Establishing a new company in Thailand, pros n cons?

[momtaz]

My cousin planning to be in Thailand within the next couple of months, for the purpose to open a company,

I checked with a lawyer office, I found the mandatory and first item it to provide a Thai partner,

he's still a bit skeptical about this, due to his first time, and matter of trust,

Any of you guys who used to establish a company with a local partner due to the law, and had any problem with this later on?

Please advise about this part, if anyone (foreigner) operated a lucrative and had trouble? or some issue about money?

He expects that his new idea will hit well in the market, therefore will be good income in this, and might bring some trouble if the is some greed about this, this is just his probable issue to happen, and he is hesitated to come since since last October,

Any further, additional information will be highly appreciated, with many thanks in advance!

Kind regards,

[bermondburi]

Good luck

[CharlieH]

MOVED to Business forum

[Squeegee]

Whether you're talking about business, prostitution or crime, the pros are getting fewer and the cons more numerous.

[manarak]

@OP:

ignore the nitwits who obviously never had a company ever.

Your cousin needs at least 2 Thai partners to establish a limited company, and your cousin is not allowed to own more than 49% of the nominal capital, unless your cousin is US American, in which case he can own the whole company under the US-Thai treaty of amity.

To find Thai partners, I would really really advise your cousin to use a reputable lawyer instead of trying to find the partners himself.

The lawyer knows all the tricks to make sure the company remains under your cousin's control and to make sure you don't have to split profits with the dummy partners.

The lawyer can also organize on-the-paper staff to get a work permit for your cousin, which will be necessary to avoid problems.

Have the lawyer do everything by the book and your cousin won't be exposed to risks.

The different administrations such as ministry of labor, immigration and maybe the tax office / VAT might want to inspect the premises - sometimes some extra "fees" are necessary to "speed up" the process.

Your lawyer will inform you about everything.

[Squeegee]

@OP:

ignore the nitwits who obviously never had a company ever.

As opposed to a sense of fun or humour.

[sunnyjim5]

The "cousin" is clearly naive.

Tell him to forget the idea and open a business in his own country where, hopefully, the rules will be understood.

[Gutenberg]

I felt really relaxed while opening a company in Thailand in regard to other countries. And I opened quite a lot in different countries (clients involved).

I had some nice meetings with the lawyers, got translated all relevant papers and then we went off to the lawyer's friend in the bank to open the account. Accountant communication basically per email in perfect English.

Sometimes it involves a bit cash money to get on the official's fast lane to sort things out - but it's common and the western PC/morale shouldn't come in the way.

So at last, I can surely say, if you want to make 10 mio THB in Thailand, bring 2 mio THB (for the capital req. which you in reality do not need anyway).

[puukao]

Pros:

1. (empty)

Cons:

1 - 1,000,000,000,000,000,000,000,000,000,000,000,000 (see attached encyclopedia)

[onetime]

@OP:

ignore the nitwits who obviously never had a company ever.

Your cousin needs at least 2 Thai partners to establish a limited company, and your cousin is not allowed to own more than 49% of the nominal capital, unless your cousin is US American, in which case he can own the whole company under the US-Thai treaty of amity.

To find Thai partners, I would really really advise your cousin to use a reputable lawyer instead of trying to find the partners himself.

The lawyer knows all the tricks to make sure the company remains under your cousin's control and to make sure you don't have to split profits with the dummy partners.

The lawyer can also organize on-the-paper staff to get a work permit for your cousin, which will be necessary to avoid problems.

Have the lawyer do everything by the book and your cousin won't be exposed to risks.

The different administrations such as ministry of labor, immigration and maybe the tax office / VAT might want to inspect the premises - sometimes some extra "fees" are necessary to "speed up" the process.

Your lawyer will inform you about everything.

I'm a nitwit who has built a couple of companies, and sold them. (because that's where the real profit is)

If you follow the advice advice, in the current political and economic environment, you will get <deleted> screwed.

Consider the following;

It is more common for the Thai lawyer to set you up with a couple of Thai people in cahoots with him, than it is for the Thai lawyer to be honest. The 'Thai love Thai' mentality means you lose no matter what the situation is.

If you do structure a company with on-the-paper staff, you will have violated the law and a government agency can, and will, take everything you have invested in.

Imagine for a second your on-the-paper employees, who you pay the taxes for, walking into a lawyers office and making up a story to sue you. You're going to take this to a Thai lawyer, who will argue it before a Thai court where the judges have a history of impartiality and fairness. (not)

The numerous agencies you will have to deal with will all have their hand out for an extra 'fee'. It's about 27 different agencies that will eat into your profit. Remember, you will have to 'wai them' and act contrite during this relationship, because Thailand is a 'caste system', and you are the lowly farang. http://countrystudies.us/thailand/52.htm

If you are, somehow, successful, a Thai person will complain and cause you problems, because you're a lowly farang. Or, a Thai person will set up shop right next to you, and then complain, effectively stealing your investment.

