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| Thailand |
| Marketing
and Distribution |
Market Characteristics
Most Thai people are Buddhists, generally religious in their own lives
and tolerant of foreigners of other faiths. No important religious
taboos affect their trade. However, some cultural practices should
be observed. The country and its people are a mixture of old and new,
conservative and progressive.
Thailand has made steady progress in its drive for industrialization
as shown by the declining shared of agricultural, forestry and fishery
sectors, as a proportion of overall GDP between 1980-1996 (1996 -
10.4%) However, still the agriculture, forestry and fishing sector
provide the means of livelihood for a high proportion of the population
and employs 52.4% of the workforce.
Manufactured goods requiring higher production technology are coming
to the fore. The country's Eastern seaboard site of the deep-water
port of Laem, Chebang remains the base of the country's heavy industry.
Price is probably of paramount importance, particularly in the purchase
of general consumer goods, small machinery and appliances. Although
aware of the general benefits of higher priced more durable goods,
the Thai consumer is often in the position to afford only less expensive
merchandise.
Most Thai prefer to have labels, instructions and descriptions that
accompany imported products, printed in the Thai language. They prefer
foreign products if price is not a significant obstacle.
Thai buyers are quality conscious although this factor is often outweighed
by considerations of price and credit.
Servicing of sales is necessary particularly in selling machinery
and equipment. Many foreign suppliers provide parts inventories, trained
repair personnel and expeditious servicing as a standard function
and the Thai buyer is demanding greater service back up from all sources.
Product specifications and the initiative of the supplier in altering
products to meet local demand can often be the determining factor
in making sales. The use of imaginative advertising, proper attention
to the effective display of products, care in selection and appropriate
supervision of distributors and the introduction of modern selling
methods are helping foreign suppliers to win sales.
Distribution and Sales Channels
There are four main categories of importers/agents. Each offer advantages
and disadvantages depending upon the product to be covered. First,
there are the long-established expatriate firms with strong resources
and large turnovers. However, in such diverse operations, the value
of business from a medium-sized principal is often small in the firm's
overall activities and the product may be neglected. On the other
hand, some other product may fit within the mainstream of the firm's
operations.
The second category comprises smaller importers who generally specialize
in one line of business, in which they have valuable contacts. They
may specialize in selling to one or more government departments or
they may have special contacts within only one industry.
The third category, which offers good prospects for many medium sized
exporters, comprises the relatively new companies that are trying
to grow into major marketing organizations. They frequently have technical
backing and modern marketing techniques.
The fourth category comprises private firms heavily involved in the
import/export business and known as international trading companies.
The advantage of using an ITC is that ITCs are granted certain privileges
by the Board of Investments. ITCs are exempted from import and business
taxes on import goods, while suppliers of raw materials and other
items to ITCs are exempted from business tax.
Careful agency selection is important. In almost all cases a local
representation arrangement is the best way an exporter can obtain
worthwhile business. The experience and knowledge of the commercial
office of the Sri Lanka Embassy in Bangkok can be drawn upon when
attempting to match product with representation.
Distribution and sale of imported goods are carried out by a number
of commercial organizations. Some are devoted exclusively to wholesale
trade, while others exclusively to retail trade and still others are
engaged in both wholesale and retail trade.
Wholesale firms located in the Bangkok and Thonburi areas are agents
for the sale of imported goods. Outlets that vary from highly sophisticated
and modernized urban establishments to small general stores, itinerant
peddlers and door-to-door traders selling food distribute retail goods.
Almost every kind of retail outlet, ranging from reasonably modern
supermarkets to the traditional floating market, is represented in
Bangkok. In addition to the ubiquitous small general store, there
are department stores and almost every kind of specialty shop, including
dress shops, florists, jewellers, shoe dealers, furniture shops, electric
equipment shops and many others. The number of department stores and
supermarkets is increasing in suburban centres. Personal, technological,
and professional services are also available in the metropolitan areas.
The government is Thailand's biggest single importer. The government
usually purchases by means of tenders issued by the various end-user
agencies and departments.
Invitations to bid on government tenders usually require that a deposit
of up to 5 percent accompany the bid. The deposit is refunded to unsuccessful
bidders and the successful bidder's deposit is retained as a performance
bond and returned after the bidder has completed the work satisfactorily.
In some cases, successful bidders are required to furnish a performance
bond in addition to their original deposit.
Price is only one of several considerations for a government award.
Quality, delivery, credit terms, maintenance and service facilities
are also weighed.
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