New Zealand’s trade commissioner to Thailand, Karen Campbell, provides a snapshot of the Thailand marketplace and stresses the importance of adopting a pan-Asia view when focusing on South East Asia.
It’s true that if you really want to learn about a particular overseas market – you go there and experience it. Karen Campbell is in the enviable position of living and working in Bangkok, Thailand’s capital, where she is New Zealand’s Trade Commissioner, and therefore well versed in the intricacies of a unique market.
Nelson-born and bred, and long-time resident of Thailand, she was previously employed by Bangkok Bank as executive vice president, product and distribution department, and prior to that, worked for Visa International (Asia Pacific) in Singapore and Japan.
So what is modern-day Thailand really like? Over the phone Campbell paints a picture of a country eager to distinguish itself from its regional neighbours. It is a country with an administration keen to promote populist policies. Elected on the back of a recent history of civil unrest, the government is currently increasing the minimum wage province by province. That’s having a flow-on effect of increasing labour costs, but that’s not necessarily a bad thing, says Campbell. Thailand is willing to leave lower-value manufacturing to the likes of Laos and Cambodia while it gets on with the
job of producing higher-value goods.
Your hard drive may, in fact, come from there.
The government is also working on making access to health care easier for its citizens, and leading-edge technology – such as tablet computers – available to schools.
With a population of 67 million, Thailand is a significant market in terms of size. It’s a market that has grown quickly and seen a rising level of domestic wealth in the past ten to 15 years. Discretionary spend on imported food and beverage and health items, such as wine, cheese, honey, colostrum and mussel extracts, is rising.
The opportunities for New Zealand companies are many, says Campbell, reeling off sectors such as health and medical IT, food and beverage, engineering, agri-business, education, to name just a few.
“It’s important to note that Thailand has a royal family and has never been colonised,” says Campbell. “In fact, the occasion of the 50th anniversary of the King and Queen of Thailand coming to New Zealand in 1962 was recently celebrated in Auckland.”
The point about the country having never been colonised emphasises the ongoing need for English-language education partnerships, she says, and this is a major opportunity for New Zealand providers of education services.
Of course Thailand is an ASEAN (Association of South East Asian Nations) member, which means that, for most New Zealand exporters, the ASEAN-Australia-New Zealand FTA offers a number of trade incentives. There is also a Closer Economic Partnership (CEP) agreement which was signed in 2005 and which gives a timetable for reducing tariffs and increasing quotas. While a large number of products are already tax free, in 2015 a new wave of zero tariffs are scheduled to come into force. New Zealand Trade & Enterprise can also assist with introductions and building relationships in-market. “Thailand has a Board of Investment which offers a number of incentives for foreign companies to set up manufacturing facilities, such as tax waivers, reduced capital requirements and relaxed rules on visas and work permits,” says Campbell. But accessing the Thailand market is not all plain sailing, she says. Although there has been a push for a greater level of standardisation of regulations amongst the ASEAN countries, there are still significant variations – such as FDA rules.
Her advice is to be prepared. First, understand the market; spend a lot of time with any potential Thai partner to develop a relationship. Compare the people and the company values with yours. Working on the structure or form of that partnership can follow she says.
Pan-Asia viewpoint
When approaching the Thailand market, it’s important to remember that ASEAN connection – because access to Thailand can later lead to access across borders to Malaysia, Laos, Cambodia, Myanmar and/or Vietnam.
“This pan-Asia view is becoming increasingly important. The development of regional infrastructure means that New Zealand exporters should no longer think about Asia solely on a ‘country-by-country’ basis,” says Campbell.
“Thailand sits at the centre of a geographic land mass which is rapidly becoming a hub.”
The map on the previous page illustrates her point. The north-south corridor is in place (red line) giving full road access all the way from China to Singapore. The east-west corridor, which will connect Myanmar with Vietnam, is well under way. The grey line (southern corridor) will connect the planned port of Dawei (in Myanmar) with Thailand’s eastern deep-sea ports and on through Cambodia into Vietnam, and may change the flow of some shipping which currently goes via Singapore and the dangerous Malacca Straits.
So find the right partner in Thailand, suggests Campbell, and you could have access to potentially five other south-east Asian countries plus southern China.
Of course, finding that partner is going to require time and tenacity, she says. Bangkok is just 11 hours away from Auckland, with five direct flights every week, so there’s no excuse for not getting on a plane and checking it out for yourself.
Kiwi at the coalface
Greg Reynolds, managing director of Your BUSINESSinASIA.com, supports Karen Campbell’s contention that ASEAN is a much bigger opportunity that many realise and that time in the market is critical for success. A Kiwi based in Thailand since 2009, his company has delivered various projects across the region and comments that many companies are somewhat light when it comes to their market entry and due diligence.
“Market entry into Asia requires time and focus. Fly-in, fly-out research only gives you the surface story,” he says. “Asia is like an iceberg; their trading strength is hidden in the long term, often generational relationships that have been built over many years.”
Thailand is probably the ultimate example he says. Many Thai companies have effectively locked themselves off from wider opportunities as they only speak Thai. With 67 million people on their doorstep, many have more than enough work on their doorstep. However, he sees a creeping awareness of ASEAN and the open borders planned for 2015 and regards agri-business, IT and education (not just English language schools) among the best opportunities in Thailand.
“Thailand is also a nation of SMEs,” he says. “So there is a natural fit once you can work around the language barrier and rich pickings to be found.”
He says Kiwi companies who trade successfully tend to be those who clearly understand their own domestic success and are able to articulate that in plain English. Once they have absolute clarity of who they are and what makes them so good then, either by frequent visits themselves or engaging with professional’s already in-market, they must build their understanding of the complexities and opportunities in the market.
“Many arrive expecting to make sales and then go home, which is simply naive. Would a New Zealand company give the time of day to a Thai arriving on a one week visit with a product or service to sell and sign an agreement on the spot?” he asks. “It is almost embarrassing to see many Westerners arrive with that objective and seem almost insulted when they cannot get past first base!”
The opportunities across the wider ASEAN region are almost mind blowing and the only difficult question is where to start. Reynolds top picks are Thailand and Malaysia for size and scale and Singapore for more boutique, higher-average-value products or services. Like Campbell, he’s a strong advocate of Thailand due to its geographical location in the region and the number of other ASEAN nations trading with it. “You are more likely to be found once you are trading in the region and then the opportunities scale up remarkably quickly.
“Get here now!” is his parting comment.