The 'inevitable day' is approaching, and when that happens, all hell is going to break loose. You will have zero control.

Now, if you really want to invest in something profitable, I have a bridge for sale! It's in Brooklyn.

[WhizBang]

Assuming your cousin has the experience to open and run a business, then my advice would be to find a country with a level playing field in which to operate. Such a country is NOT Thailand.

As some posters have pointed out, the deck is very heavily stacked against you in Thailand. Heed their warnings.

If your cousin is still intent on going ahead, then I suggest he come and live here for a few years, to get the lay of the land, as it were, BEFORE attempting to start a business. Hopefully he will have his eyes opened during that time.

I came here in 2000 with the intention of opening a branch of my business. It did not take me very long to realize I could not do business in this corrupt country.

[momtaz]

Thanks for all replies guys,

the product is a type of food and beverage items,

A new brand product that very well expected to be successful,

all necessary steps will take a place and everything will be according to the legal procedure,

the worrying is the unexpected out of the fame hands,, I head of such stories to have someone will come to compete with you, then start nagging complaining to push the white hand tax collectors annoying and bothering around,

I visited one lawyer office at wireless road, this is a foreigner company, explained everything,

but the knot is to find a local partner, to involve a local with you and they see your business is generating well,

so it's really critical issue,, the by law u can't escape to involve a local person, and what is they feel jealous of your income and the satanic demonezation begin?

Addition to the above, the lawyer explained that the sector of food and beverage has more restrictions to be for Thais,

the gentleman is willing to set up everything as per the regulations to get everything done properly,, but the main worrying is about the jealousy of the local partner and extortion deals,

[Asiantravel]

@OP:

ignore the nitwits who obviously never had a company ever.

Your cousin needs at least 2 Thai partners to establish a limited company, and your cousin is not allowed to own more than 49% of the nominal capital, unless your cousin is US American, in which case he can own the whole company under the US-Thai treaty of amity.

To find Thai partners, I would really really advise your cousin to use a reputable lawyer instead of trying to find the partners himself.

The lawyer knows all the tricks to make sure the company remains under your cousin's control and to make sure you don't have to split profits with the dummy partners.

The lawyer can also organize on-the-paper staff to get a work permit for your cousin, which will be necessary to avoid problems.

Have the lawyer do everything by the book and your cousin won't be exposed to risks.

The different administrations such as ministry of labor, immigration and maybe the tax office / VAT might want to inspect the premises - sometimes some extra "fees" are necessary to "speed up" the process.

Your lawyer will inform you about everything.

I'm a nitwit who has built a couple of companies, and sold them. (because that's where the real profit is)

If you follow the advice advice, in the current political and economic environment, you will get <deleted> screwed.

Consider the following;

It is more common for the Thai lawyer to set you up with a couple of Thai people in cahoots with him, than it is for the Thai lawyer to be honest. The 'Thai love Thai' mentality means you lose no matter what the situation is.

If you do structure a company with on-the-paper staff, you will have violated the law and a government agency can, and will, take everything you have invested in.

Imagine for a second your on-the-paper employees, who you pay the taxes for, walking into a lawyers office and making up a story to sue you. You're going to take this to a Thai lawyer, who will argue it before a Thai court where the judges have a history of impartiality and fairness. (not)

The numerous agencies you will have to deal with will all have their hand out for an extra 'fee'. It's about 27 different agencies that will eat into your profit. Remember, you will have to 'wai them' and act contrite during this relationship, because Thailand is a 'caste system', and you are the lowly farang. http://countrystudies.us/thailand/52.htm

If you are, somehow, successful, a Thai person will complain and cause you problems, because you're a lowly farang. Or, a Thai person will set up shop right next to you, and then complain, effectively stealing your investment.

The 'inevitable day' is approaching, and when that happens, all hell is going to break loose. You will have zero control.

Now, if you really want to invest in something profitable, I have a bridge for sale! It's in Brooklyn.

[Asiantravel]

@OP:

ignore the nitwits who obviously never had a company ever.

Your cousin needs at least 2 Thai partners to establish a limited company, and your cousin is not allowed to own more than 49% of the nominal capital, unless your cousin is US American, in which case he can own the whole company under the US-Thai treaty of amity.

To find Thai partners, I would really really advise your cousin to use a reputable lawyer instead of trying to find the partners himself.

The lawyer knows all the tricks to make sure the company remains under your cousin's control and to make sure you don't have to split profits with the dummy partners.

