As an emerging market with nearly 70 million population and a rapidly growing middle class, it comes as no surprise that many foreign companies have their eyes set on Thailand. However, the Thai market is notoriously hard to penetrate, with hurdles arising from its unique language and culture. So how do foreign enterprises set up e-commerce businesses here? It will certainly not be a walk in the park, so let us help you point out 5 foreseeable Thailand e-commerce challenges and tips on how to manage them.
Are you ready to learn more about these challenges? Let’s get started!
Thai language and culture
The first Thailand e-commerce challenges that you will have to cope with is the language and cultural barriers.
In Thailand, it is expected that communications need to be in the native Thai language, be it at work or at play. As such, for your online business to be accessible to the Thai audience, you have to ensure that your e-commerce interface and all marketing content are produced in Thai. This is the first step to establish any brand credibility.
Without understanding the Thai language, it is almost impossible to comprehend the cultural nuances. And if you make a mistake that is deemed offensive in the eyes of locals, you risk diminishing your company’s credibility.
Open a corporate bank account in Thailand
Thailand has many bank options when it comes to corporate banking. Of which, one of the biggest players, Kasikornbank (KBank), is known to be exceptionally business-friendly.
As of September 2019, there are 561,000 users on KBank’s corporate-friendly mobile application called K PLUS SME, making it the most downloaded mobile application for Small Medium Enterprise (SME) customers in Thailand.
KBank also revealed that in the first eight months of 2019, K PLUS SME conducted around 138 million transactions worth 293,128 million Baht, reinforcing its status as the most preferred bank for SMEs.
Here are the top 3 features that make K PLUS SME business-friendly:
- Real-time digital updates of deposits and loans, fund transfer and cheque status
- Notification function that reminds SMEs of the due dates of loans to prevent default on loan payments
- Notification function that informs SMEs if there are issues with cheques or insufficient funds, hence avoiding bad credit history
However, the process of opening a corporate bank account isn’t that simple.
You need to bring copies of company registration papers and other additional supporting documents to the bank for review and approval – again, the ability to read and converse in Thai is absolutely necessary.
Legal License to Sell Products in Thailand
Another Thailand e-commerce challenges which are tedious and time-consuming – kickstarting e-commerce in Thailand requires plenty of documents to process your application, such as corporate structure, foreign business license, Office of the Consumer Protection Board (OCPB) registration, e-license, legal compliance, visa/work permit, and taxation.
Example of how to sell a foreign beauty product in Thailand
Firstly, you need to have an authorized operator number issued by the Food and Drug Administration (FDA).
Mandatory information includes:
- Enquirer’s name
- Authorized operator number
- Brand name
- Product name
You will also be required to submit sample products and supplementary information about the type of product, product objectives, list of ingredients, instructions on how to use, and more.
Then, you will have to deal with the import process, where you are required to complete the customs declaration:
- Commercial invoice
- Packing list
- Certificate of origin
- ETA or bill of lading and insurance
- Receipt of notification delivers by the FDA
- Certificate of free sale
Following this, you will be subject to the taxation process, where you are required to pay taxes depending on the type of cosmetic product.
Finally, after you have completed the above processes, you will need to apply for e-commerce business registration in Thailand at the Department of Business Development or on their DBD website in order to obtain the right to sell foreign products on Thailand’s e-commerce marketplace.
Primary documents required are:
- Application form
- E-commerce business registration form
- Identity card
- Work permit
- Foreign Business License
Human resources in Thailand
Human resources can be a challenge too. Let us guide you on how to transfer your employee from headquarters to be based in Thailand or recruit native Thais to help you with running the business.
How to apply for a Thailand work permit?
For Foreigners to legally work in Thailand, they must apply for a Thailand work permit. The applicant must have an initial visa, which is a non-immigrant visa prepared beforehand.
He/She needs to submit the following documents to Thailand’s Ministry of Labor Office of Thailand:
- 2-inch photo
- medical certificate
- original passport
- letter of employment
- certificate of degree
- address in Thailand
The employer has to provide the following documents:
- company certificate and objectives
- list of shareholders
- application for VAT
- withholding tax of the company
- financial statement
- photocopy of the director’s passport and work permit with a signature affixed
- office map
- letter of employment stating the position and salary of the applicant
- employment agreement
The work permit process would take 7 business days to complete.
Foreigner-to-local employee quota
In Thailand, there is a law from the government to limit the number of foreign employees in each company to protect Thai employees. The cap of foreign employee number to total employee number is 20%.
Common job portals to advertise on when recruiting Thai employees
The common job portals to advertise positions in your company are:
The right e-commerce platform to selling your products in Thailand
Even if your product is the best, but if you aren’t using the right e-commerce platform, your sales volume will not take off.
Here are some common e-commerce platforms in Thailand that you must know:
A new e-commerce platform launched by LINE, the #1 communication application in Thailand. With a low barrier to entry and fuss-free set-up for any business that owns a LINE Official Account
This famous e-commerce platform under Alibaba Group is currently the #1 platform in Thailand, focusing on providing highly reliable B2C products in LazMall and offers a wide array of business-friendly features
Another e-commerce giant that is a household name in Thailand, this platform focuses on facilitating the Consumer-to-Consumer (C2C) mode of selling, enabling easy, fast, and convenient transactions.
Another e-commerce platform with a notable presence in Thailand is JD Central – a joint-venture between CENTRAL Group, a retail conglomerate that owns several department stores across the country, and JD.com, China’s top e-commerce company.
Businesses can also consider setting up a fully owned-and-controlled e-commerce website, which gives business owners free rein in customizing their online store.
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Partner in penetrating Thailand
Let IH Digital be your partner in penetrating the Thai market – we will help you overcome every Thailand e-commerce challenges by helping you understand the Thai consumers and Thailand business landscape, as well as plan for your social media and e-commerce needs end-to-end, be it on LINE MyShop, Lazada, Shopee, JD, or your very own Website.
Contact us today for a quotation.
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IH Digital is a 360 ° digital marketing agency in Thailand, with offices across Southeast Asia and Greater China. We offer a comprehensive range of digital marketing services, including Facebook and LINE marketing. Talk to our marketing expert today to learn more about our services.
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