Thais Dont Understand Financing/money

[kkf123]

What is the deal with these Thais who own shop houses worth 40 million baht+, yet only have a tiny little business downstairs selling food or newspapers?

Why dont they sell the house, and buy in a cheaper nicer area, and use the positive cash flow to create another business or invest in the financial markets? From the looks of them, you get the impression that they are not hanging out in The Emporium. I imagine that they do not sell their home because its been in their family, etc. So their children do not go to University because they have a business selling newspapers, etc.

Very bad money management, no wonder there are such drastic differences between rich and poor in Thailand. A very small minority of the people understand money and business.

"We dont use banks, we just buy gold necklaces and pawn them a month later losing 1/2 the value"

[OxfordWill]

Yea, like that guy Thaksin - he hasn't got a clue. He should learn from us, we guys know how to make real money.

[The Dan Sai Kid]

What is the deal with these Thais who own shop houses worth 40 million baht+, yet only have a tiny little business downstairs selling food or newspapers?

Why dont they sell the house, and buy in a cheaper nicer area, and use the positive cash flow to create another business or invest in the financial markets? From the looks of them, you get the impression that they are not hanging out in The Emporium. I imagine that they do not sell their home because its been in their family, etc. So their children do not go to University because they have a business selling newspapers, etc.

Very bad money management, no wonder there are such drastic differences between rich and poor in Thailand. A very small minority of the people understand money and business.

"We dont use banks, we just buy gold necklaces and pawn them a month later losing 1/2 the value"

Well, if you'd had the foresight to invest in gold about a year ago you would be now receiving a much better return than if you'd put it in the bank...

[Carmine6]

Crazy to criticize families with houses worth 40million+ baht. What else could they have done over the years that would have gotten them that much wealth, especially considering the currency value was almost cut in half less than a decade ago? How many non-Thais have net worths that high even with education?

The real question is are they happy with their lives?

[Thaipwriter]

Why dont they sell the house, and buy in a cheaper nicer area, and use the positive cash flow to create another business or invest in the financial markets?

The average Thai could not give a flying **** about cashflow and nicer areas and the stock exchange.

They are, in the whole i think, just simple unmotivated folks who want somewhere permanent to live with thier family unit and to enjoy the laid back life that is attainable here.

Are you American by the way?

[OlRedEyes]

As everywhere, there's a vast difference between how the younger and older generation approach their financial security.

No cash? I don't think so. They do have cash, sometimes lots. Just don't flash it around or spend it the way you may think they should. Maybe their goals are different.

[BKK90210]

Don’t be fooled by their appearances!

I know one thai uncle (not my uncle, unfortunately) who owned a little shop house selling magazines and renting out thai romance novels….but guess what he’s doing in the back shop?....he’s a wholesaler of gold and rough/uncut diamonds!

These people are the old fashion rich, & savvy consumers….. who don’t need to flaunt/show off their wealth to every passerby.

Edited May 8, 2006 by BKK90210

[simcity]

What is the deal with these Thais who own shop houses worth 40 million baht+, yet only have a tiny little business downstairs selling food or newspapers?

Why dont they sell the house, and buy in a cheaper nicer area, and use the positive cash flow to create another business or invest in the financial markets? From the looks of them, you get the impression that they are not hanging out in The Emporium. I imagine that they do not sell their home because its been in their family, etc. So their children do not go to University because they have a business selling newspapers, etc.

Very bad money management, no wonder there are such drastic differences between rich and poor in Thailand. A very small minority of the people understand money and business.

"We dont use banks, we just buy gold necklaces and pawn them a month later losing 1/2 the value"

WOW 40 million baht for a shop house!! much less i suppose .. Father my friend bough his for 200000 baht 20 years ago , now about 6-7 million ( 6 stories ) .

China town are the most expensive holding for shop houses!

But 40 million is a lot of money for one!

[Heng]

What is the deal with these Thais who own shop houses worth 40 million baht+, yet only have a tiny little business downstairs selling food or newspapers?

Why dont they sell the house, and buy in a cheaper nicer area, and use the positive cash flow to create another business or invest in the financial markets? From the looks of them, you get the impression that they are not hanging out in The Emporium. I imagine that they do not sell their home because its been in their family, etc.

