Establishing a new company in Thailand, pros n cons?

[aronp1]

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.

So hopefully you don't love here.

[aronp1]

Unless I over looked it, the question "is he American?" hasn't come up. Because if he just happens to be, he don't need a Thai partner.

[torpedo1970]

Establishing a new company in Thailand is a no go

Cambodia a better option

[torpedo1970]

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

There is no smiles anymore......

The LOS is a oxy moron.......

[kinmaew]

Despite what the more experienced post said think of it logically here are some of the quotes:

"first item it to provide a Thai partner"

Thais are mostly an incompetent bunch, who don't like foreigners which has been taught from birth and all of the systems are 100% corrupt.

"dummy partners"?

With your hard earned money do you want a business partner that will help and work with you or some mystery person doing god knows what in the background?

Unfortunately Thailand seems like a good place to do business with the hot weather, spicy food and lovely girls but when it comes to your cash you need to keep it in your home country. You have been warned.

PS: Older Chinese guy I know wants to come to Chiang Mai to live, I didn't even have to tell him but he just said "I will rent" - i.e. he will keep his house and investments in home country because he knows in Thailand you WILL lose.

One day I may come back, will rent, have no investments in the country ever and will take utmost pleasure of being able to "Flee the scene" and hop on an overnight flight before anyone knows anything back to my home if anything starts to get sticky.

Edited January 25, 2016 by kinmaew

[sir charles IV]

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.

man you're been harsh on him. Read his post. HE EXPECTS THE PRODUCT WILL DO WELL. forget business plan just go with gut feel. Lol. I think you maybe right in thinking another foreigner hooked on Thai girls and wanting to generate income here rather than bringing hard earned cash from home. Obviously this guy has no clue. As such regardless of the brilliant explanation you provided likes of him are so c...struck that will not listen to reason and will do it. He'll end up engaging in illegal activity to fund his return ticket. But wait he probably borrowed money from friends and relatives which he can't pay back. He seems from the sub continent or Mid East. There also exist the "save face" issue. They think he's running a company in Thailand bigger than Coca Cola! I have no sympathy for those trying to get rich quick without doing due diligence as you have tried to elaborate. "Foreign man jumped off a motel balcony in pattaya yesterday. Police believe it was suicide. A23 year old girl was seen running out with a young Thai man. Neighbors said she was ex partner who fought about money all the time. Possible News article". Lol

[momtaz]

Appreciate all your comments and suggestions guys,

As I heard from him: the business idea is something like a sales counter for smoothie, fresh fruits mixed with chocolate, ice-cream, but with innovative decoration style that not existed yet, regarding the selling place is somewhere like central world, siam paragon, MBK, terminal 21 and such places,,

the targeted customers either locals or foreigners, so the product is mainly to be sold in shopping malls, not any other outside space,

About the idea of prices, let's have a look on Starbucks coffee, or similar type, the prices are not that cheap to be <30 baht, but they are performing well,

Regarding setting up the company, checked with 2 different lawyers, one asked for 60k fees, another asked for 27k,

other expenses for (work permit) almost the same,

But everything will be arranged as per the regulation requirements properly,

The idea about sales workforce: to employ Thai employees, everyday will supply them number of cups, estimated quantity of products, and count cashier sales accounts with them everyday (as per his idea), any advise regarding this guys?

[Gutenberg]

Appreciate all your comments and suggestions guys,

As I heard from him: the business idea is something like a sales counter for smoothie, fresh fruits mixed with chocolate, ice-cream, but with innovative decoration style that not existed yet, regarding the selling place is somewhere like central world, siam paragon, MBK, terminal 21 and such places,,

the targeted customers either locals or foreigners, so the product is mainly to be sold in shopping malls, not any other outside space,

About the idea of prices, let's have a look on Starbucks coffee, or similar type, the prices are not that cheap to be <30 baht, but they are performing well,

Regarding setting up the company, checked with 2 different lawyers, one asked for 60k fees, another asked for 27k,

other expenses for (work permit) almost the same,

But everything will be arranged as per the regulation requirements properly,

The idea about sales workforce: to employ Thai employees, everyday will supply them number of cups, estimated quantity of products, and count cashier sales accounts with them everyday (as per his idea), any advise regarding this guys?

A dream.

[blackcab]

Starbucks does well because it is a global brand name that some middle class Thai people find aspirational.

If you are not a global or very well known franchise and you charge similar prices per item as Starbucks then what you have had better be really, really good.

I would suggest you really test the market before you set up shop. The majority of your customers will be Thai simply because the majority of the people at the locations you mention are Thai.

Do you absolutely know what flavours, tastes and styles Thai people like? As an example, do you know that mint ice cream is not popular because Thai people consider mint something they eat with savoury food? Do you know what the top 10 best sellers of your competitors are?

As for the fees you were quoted, you are being completely ripped off. This, however, is the way it will be all the way through the process unless your know the real prices to pay for things.

I will also reiterate what I said before: if your idea is successful it will be instantly copied and replicated. Beverages have a low barrier to entry. Your product will be easy to copy and the people you train will soon walk out with all your design knowledge. They will absolutely work for your competition (or compete with you themselves). What measures are you going to put in place to attempt to prevent this?

You are focusing on protecting your cash and stock. You really are jumping the gun. I suggest you first focus on how you will market your business. As an example, do you know a guaranteed way to get footfall into your business and the costs associated with this approach?

Do you know which EPOS provider you are going to use? How much will this cost? Do you know what your gross profit must be to succeed? Can you calculate your gross profit across a range of given dates? Do you know how to detect fraud by analysing your statistics? Where are you going to get your staff from? How much are you going to pay them? Does your friend speak Thai?

If you can't answer these questions well, then get your thinking cap on because this is just the very very start if it all. There are many other questions to answer before you should even consider starting.

[Gutenberg]

27k for a company formation including all is a completely ripoff?! Definitely not.

[blackcab]

I agree - 27k all included is not being ripped off at all. However I doubt that it is all included. The DBD fees and the minimum paid up capital make me think this.

[simon43]

I agree - 27k all included is not being ripped off at all. However I doubt that it is all included. The DBD fees and the minimum paid up capital make me think this

My accountant in Phuket charged me 24k baht to register a Thai Ltd company, including DBD fees.

[LukKrueng]

So much negativity and bullsh**t in this thread. What are all doing here in Thailand? Why are you even here?? There are rules and regulations in all countries. You simply have to do things the right way.

I know many foreigners that own business in Thailand on many different sectors - factories, shops, import/export, coffee shops and even massage shops. Successful or not is up to the business plan, location, management skills etc'.

As for competition - you'll have it anywhere you open a successful business with low entry barriers. That's capitalism.

if you are talking about a food business, you'll need local employees anyway, so you are covered for this issue. If you don't know anyone you trust to be your local partner, you'll have to go through a lawyer, which is not straight forward, but many people do it without any problems. To keep control over your business you register yourself as the sole director and signatory for the company so only you have access to bank accounts and other legal issues.

The only thing I would recommend to do before you open a food business is to do a market research and survey to see if it can succeed here. Another thing to check before you invest money here (if you never lived /visited Thailand)is the living conditions and verify you like it.

good luck

[Gutenberg]

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!

If you want premium, you pay a premium. If you want a lawyer working inside a soup shop (seen in Udon), pay less

[JLCrab]

My friends in the US started a food company from scratch and got it to $20+ million per year and tops in many of their product categories when they sold it. It only took them 25 years.

Edited January 28, 2016 by JLCrab