product/service regardless of rent and labor costs.

[Cloggie]

Personally, and as a business owner in the USA, I think the potential is far far better in N. America than in Thailand.

My business is a service business, but not one with $0 investment. In my case, I own and operate an environmental analytical laboratory. Equipment investment alone ran into millions.

I looked at opening a lab in Bangkok, but very quickly decided it was a no go, mainly due to corruption. Never mind the whole Thai partner aspect.

Perhaps you need to look at something other than franchises.

As you are American, you do not need a Thai partner to setup a company, or do I miss something?

[monty]

The biggest franchise in Thailand is probably 7/11

On average 100 K US$ investment, and you'll get between 8000 and 20,000 US$ return per year. But the way they (and a lot of other franchise chains work) is when you start getting better returns (say 15,000 $ or more/year), then it becomes viable for them to open another one in your location, instantly halving your revenue!

Maybe a bad example as this franchise is not open to foreigners, but you get some idea of numbers, considering 7/11 is one of the most successful.

In general, doing business in Thailand? If your were successful as a self employed entrepreneur, you have a fair chance of doing OK over here if you can adapt to how things happen in Thailand.

You have a few advantages over here, namely low taxes (need good accountant, squeezing all advantages a start up has out of the tax system), relatively low labour cost, and the fact that when you can offer Western style reliability, responsibility, communication, etc, you have not that much competition.

You also have heaps of disadvantages:

Staff: Good staff is hard to find. You'll have to train them. Very little chance of finding people who will be productive from day 1.

Relatively low work ethics. Example, the maximum allowed sick leave WILL be taken, regardless of the fact they are sick or not, it is considered paid holiday. They have no qualms of simply leaving you right after pay day, without notification. Simply stop showing up. Very little allegiance to their employer. Very little pride/honour in their work, so just get it over with and collect salary. They don't really care if their employer does well, they only worry about getting paid.

And the Thai Labour department in general is very much on the side of the employee!

There is good staff around! It's just that those good ones are hard to find, as most of them will be held onto very tightly by their current employers with very good benefits and high salaries, or they will be working for big MNC's with salaries you'd be amazed of how close they are to what can be earned in the West. Still a fair bit lower, but compared to cost of living in Thailand you could say they can make much more then their Western colleagues!

Red tape: Bureaucracy in Thailand can be daunting. The laws are often very ambiguous. Many Thai lawyers (or legal offices) have no qualms of setting up very shady business constructions, often outright illegal, all the while insisting to their clients everything is cool and above board.

If and when things get hairy, they seem to disappear into small corners, are very seldom held accountable for their bad advice, leaving you suddenly liable for maybe illegal set-ups, prone to lose everything, and more!

The current crack down on business in Phuket shows there is risk of getting investigated. A lot of those foreigners being checked will have been aware they were utilizing sort of illegal loopholes in the law, but also a lot of them would simply have put their thrust in their lawyers and think everything was done perfectly legal!

Practically, you'll probably either have to pay serious money for good representation by International recognized law offices and accountants like for example Tilleke & Gibbins or Allen & Overy, or, the better solution, take several months to study how things can be done legally in Thailand.

And learn the lingo. Relying all the time on somebody to translate for you is very hard, especially when dealing with officialdom. In Thai society it is in general frowned upon to question your superiors, so a lot of Thai people simply will not question an official refusing a request for example, even though the request should be granted within the laws. Most cases a (very) polite insistence can get things solved, but big chance it will be you needing to do the insisting as most Thai staff would be very uncomfortable doing so, unless they are pretty senior themselves.

It can be done, many have proven so, but is is not easier then back home, but rather likely more difficult if only for language and cultural/social differences!

[WhizBang]

As you are American, you do not need a Thai partner to setup a company, or do I miss something?

Sorry, I was not specific. I am Canadian with a US green card.

But here is where Thailand falls very far behind the civilized world. I was granted a green card in about 9 months after marriage to a US citizen. Once I had the green card, I had all the rights and privilages granted US citizens, except pehaps, the right to vote (don't care about politics anyway).

I could buy property, raw land, anything I wanted, no questions asked as long as I had the money to pay for it. If I didn't, then bank loans and mortgages were available. I could start my own business, 100% ownership. Again, no questions.

Compare that with Thailand. Plus, once in the country, immigration could care less about me. I was free to move about at will. No visas, no reporting to immigration every 90 days. I was not treated like a potential criminal on permanant parole.

AND, the police did not have the right to harass me at will.

As much as I love Thailand, this country has a very long way to go to reach first world standards.