Allow me to add to your no doubt vast research in the field of the wealth and cash flow of Thai families.

A lot of families have a policy of not selling real estate. And believe me, there is no such policy for not acquiring real estate and other assets and investments.

We have 4 shophouses in a row in Ban Moh (a short walk from Ratchadanoen Rd.) that would likely fit your description. A bit run down, old style wooden folding doors, haven't been painted since the 70's. There are folks selling noodles downstairs, and some more folks selling various electronic parts (plugs, switches, etc.) in front, I think there's a meatball vendor, but they don't own the buildings (the carts pay us 150 Baht a day in rent, the noodle folks about 8,000 a month, verbal contract only.... we could rent 2 to CP and another 2 to Central and make them 7-11's and Family Marts for 35,000 each but then we'd be under contract and we wouldn't have a place to say to the next generation.... "this is where your grandmother and grandfather built up their business, selling silk to Thai silk exporters, among them Jim Thompson,....."). We live in Bangkapi on a 13 rai plot, own a plastics injection mini factory, own a few small mom and pop type pharmacies across town, are developing Baan Dusit Pattaya in Pattaya, own a pawn shop (2 close branches under one license actually), about XX rental properties, export orchids and aquatic plants and import shrimp and food fish feed, and the list goes on. Last I checked, the cash is flowing.

edit: and I'd like to add, without one single borrowed Baht in the mix. Sure, we could probably BORROW X00 million Baht with our assets as collateral, but IMO it's folks who do that who DO NOT understand financing.

Edited May 8, 2006 by Heng

[ProfessorFart]

This nonsensical OP seems to highlight the OPs awareness of Thailand nicely!

[Thaipwriter]

We have 4 shophouses in a row in Ban Moh (a short walk from Ratchadanoen Rd.) that would likely fit your description. A bit run down, old style wooden folding doors, haven't been painted since the 70's. There are folks selling noodles downstairs, and some more folks selling various electronic parts (plugs, switches, etc.) in front, I think there's a meatball vendor, but they don't own the buildings (the carts pay us 150 Baht a day in rent, the noodle folks about 8,000 a month, verbal contract only.... we could rent 2 to CP and another 2 to Central and make them 7-11's and Family Marts for 35,000 each but then we'd be under contract and we wouldn't have a place to say to the next generation.... "this is where your grandmother and grandfather built up their business, selling silk to Thai silk exporters, among them Jim Thompson,....."). We live in Bangkapi on a 13 rai plot, own a plastics injection mini factory, own a few small mom and pop type pharmacies across town, are developing Baan Dusit Pattaya in Pattaya, own a pawn shop (2 close branches under one license actually), about XX rental properties, export orchids and aquatic plants and import shrimp and food fish feed, and the list goes on. Last I checked, the cash is flowing.

Can u lend me B1,000,000 ?

There's this bar for sale in.......

[PeaceBlondie]

Great post, Heng. But does your example apply more to old-line Chinese-Thai families than it does to relatively new Thai business families who don't have your tradition?

Forgetting the example of a 40 million baht shophouse (!!), are there a whole lot of Thai small businesses that don't use their properties wisely, get into consumer debt disguised as business debt, employ lazy family members, etc.?

I have no idea. I look at all the shophouses and want to see their America-style Form 1040 annual income tax returns. I see how my rich Thai landlady operates this moo-bahn and really wonder about return on investment, cash flow, expertise of staff, her control of the staff, etc.

[Heng]

Great post, Heng. But does your example apply more to old-line Chinese-Thai families than it does to relatively new Thai business families who don't have your tradition?

Of course. And by the way, we're nowhere near old line. Our own family example mentioned above isn't even a Silom/Sukhumvit or Sampeng/Yaowarat family. We're quite "nouveau riche" comparatively as we didn't even get into the Ban Moh area until the 1950's (and "just arrived" in Thailand in the 1930's).

You'll find plenty of Thai Sikhs, Thai Indians, and Thai-Thais to a lesser extent that fit the bill as well.

Forgetting the example of a 40 million baht shophouse (!!), are there a whole lot of Thai small businesses that don't use their properties wisely, get into consumer debt disguised as business debt, employ lazy family members, etc.?