The lawyer can also organize on-the-paper staff to get a work permit for your cousin, which will be necessary to avoid problems.

Have the lawyer do everything by the book and your cousin won't be exposed to risks.

The different administrations such as ministry of labor, immigration and maybe the tax office / VAT might want to inspect the premises - sometimes some extra "fees" are necessary to "speed up" the process.

Your lawyer will inform you about everything.

you make it sound so easy given the very unique nature of the government in this country ( just two days ago you could read a thread on this forum entitled " A draft constitution for army-run Thailand " ) or even the state of the global economy at this point in time.

you wrote somewhere else that you used to be an options trader? Not everyone considering starting a normal business would view risk the same way as you do.

Edited January 23, 2016 by Asiantravel

[fstarbkk]

OP, your concerns regarding the Thai partners are well justified and I don't think there are any easy answers to eliminate this risk factor. Remember, the intent of the laws governing this set-up, is to ensure Thai control of the business.

Even a very competent lawyer can do no more than to help you subvert the spirit (if not the letter) of the law. As such, you will end up with a very well built house, built on a shaky foundation.

[manarak]

you make it sound so easy given the very unique nature of the government in this country ( just two days ago you could read a thread on this forum entitled " A draft constitution for army-run Thailand ":giggle: ) or even the state of the global economy at this point in time.

you wrote somewhere else that you used to be an options trader? Not everyone considering starting a normal business would view risk the same way as you do.

that's probably very true !

the reputable lawyer is the key.

if the venture has more muscle behind, the best is to use one of the major legal consulting companies such as KPMG, Deloitte, Ernst&Young or PWC.

[blackcab]

One key question is how easy is it to make (copy) the food and beverage?

If it is

1. Easy to replicate,

2. Has a low barrier to entry, and

3. You are successful

You will have many imitators very quickly. The thing is that the people copying you won't need a formal business structure, won't need a Thai partner, won't pay accountants and lawyers, won't register for VAT, won't need a work permit and extension of stay and they won't care if they make very little money.

If, on the other hand, the barrier to entry is higher then you should have a better chance.

[bwpage3]

Thanks for all replies guys,

the product is a type of food and beverage items,

A new brand product that very well expected to be successful,

all necessary steps will take a place and everything will be according to the legal procedure,

the worrying is the unexpected out of the fame hands,, I head of such stories to have someone will come to compete with you, then start nagging complaining to push the white hand tax collectors annoying and bothering around,

I visited one lawyer office at wireless road, this is a foreigner company, explained everything,

but the knot is to find a local partner, to involve a local with you and they see your business is generating well,

so it's really critical issue,, the by law u can't escape to involve a local person, and what is they feel jealous of your income and the satanic demonezation begin?

Addition to the above, the lawyer explained that the sector of food and beverage has more restrictions to be for Thais,

the gentleman is willing to set up everything as per the regulations to get everything done properly,, but the main worrying is about the jealousy of the local partner and extortion deals,

If your products are "sourced" and not manufactured by you with a secret recipe, it won't be long until your Thai partners/workers figure this out and set up shop for themselves.

How receptive are Thai's to food products that are not Thai food or western fast food? Thai's only go for new ideas they see on social media from Japan or South Korea or bombarded by TV commercials with famous movie stars.

If you did not do a bonafide business plan with research, chances of success are zero. Did you put out samples in volume and let Thai people try the products? Do you even have the education how to do a bonafide business plan to evaluate the potential success/failure rate before you throw all your money down the drain?

What about product distribution? Have any deals with Tesco Lotus? No? 7-11? No. They all have their own product sources.

So where exactly do you think you will sell enough product to earn enough income to support yourself and a company?

In the local neighborhood Thai outdoors markets, the majority of Thai's spend their limited money on a meal (35 baht), maybe a fruit drink (15 to 30) baht, maybe local doughnut or sweet (30 baht).

Now if you want to live in Thailand as a bonafide businessman, your income should be at least 90,000 thb per month after all your taxes, employee salaries, VISA requirements, shop rent, shop utilities, insurance etc are paid. After all that is paid, let's assume a profit of 10 thb for each product you sell. Food and drink to most Thai's is in the 30 to 50 baht per day range.

90,000 thb / 10 thb = 9,000 products a month/ 30 days in a month = 300 sales a day

Keep in mind that 300 sales a day has to come AFTER you made enough sales to pay for the business rent, utilities, taxes, and everything else.

Realistic sales might need to be 900 a day to cover expenses.

Where exactly do you feel you could sell 900 of anything every single day of the month in Thailand?

Where do you think you will find a daily gathering of at least 900 paying customers?

The answer is you will not. If you think you have a distribution plan? Thai's will rob you blind. You have no power to stop them.