Edited July 23, 2013 by WhizBang

[Pib]

No care about first world standards; Thai world standards good enough.

[tool84]

I like the 7 eleven example because we can compare US and Thailand. So a typical franchise in the US will cost between $250 000 up to a million vs Thailand that is around 100k. So in Thailand for same investment as in the Us you could open a few franchises.

This kind of franchise will have similar workforce challenge in each country, meaning unreliable employees that will quit when they are tired of their job.

But looking at the return potential of Thailand vs US, is it not safe to assume that the profit potential in Thailand is higher since you will have more stores compared to one in the Us based on the cost of living? Even if you make 45k US of profit for 3 stores in Thailand, in the US you might make maybe $50 000- $75 000 for a 7 Eleven worth 300k.

I think I would prefer the investment in Thailand if I'm living from that return.

If we are looking purely at a ROI point of view, then in the US would be paid back faster, but if that investment is also for you to live from then Thailand becomes better.

There is also the fact that 7 Eleven in the US won't even look at you unless you have at least 200k money while in Thailand you don't need as much money to to able to get a franchise.

Edited July 23, 2013 by tool84

[yoshiwara]

Just because the entry bar figure is lower in Thailand than Canada or elsewhere doesn't make the chances of success proportionally better, it just means that you can enter that market with your lower capital base. The chances of success might be worse. You might be entering a value trap.

[tool84]

It's all about the cost of living in each country and Thailand is much lower than in the West. That entry bar figure is also making it hard now for Westerners to start a brick and mortar business unless they have many hundred thousand to invest while in Thailand because of the cost of living it is still pretty easy to setup such business with much less capital. Of course chance of success really is all about business plan and research before doing the move anywhere in the world.

[SantiSuk]

Basic economics - Thailand = high risk/high return. Canada = low risk/low return.

You choose.

[Berkshire]

As you are American, you do not need a Thai partner to setup a company, or do I miss something?

Sorry, I was not specific. I am Canadian with a US green card.

But here is where Thailand falls very far behind the civilized world. I was granted a green card in about 9 months after marriage to a US citizen. Once I had the green card, I had all the rights and privilages granted US citizens, except pehaps, the right to vote (don't care about politics anyway).

I could buy property, raw land, anything I wanted, no questions asked as long as I had the money to pay for it. If I didn't, then bank loans and mortgages were available. I could start my own business, 100% ownership. Again, no questions.

Compare that with Thailand. Plus, once in the country, immigration could care less about me. I was free to move about at will. No visas, no reporting to immigration every 90 days. I was not treated like a potential criminal on permanant parole.

AND, the police did not have the right to harass me at will.

As much as I love Thailand, this country has a very long way to go to reach first world standards.

So your idea of "first world standards" is all about giving foreigners more rights? That's a rather self-serving attitude, and certainly not how it is in most first world countries. Sure you can cherry-pick certain aspects of immigration laws, but Thailand in general, is much more open to foreigners than most western countries.

[tool84]

Try coming to Canada for fun as an Investor to get a permanent residence. You need a net worth of 1.6 million with proof that you obtained it legally and need to invest a minimum of 800k. Plus this type of application as per website is temporarily suspended. That seems pretty restrictive to me for 99% of the world. Much easier to go invest in Thailand.

[Tmymaimee]

I can relay my experience about starting a business in Canada. I started an air charter operation 10 years ago and recently sold it outright. I have never operated a business in Thailand but I can see some issues right away.

Aviation in Canada is very regulated and your English has to be very precise in interpreting regulations and coordinating with the governing authority. Even if I was fairly fluent in Thai, the Thai regulations would be difficult to interpret even with an interpreter as it is trade words not used outside of aviation.

Startup capital in both countries would be the same. I began by borrowing $800,000 for 2 aircraft and working capital. Operating costs are lower in Canada. Fuel and salaries are less in Canada as there is a surplus of pilots in Canada due to government paid training available. Parts and maintenance are lower in Canada due to reduced shipping costs and a highly competitive market for maintenance services.

Because the Canadian government shovels billions of dollars to the aboriginal welfare industry, the natives travel daily from their hometown reserve back to civilization for grocery shopping, binge drinking and so on. Government services such as police and doctors travel to these settlements daily.

In Thailand, the local natives such as the Hmong are basically left to fend for themselves. The government agencies can travel by low cost carriers almost anywhere in the country so basically my market in Thailand would be minimal The only air charter service in Thailand is out of Don Muang and their prices are so high as to be absurd, i.e. 2- 3 times more expensive than Canada for the same distance and aircraft. Compare this where US air charter rates are are about 25% lower than Canada.