Sure. Just like anywhere else in the world. But "not using one's assets wisely" is a relative concept. Plenty of tier one MBA's would say that we aren't using our capital wisely.

If you'll allow me to add to the 40 million Baht shophouse theme... naturally not everyone with a shophouse in the center of town will be running dozens of other enterprises as well. There are probably folks that really own just one or two shophouses and little else in the world (although they are more likely to be found as you expand outwards from the 30-40 million Baht per shophouse area.... Ladprao, Ramkhamhaeng and so forth, in the 5-9 million range per shophouse). Why don't they sell? Everyone has their own reasons. For one, they have likely already been debt free for decades with any income easily flowing into savings and producing interest revenue, so cash flow isn't a priority. They may like the convenience of living somewhere relatively central. What are they going to do with the funds? Move somewhere tropical? Retire to Thailand?

Again one's results may vary and I'm just talking about my own family and those I know in my own circle. I'd say the trend leans more towards diversification than really just sitting around selling noodles.

[dashf trader]

Great post, Heng. But does your example apply more to old-line Chinese-Thai families than it does to relatively new Thai business families who don't have your tradition?

Of course. And by the way, we're nowhere near old line. Our own family example mentioned above isn't even a Silom/Sukhumvit or Sampeng/Yaowarat family. We're quite "nouveau riche" comparatively as we didn't even get into the Ban Moh area until the 1950's (and "just arrived" in Thailand in the 1930's).

You'll find plenty of Thai Sikhs, Thai Indians, and Thai-Thais to a lesser extent that fit the bill as well.

Forgetting the example of a 40 million baht shophouse (!!), are there a whole lot of Thai small businesses that don't use their properties wisely, get into consumer debt disguised as business debt, employ lazy family members, etc.?

Sure. Just like anywhere else in the world. But "not using one's assets wisely" is a relative concept. Plenty of tier one MBA's would say that we aren't using our capital wisely.

If you'll allow me to add to the 40 million Baht shophouse theme... naturally not everyone with a shophouse in the center of town will be running dozens of other enterprises as well. There are probably folks that really own just one or two shophouses and little else in the world (although they are more likely to be found as you expand outwards from the 30-40 million Baht per shophouse area.... Ladprao, Ramkhamhaeng and so forth, in the 5-9 million range per shophouse). Why don't they sell? Everyone has their own reasons. For one, they have likely already been debt free for decades with any income easily flowing into savings and producing interest revenue, so cash flow isn't a priority. They may like the convenience of living somewhere relatively central. What are they going to do with the funds? Move somewhere tropical? Retire to Thailand?

Again one's results may vary and I'm just talking about my own family and those I know in my own circle. I'd say the trend leans more towards diversification than really just sitting around selling noodles.

Cool story . Heng

[sting01]

Great post, Heng. But does your example apply more to old-line Chinese-Thai families than it does to relatively new Thai business families who don't have your tradition?

Of course. And by the way, we're nowhere near old line. Our own family example mentioned above isn't even a Silom/Sukhumvit or Sampeng/Yaowarat family. We're quite "nouveau riche" comparatively as we didn't even get into the Ban Moh area until the 1950's (and "just arrived" in Thailand in the 1930's).

You'll find plenty of Thai Sikhs, Thai Indians, and Thai-Thais to a lesser extent that fit the bill as well.

Forgetting the example of a 40 million baht shophouse (!!), are there a whole lot of Thai small businesses that don't use their properties wisely, get into consumer debt disguised as business debt, employ lazy family members, etc.?

Sure. Just like anywhere else in the world. But "not using one's assets wisely" is a relative concept. Plenty of tier one MBA's would say that we aren't using our capital wisely.

If you'll allow me to add to the 40 million Baht shophouse theme... naturally not everyone with a shophouse in the center of town will be running dozens of other enterprises as well. There are probably folks that really own just one or two shophouses and little else in the world (although they are more likely to be found as you expand outwards from the 30-40 million Baht per shophouse area.... Ladprao, Ramkhamhaeng and so forth, in the 5-9 million range per shophouse). Why don't they sell? Everyone has their own reasons. For one, they have likely already been debt free for decades with any income easily flowing into savings and producing interest revenue, so cash flow isn't a priority. They may like the convenience of living somewhere relatively central. What are they going to do with the funds? Move somewhere tropical? Retire to Thailand?

