Business with Thais

• Western vs. Thai Values
• Buddhism and Rules of Conduct
• Status
• Time and Patience
• Conficts and Harmony
• Trust and References
• Contracts and Safeguards
• Business Etiquette
• Business Negotiations
• Final Words

A typical western style businessman (or businesswoman) likes to see him or herself as goal oriented, dependable and efficient. These attitudes are mirrored in terse language with a military touch and a voice that can become quite loud and insistent when issuing orders. Especially when things get tough or start to seem chaotic, we Farang tend to get loud and show our feeilings openly. We quickly "get to the point", use logic as our main argument and know exactly what we need to do to get it done.

"Time is money!" "You only have one life, make it successful." "Keep your mind on your goals!" "Use the other's shortcomings, hide your own." "Divide and conquer!"

In Europe, North America or Australia this type of behavior is perfectly acceptable. We like to be viewed as tough, realistic and assertive - very positive characteristics. It is also ok to politely criticize our negotiating and business partners while searching for a solution to a problem. Criticism can also be part of a negotiation strategy. Among Westerners the discussion climate in business relations can be relatively aggressive without anyone being insulted or taken aback.

Ok, all this sounds familiar and makes good sense? You want to do business in Thailand? Then forget almost everything you have just read. And let's take a closer look at the Thai value system and its influence on daily and business life.

 

95% of the population in Thailand are Buddhists. According to Buddhist teachings, every person is reincarnated many times and lives many lives. The quality of life after each reincarnation is dependent on how good a person's deeds were in a previous life. Of course there are the priveledged few who are able to break through the endless cyle of reincarnations and get to Nirvana fast. But most Thais have resigned to the fact, that this is not going to happen to them. They try to improve their Karma by doing good deeds. At the same time Buddhism and the concept of reincarnation gives them a feeling of not beeing 100% responsible for their own lives. And more importantly, the position of a superior will never be questioned: it is seen as the reward for good deeds and a positive attitude in a former life.

In Thailand ambition does not have much of a foundation. As far as most Thais are concerned, the past and the future are not as important as the present. This is part of the explanation for the typical Thai way of dealing with personal finances. Money is for spending and not for saving - and for having fun (sanook).

It is really not surprising then, that most of the successful Thai business people belong to Thai-Chinese families, have studied abroad and have a good working network with contacts around the world. Their upbringing makes business life easier for them, they are less inhibited by Buddhism and better able to deal with a rougher, more aggressive business culture.

A person's status depends on their age, their family background and how long they belong to the staff of a company or other organisation. A person of higher status is to be respected, regardless of how good or bad their performance may be. This leads to strange and unfair situations - at least from a Westerner's point of view.

A young person and "high achiever" does not earn the same amount of respect that he would in Europe or North Amerika or Australia or the like. Age, experience and inherited status are more important. If this sounds old fashioned and unjust to you, keep your opinion to yourself. A Thai will not understand you when you criticize someone for their authoritarian behavior or if you do not accept that someone with higher status  is by definition "right".

At the same time, one should not forget that Thailand and its social structure is changing. In urban centers like Bangkok you will find a well educated middle class influenced by Western social values. But don't expect that kind of thing outside of larger Thai cities.

On the other hand, just to be fair, taking a look at statistics in European countries make clear, that belonging to middle- and upper class families is a great help in gaining success - pure achievement alone is not enough.

Another major difference between Western and Thai values is the innate respect that Thais have for older people. So don't be suprised if your Thai business partner is especially polite and respectful when he sees that you are significantly older than he is. But don't expect too much in this case. Your Thai partner is just being polite. You will have to work to earn his real respect.

Thais seem to take their time. What can't be achieved in this life, can be completed in the next. What's the hurry?  Well, Thais are not in a hurry, they take their time in consultations, discussions and negotiations. Don't be too suprised if you spend hours making small talk with a Thai before you have any idea of what he really wants or find out anything concrete - and this despite the fact that the "get together" was his idea. Probably he just wanted to get a chance to get to know you. That's the prerequisite to any business endeavor.  Therefore, just take your time as well - and be patient. Just view this first encounter as a chance to meet each other and get acquainted.

In a discussion with a Thai you do have some disadvantages you should be realistic about. Thais are brought up to keep themselves under control and remain self-restrained. When Thais speak to each other they not only many ways of transmitting their feelings and attitudes through finely tuned signals while speaking. Thais also have a large repertoire of non-verbal signals they can use to communicate without words. The Farang is at a great disadvantage: he misunderstands or does not even see verbal and non-verbal signals. That is why many Thai view Farang not only as ignorant, but also as maladjusted and disturbed. This is especially the case, when Farangs get upset and start getting loud or aggressive. This type of behavior usually leads to the end of a promising Thai-Farang business relationship.

 

In Thailand harmony and lack of conflict are essential elements in a relationship. Respect for other people's feelings and the importance of personal reputation are so important that criticism - especially in front of other Thais - is a very touchy matter and to be avoided at all costs. Keeping one's face is of utmost importance to a Thai person.

This can lead to very difficult situations. An example: Every Thai worker in a company knows the their are obvious flaws in a product or a working process. But nobody will talk about it because that would mean they would be criticizing another person - and that is a taboo. In this case, you as a Farang boss  (if that's you) will have to see and solve the problem yourself. Your Thai workers are not going to come to your with their problem. And the worst thing you could do it to criticize someone on your team.