Staff turnover in Canada is brutal as your hiring new guys that are only there for experience before moving on. I would imagine Thailand to be similar.

As far as rate of return in Canada, as you add aircraft, your profitability climbs quickly as your fixed costs are spread over more flight hours. Because the banks love to loan money to purchase aircraft as the return is so good for them, you really don't actually need the capital to purchase the aircraft. I have no idea what the lending market in Thailand is like for leasing small aircraft but if its anything like mortgage rates, it wouldn't be competitive.

In a busy year in Canada you can generate a 30% return on assets which is excellent considering you only borrowed the funds to purchase the aircraft. In terms of invested capital, a $1 million investment can generate $1 million a year in profits if you're willing to work 80 hours a week and go with minimal staffing.

To generate $1 million profit in a year in Thailand, I would guess you would have to invest somewhere around $10 million and open something like a car dealership or large hotel. You would still be working 80 hours a week, dealing with a third world bureaucracy and from the stupidity I've seen demonstrated by Thai workers, probably work yourself to a nervous breakdown.

The only business I would consider in Thailand is something requiring minimal staff and something that would be more of a hobby and wouldn't take all my waking hours to operate.

If I was to advise someone after having gone through it in Canada, it would be to start your business in Canada and build it up to the point where you can hire a manager you can trust and leave it in his hands while you holiday in Thailand or wherever whenever you want to get away. There are no issues with police, discrimination and you have a functioning set of rules that treats people fairly. Sure the taxes are higher in Canada but I think with the right business, you will still get a better rate of return in Canada than Thailand.

You can also just compare companies in North America versus Thailand. How many Thai companies are successful outside of Thailand in comparison to North American companies that branch into Thailand and do very well.

[timber]

Monty well written

[geriatrickid]

This really is a puzzling topic because;

1. Last year, Forbes magazine ranked Canada as the best country in the world to do business, citing its dropping tax rate, sound banks, investor protection and relative lack of red tape.

2. The Price Waterhouse Coopers study in conjunction with the World Bank stated that Canada had the 8th best corporate tax conditions in the world. Once, the oil rich middle east countries are removed Canada moves up to 4th place with Singapore and Hongkong owning the top positions. And it wasn't just big companies that benefited. The tax code favours small and medium sized businesses. This is very different than the case of Thailand which was ranked 96 and has a corporate tax policy that favours the large companies.

3. The PWc study also looked at the ease of dealing with the corporate tax environment. Canada has one of the easier codes to apply.

PwC said it took on average 131 hours for a typical Canadian company to comply with its annual tax obligations, just over half the global average.

The typical Thai company needs 264 hours. As well, while a typical Canadian firm makes six payments a year, the world average is 27. The typical Thai company makes 22 payments a year.

4. Lost in the discussion is the issue of corruption. It takes it's toll. Unless one is a major employer, there is no escaping the plague of corruption. If some government official demands a bribe in Canada, you call the provincial anti corruption hotline and turn in the corrupt person. In Thailand, you call up the local provincial government office and ask where to send the payment.

The reference to 7-11 as an example of franchising is an excellent example of why some foreigners fail. A quick look at the 7-11 annual report provides multiple reasons why;

CP ALL Plc. (the “Company”) was established in 1988 by the Charoen Pokphand Group to operate the convenience store business in Thailand under the “7-Eleven” trademark. The Company was granted a license to use the trademark from 7-Eleven, Inc., USA. At the end of the year 2012, the Company had a total of 6,822 7-Eleven stores nationwide, Of the total 3,646 stores are in Bangkok and vicinity. According to type of store, corporate stores 48 percent,, franchise stores 44 percent and 415 sub-area license stores 8 percent.

Lessons to be taken (and this isn't directed at 7-11);

- There is a master franchise holder. All supplies must be purchased from the master franchise holder and this is where the franchisees pay big time. The cost of supplies can sometimes be higher than from conventional distribution outlets. The master franchise holder isn't going to turn over what it considers as the best retail areas unless it is paid an initial large franchise fee and the annual franchise fee . There goes a large chunk of the profit. This is how it is for all of the big franchise chains in Thailand. There is a master franchise holder and an individual franchisee is beholden to Mr. Big.

- Location, location, location. Despite the assumption rents are cheap in Thailand, a well situated ftranchise holder pays a prohibitive rent.

- As already mentioned, staffing is a nightmare. So is stock shrinkage in some locations.

- The Thai master franchise holders prefer to keep it in the Thai family, so that means Frankie Farang is unlikely to have any chance at a franchise, let alone a good location.

Edited July 27, 2013 by geriatrickid