Again one's results may vary and I'm just talking about my own family and those I know in my own circle. I'd say the trend leans more towards diversification than really just sitting around selling noodles.

On the long run that is the wisest strategy I think. It remenber me how old familly process in old europe. At least it's a proof good idea can appear everywhere .

[sbk]

Don’t be fooled by their appearances!

I know one thai uncle (not my uncle, unfortunately) who owned a little shop house selling magazines and renting out thai romance novels….but guess what he’s doing in the back shop?....he’s a wholesaler of gold and rough/uncut diamonds!

These people are the old fashion rich, & savvy consumers….. who don’t need to flaunt/show off their wealth to every passerby.

Very true bkk90210. Some of the poorest looking people on my island are also some of the wealthiest. I know one local family who still drive their old truck around buying up coconuts from local coconut plantations, the sons do the labor and wear fairly raggedy clothes. They own all the land at the pier, and rent it all out for some very good rates. They not only have the asset rich but the cash rich going on. But, they look very poor.

[Gary A]

I had a good little clipping but I can't find it. The gist of it was that a farang was up along the river in Issan. He was talking to a fisherman and advising him how to expand his business so he could get rich. The Thai asked him why should he do that. The answer was that then the Thai could sit back and enjoy life. The Thai told him that is what he does now.

[Old Man River]

What is the deal with these Thais who own shop houses worth 40 million baht+, yet only have a tiny little business downstairs selling food or newspapers?

Why dont they sell the house, and buy in a cheaper nicer area, and use the positive cash flow to create another business or invest in the financial markets? From the looks of them, you get the impression that they are not hanging out in The Emporium. I imagine that they do not sell their home because its been in their family, etc.

Allow me to add to your no doubt vast research in the field of the wealth and cash flow of Thai families.

A lot of families have a policy of not selling real estate. And believe me, there is no such policy for not acquiring real estate and other assets and investments.

We have 4 shophouses in a row in Ban Moh (a short walk from Ratchadanoen Rd.) that would likely fit your description. A bit run down, old style wooden folding doors, haven't been painted since the 70's. There are folks selling noodles downstairs, and some more folks selling various electronic parts (plugs, switches, etc.) in front, I think there's a meatball vendor, but they don't own the buildings (the carts pay us 150 Baht a day in rent, the noodle folks about 8,000 a month, verbal contract only.... we could rent 2 to CP and another 2 to Central and make them 7-11's and Family Marts for 35,000 each but then we'd be under contract and we wouldn't have a place to say to the next generation.... "this is where your grandmother and grandfather built up their business, selling silk to Thai silk exporters, among them Jim Thompson,....."). We live in Bangkapi on a 13 rai plot, own a plastics injection mini factory, own a few small mom and pop type pharmacies across town, are developing Baan Dusit Pattaya in Pattaya, own a pawn shop (2 close branches under one license actually), about XX rental properties, export orchids and aquatic plants and import shrimp and food fish feed, and the list goes on. Last I checked, the cash is flowing.

edit: and I'd like to add, without one single borrowed Baht in the mix. Sure, we could probably BORROW X00 million Baht with our assets as collateral, but IMO it's folks who do that who DO NOT understand financing.

While I don't recognize you, I certainly recognize the investment profile. My wife's family are also Thai Chinese and have similar investments in an around Bangkok. They don't ever sell (that isn't the idea) and are always on the lookout for something else to buy. They originally came to Bangkok from the south in the 1960's and bought a house way out on Sukhumvit which now has a skytrain station near it. They never, ever borrow.

[Smithson]

Great post, Heng. But does your example apply more to old-line Chinese-Thai families than it does to relatively new Thai business families who don't have your tradition?

Of course. And by the way, we're nowhere near old line. Our own family example mentioned above isn't even a Silom/Sukhumvit or Sampeng/Yaowarat family. We're quite "nouveau riche" comparatively as we didn't even get into the Ban Moh area until the 1950's (and "just arrived" in Thailand in the 1930's).

You'll find plenty of Thai Sikhs, Thai Indians, and Thai-Thais to a lesser extent that fit the bill as well.