I think if your product is not in the <30 baht range, you probably won't sell any to anyone.

Many people have had the same idea to come to Thailand to strike it rich. Unfortunately, their main idea is Thai girls, and their business idea and lack of plan already has them doomed.

Understand why people attend UNI for 6+ years to get a Masters Degree in Business.

Wanting to move to Thailand without a proven business plan is a complete failure waiting to happen.

Save yourself the misery and embarrassment or else save enough for a plane ticket home.

With no prove business plan you have already failed.

Another real issue is all the headaches concerned when your business goes under and you have to legally close it down and pay all the compensation for closing.

[blackcab]

To be fair some customers might buy more than one piece.

[Rhys]

So... try a self-directed, student businessman's centered learning approach or case study: Just look up California Fitness, J. Levine... you will find your framework there..

Cheers..mate..

Ngahh.. just come and play here.

[RaduAlex]

Get a copy of "Doyle's Practical Guide to Thailand Business Law" by Michael Doyle, ISBN 9786169223900

[bangkoklawyer24]

the best is to use one of the major legal consulting companies such as KPMG, Deloitte, Ernst&Young or PWC.

Exactly. But never ever pay them more than THB 15,000 for the company formation!

[MeHere]

I'm not sure if an American (can own 100% of the business without the need of Thai partners), considering the Amity Treaty, has an advantage over the risks put forward here or not.

[Eric Loh]

I suggest that you set up a branch office first which don't require the local content and setting up branch office is pretty straight forward. Appoint local companies to market your products with marketing support from you. You can advertised for distributors to sell your products. This will be useful for you to know customer buying behaviors, pricing, stocking etc as you are new to the market place. Also a chance for you to get to know the people. Take this chance to select the people that will have a good fit to your expectation. Good partner/s are hard to find and only through working together that you get to find the right fit. When you are ready and found your local partner, then set up the company.

I spend 6 years marketing via a distributor before setting up my company. I have no problem with my 51% local partner whom I employed as GM.

[Thaidream]

Aa someone who has been in Thailand a long time- my advice- do not try this in Thailand. If the idea is that good, it will be a better launch in a Western oriented country and with success and income- you can go for it in Asia. Do not be lured by the alleged ease of setting up a business. Many have tried and few have succeeded. I can count on one hand the number of really successful foreigners I know of and most of them have been at it for decades.

[yellowboat]

The "cousin" is clearly naive.

Tell him to forget the idea and open a business in his own country where, hopefully, the rules will be understood.

There is money to be made in Thailand, but one must ask ones self why and contemplate the benefits. We by from and sell to Thailand from the outside to avoid hassles. Also, do not limit yourself to doing business in just Thailand.

Cambodia is far easier to set up a business than Thailand, but it comes with some of the headaches of a developing country. Malaysia seems to be troublesome,but more straightforward than Thailand, unless you are an American.

Does your business require a Thai company ?

[Srikcir]

With the ASEAN Economic Community trade agreement in place now you might consider setting up a company in Vietnam and "backdoor" into Thailand.

[timendres]

Thanks for all replies guys,

the product is a type of food and beverage items,

A new brand product that very well expected to be successful,

all necessary steps will take a place and everything will be according to the legal procedure,

the worrying is the unexpected out of the fame hands,, I head of such stories to have someone will come to compete with you, then start nagging complaining to push the white hand tax collectors annoying and bothering around,

I visited one lawyer office at wireless road, this is a foreigner company, explained everything,

but the knot is to find a local partner, to involve a local with you and they see your business is generating well,

so it's really critical issue,, the by law u can't escape to involve a local person, and what is they feel jealous of your income and the satanic demonezation begin?

Addition to the above, the lawyer explained that the sector of food and beverage has more restrictions to be for Thais,

the gentleman is willing to set up everything as per the regulations to get everything done properly,, but the main worrying is about the jealousy of the local partner and extortion deals,

It might be simpler and more profitable to partner with an established company here. Still many issues with trust, but you eliminate all of the headaches and costs of establishing your own company. Not sure, but the business partnership could also allow for obtaining a Non-O B visa that would allow for long stays (but not continuous).

[SOTIRIOS]

...prepare to be eaten alive......with a smile of course......

[kingstonkid]

Op,

I have been here five years and just starting to put together a business. The big thing that delayed me was finding Thai partners that i felt I trust.

They are all established through my gf and working arrangements that I have made.

How long have you been in Thailand and what connections do you have. How many of the Thais that you know would you trust your life to?

These may be the people that he wants if you have them. I agree in this climate with all the crap going on skirting the laws other than teaching seems to be foolish.

If the lawyer says that he can get everything including partners i would suggest that you run do not walk out of that office.