Status, family standing and background, as well as, belonging to the "right" organisations are very important in Thailand. Thais are looking for long term business relationships and  take their time building these. Good contacts are a great help in the process. They can introduce you to the people you may need and act as a  "reference". References and good networking are crucial in doing business  in Thailand.  You will need good references and it will take you time to build your network. While a good reference is a important aid, having the wrong "contact" can lead to the end of an otherwise promising business relationship. In Thailand it makes a lot of sense to invest (money) in your good contacts. They are necessary not only for business negotiations but also for dealing with the Thai bureaucracy effectively. Without the help of "friends", things can be pretty difficult.

Of course, contracts are valid in Thailand. There are laws and regulations for setting up contracts and dealing with breach of contract. 

Nonetheless, in contrast to Westerners, Thais prefer contracts that leave more room for discussion and change. Trust is the basis of business. Contracts that are too specific are seen as a sign of mistrust. Generally speaking it is difficult to find very precise written descriptions and regulations - especially if you need them in English. This is also true of Thai civil authorities and ministries.

Doing business in Thailand, means getting people to trust you. You don't need much more. Shaking hands is often enough. So you don't have to be too careful. But at the same time that is not as easy as it sound, since you may feel very unsure of yourself in a foreign country, with language and social barriers.

Please don't overdo things. You don't have to try and act like a Thai. You won't be successfull at it anyway. Just stay polite and be yourself. Overbearing friendliness will be seen as a sign of weakness.

Here are some tips to business etiquette.

Be on time: Even if your Thai partner comes late, it would not be a good idea if you were not on time.

What to wear: Thais just people by their clothing. Clean and appropriate clothing is essential. It is better to be overdressed than badly dressed.

Greeting and salutation: Don't use the wai (bowing forward with your hands pressed against each other). Leave this greeting form to the Thais. There is a lot you can do wrong. Justing nodding in a friendly way is perfectly allright. If your Thai partner offers you his hand, then shake it. In Thailand people often have very long names and a short nickname. The salutation "Khun" (for men and women) in front of this nickname is the usual way of dealing with things and is perfectly acceptable. As a Farang you will be addressed by your first name: Khun Tom, Khun Betty or whatever. Sometimes business people who have had some experience with Western customs will try to address you by your complete name. This is just as trying for them as pronouncing a long Thai name for us. Give them a hand,  tell them your first name and make it clear that it is ok for them to use it.

Business cards: Your business cards should be printed on good quality paper. Use both sides, with an English version on one side and a Thai version on the other. Your position in the company should be clearly described - and don't be too modest. Status is important in Thailand.

Shoes: You may have to take your shoes off when entering a Thai house or office. (Don't forget to wear clean and odor free socks.) Normally you can keep your shoes on in office buildings.

Feet: Don't point at anything with your feet, especially don't point at your business partner. The best way of avoiding this is not to cross your legs at all.

Greeting cards: These are always a good idea in Thailand. In Thailand New Year is celebrated twice (Thai and Chinese New Year). Go ahead and send your partners a card each time.

Personal contact: Avoid touching other people.

Your negotiations will probably be in English. When it gets down to negotiating and signing a contract, haveing a translator is a good idea. If you speak Thai, be sure your Thai is really good enough to handle business negotiations. Sometimes it makes sense to  stick to English unless you are explicitly asked to speak Thai. But be careful: If your Thai partner later realizes that you understood more than you should have, he will loose face and you may lose your business partner.

Business negotiations can be seen as a three act play. It starts off with general small talk. You get to know each other. Then in the second act you start to talk about the major points needing negotiation. Be sure to remain low key, speak quietly and without showing your feelings. Just stay very cool. Remember that Thai boxers never show their feelings in the ring, no matter how hard a kick or punch was. This is hard for us Farangs, but it is very important. Even if you consider your partners offer out of the question, don't show how you feel. Your partner may be testing you. Even if you are not satisfied with the way the discussion is going, don't let your partner know. It is quite possible that the next time around you may be able to achieve more - when armed with the right "contact" and "references". In any case do not criticize your discussion partner - keep things on general terms. You will be respected for this behavior. Sometimes another person belonging to your partners company but lower in status will take over responsibility for the "problem". This is one way of saving face.

In the third act things are pretty informal. (Sometimes the second act never happens.) You have to be sensitive enough to understand what's happening, if the negotiation has been successful or if your partner was just "checking you out".

Beware: Thai hospitality and good manners means that a Thai will often say "Yes" or "Khrap". This does not mean he agrees with your suggestion or offer. It just means he heard you. Sometimes this "Yes" means "No". Sounds complicated? It is! You can ask him to explain things again - make it clear you are not sure if you have understood. This helps him to keep face. If you are unsure of yourself, just leave things alone for awhile - if you can. Let your "contact" check the results of your negotiation. It will be easier for your Thai partner to tell your Thai "contact" how he sees things. And your contact can help you achieve an agreement.

No, it is not easy to overcome the cultural barriers between Asia and the rest of the world. You need a lot of patience and experience in order to be successful with your business in Thailand. But it is possible! Globalization and the media have made things somewhat easier. Thais and Farangs can learn more about each other, making discussions easier to understand - for both sides. We have just tried to give you some idea of where to start.