Forgetting the example of a 40 million baht shophouse (!!), are there a whole lot of Thai small businesses that don't use their properties wisely, get into consumer debt disguised as business debt, employ lazy family members, etc.?

Sure. Just like anywhere else in the world. But "not using one's assets wisely" is a relative concept. Plenty of tier one MBA's would say that we aren't using our capital wisely.

If you'll allow me to add to the 40 million Baht shophouse theme... naturally not everyone with a shophouse in the center of town will be running dozens of other enterprises as well. There are probably folks that really own just one or two shophouses and little else in the world (although they are more likely to be found as you expand outwards from the 30-40 million Baht per shophouse area.... Ladprao, Ramkhamhaeng and so forth, in the 5-9 million range per shophouse). Why don't they sell? Everyone has their own reasons. For one, they have likely already been debt free for decades with any income easily flowing into savings and producing interest revenue, so cash flow isn't a priority. They may like the convenience of living somewhere relatively central. What are they going to do with the funds? Move somewhere tropical? Retire to Thailand?

Again one's results may vary and I'm just talking about my own family and those I know in my own circle. I'd say the trend leans more towards diversification than really just sitting around selling noodles.

Good post, I've also got some questions about Thai, Thai/Chinese business methods.

Do you think ppl rely too heavily on employing family members who are lazy, not suited/experienced? (Another poster asked this)

You mention having many different successful businesses, which is great. I've noticed alot of ppl who do this, but they seem to spend time jumping from one to the other and appear really disorganized and confused, simple tasks take forever to complete. There always saying they don't have enough time, but then the start another business. Do you think sometimes Thais have trouble focusing or spread themselves too thin?

[Heng]

Do you think ppl rely too heavily on employing family members who are lazy, not suited/experienced? (Another poster asked this)

Do I think there are some folks out there that fit that profile? Sure. There are also families out there who teach and practice discipline in business to each generation from an early age and go on to have these family members either successfully take over their branch of the family business when it's their turn or strike off and start new enterprises themselves.

You mention having many different successful businesses, which is great. I've noticed alot of ppl who do this, but they seem to spend time jumping from one to the other and appear really disorganized and confused, simple tasks take forever to complete. There always saying they don't have enough time, but then the start another business. Do you think sometimes Thais have trouble focusing or spread themselves too thin?

We've had more than a few enterprises not work out in EVERY single generation. That's the nature of things. IMO the important thing is that the more successful families find balance in their seemingly unrelated diversification and NEVER spread themselves to thin. You never risk hard fought ground just to get a big gain (because you always consider the down side as well). You remind yourself where your family started and just how comfortable you are before you even begin to start calculating business risk.

Again... Do I think there are some folks out there that fit the "unorganized, not enough time, spread to thin" profile? Sure. Sometimes I think it's a good thing those folks are out there as examples of how NOT to run things. There are plenty of folks that manage things quite well as well.

[Dakhar]

Reality check. If Thai's have the secret to the business world.... why as a nation is it so poor?

Heng, I do agree with your diversafication. My wife's mother owns apt's, a taxi van, a tour buss, farm land etc. Where did all the money come from.... Heck I can't figure that one out. When I lived in Taiwan it was the same thing, the richest people I ever saw on mopeds.

[backflip]

With bankruptcies at an all-time high in the US, apparently financial negligance is not limited to Thais.

[Heng]

Reality check. If Thai's have the secret to the business world.... why as a nation is it so poor?

Heng, I do agree with your diversafication. My wife's mother owns apt's, a taxi van, a tour buss, farm land etc. Where did all the money come from.... Heck I can't figure that one out. When I lived in Taiwan it was the same thing, the richest people I ever saw on mopeds.

Reality check, who said Thais had the secret to the business world? My response was to the OP who was suggesting that those with central in-town real estate + property holdings were those who didn't understand financing and/or the nature of money and business.... which as stated, IMO couldn't be farther from the truth.

[samran]

Reality check. If Thai's have the secret to the business world.... why as a nation is it so poor?

Cause there is ineffective distribution of wealth.

