Thailand offers a compelling mix of opportunity, strategic location, and economic growth, making it an attractive destination for foreign investment. But while the potential is high, so are the stakes — and many international businesses make avoidable mistakes when trying to establish a presence here.
To help you navigate this vibrant market, we’ve outlined the five most common missteps foreign companies make when entering Thailand — and how to avoid them.
- Underestimating Regulatory Complexity
Thailand has a layered and evolving legal landscape that can vary depending on your sector, business structure, and ownership composition. One common mistake is assuming the regulations are the same as other ASEAN countries or that translation alone is sufficient for full compliance.
What to do instead:
Engage local experts early. Whether it’s navigating the Foreign Business Act, applying for BOI (Board of Investment) incentives, or structuring your shareholding for maximum control, local legal and compliance guidance is essential.
- Choosing the Wrong Business Structure
Setting up a company in Thailand isn’t one-size-fits-all. Many foreign investors default to forming a Thai limited company without fully understanding the ownership implications, tax liabilities, or alternatives like a Representative Office, Branch Office, or using an Employer of Record (EOR) service.
What to do instead:
Evaluate your goals: Do you need a physical presence? Will you be hiring locally? Do you need to invoice customers directly in Thailand? The right setup will save you time, money, and stress in the long run.
- Misreading Thai Business Culture
Thailand has a distinct business etiquette rooted in hierarchy, relationships, and indirect communication. Many foreign businesses rush into negotiations or expect Western-style pace and assertiveness — which can lead to friction or missed opportunities.
What to do instead:
Invest in cultural fluency. Building trust and rapport is crucial. Understanding nuances like kreng jai (consideration for others) or face (reputation and respect) can make or break partnerships.
- Hiring Without Understanding Local Labor Laws
From probation periods and social security contributions to severance pay and work permits, Thailand’s labor laws are detailed and strictly enforced. Misclassifying employees or mishandling terminations can result in serious penalties.
What to do instead:
Partner with local HR professionals or use an EOR provider to manage compliance. If you’re testing the market, hiring through an EOR allows you to onboard local talent without setting up a legal entity.
- Ignoring Local Competition and Market Fit
Thailand’s domestic market is competitive, particularly in sectors like retail, tech, and hospitality. Foreign businesses sometimes assume their existing products or services will translate seamlessly — only to find local players are better adapted to consumer expectations and price sensitivity.
What to do instead:
Conduct deep market research. Don’t just localize your product — localize your strategy. What works in Singapore or Australia may need significant adaptation for Thai consumers.
Final Thoughts
Thailand is full of opportunity, but the path to success requires local insight, strategic planning, and cultural sensitivity. By avoiding these five common mistakes — and partnering with the right experts — you can unlock the full potential of your business expansion in the Land of Smiles.
At Interloop, we specialize in helping foreign companies enter and grow in Thailand with confidence. From EOR and company registration to strategic consulting and digital marketing, our team is here to support your success every step of the way.
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