And I'm not talking communist ideology here, I'm talking about inadequate but slowly improving revenue collection by the tax department. I'm talking legislated state monolpolies, which means certain markets are off limits. I'm talking ineffective anti-cartel laws, low investment in education, lack of proper supply chains, proper transport infrastructure....a whole range of things which effectively means a geographical divide exists in this country, as well as a socio-economic one.

The best thing we can do, is open up more ways of letting people to make money, rather than restricting them.

[Heng]

Reality check. If Thai's have the secret to the business world.... why as a nation is it so poor?

Cause there is ineffective distribution of wealth.

While your points are valid (and no doubt the "man" keeps a lot of people down.... but there is PLENTY of playing field left for the disciplined and ambitious), one thing you missed IMO is that lack of work ethic or to be more politically correct the 'culture of being content with their own status quo' among large portions of the population. One can find uneducated laborers in many other countries that aspire to one day be construction magnates... here, it seems that overtime is an option for when they were in the mood or just a bit short on pocket money.

[PeaceBlondie]

Samran mentions a geographical divide. This country's shape is one long kite, with too many people flying their kite when they should be working harder.

[Smithson]

Reality check. If Thai's have the secret to the business world.... why as a nation is it so poor?

Cause there is ineffective distribution of wealth.

While your points are valid (and no doubt the "man" keeps a lot of people down.... but there is PLENTY of playing field left for the disciplined and ambitious), one thing you missed IMO is that lack of work ethic or to be more politically correct the 'culture of being content with their own status quo' among large portions of the population. One can find uneducated laborers in many other countries that aspire to one day be construction magnates... here, it seems that overtime is an option for when they were in the mood or just a bit short on pocket money.

What is an 'uneducated laborer' in Thailand are often tradesman in other countries. They don't need to aspire to become construction magnates, in Austrlia (for example), painters, tilers and bricklayers can make very good money, because back breaking labor is respected. Others who didn't have the opportunity for education did apprenticeships to become and plumbers, carpenters, electricians etc. Skilled tradesman are respected, sought after and well paid.

Skills don't seem to be respected here in the same way wealth is. I think this is a shame, Thailand seems to have lost alot of craftsmen. As the country can no longer compete with China, India and Vietnam it will need skilled technical ppl more then MBA graduates who studied overseas.

[Heng]

Reality check. If Thai's have the secret to the business world.... why as a nation is it so poor?

Cause there is ineffective distribution of wealth.

While your points are valid (and no doubt the "man" keeps a lot of people down.... but there is PLENTY of playing field left for the disciplined and ambitious), one thing you missed IMO is that lack of work ethic or to be more politically correct the 'culture of being content with their own status quo' among large portions of the population. One can find uneducated laborers in many other countries that aspire to one day be construction magnates... here, it seems that overtime is an option for when they were in the mood or just a bit short on pocket money.

What is an 'uneducated laborer' in Thailand are often tradesman in other countries. They don't need to aspire to become construction magnates, in Austrlia (for example), painters, tilers and bricklayers can make very good money, because back breaking labor is respected. Others who didn't have the opportunity for education did apprenticeships to become and plumbers, carpenters, electricians etc. Skilled tradesman are respected, sought after and well paid.

Skills don't seem to be respected here in the same way wealth is. I think this is a shame, Thailand seems to have lost alot of craftsmen. As the country can no longer compete with China, India and Vietnam it will need skilled technical ppl more then MBA graduates who studied overseas.

One can be ambitious without being respected, working in a field that is 'sought after,' or well paid. My point was that IMO there is general lack (and by no means am I saying that it's non-existant) of ambition in the general population.

[austallia_1980]

you guys really think it is noble to be filthy rich and still spend your time selling newspapers downstairs? why not hire someone else to sell the newspapers instead? richest man on the island and riding a moped? what a waste? live a little somchai.

[plachon]

you guys really think it is noble to be filthy rich and still spend your time selling newspapers downstairs? why not hire someone else to sell the newspapers instead? richest man on the island and riding a moped? what a waste? live a little somchai.

Yes I do think its alright. If rich Thais all lived lives of conspicuous consumption like the Yanks or Aussies, then we'd need about 6 planets to survive. Thank goodness for rich Somchai's on mopeds I say. As it is this planet's overstretched to bursting point.

Condescending <deleted>! And learn to spell "Australia" while you're at it Bruce!