Thailand's entrepreneurs in China
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It was a pleasure to join a recent seminar organised by the Ministry of Foreign Affairs in Bangkok which reviewed the Thai prime minister
While the discussion covered many aspects of doing business with China, I particularly enjoyed hearing from the pioneers of doing business in China such as CP Group, which set up the first foreign-invested enterprise in China after the country implemented reforms under its more open policy over three decades ago, and Mitr Phol.
Since these companies went to China, there have been tremendous changes in the business scene there.
Mitr Phol went to China in the 1980s to grow and process sugarcane. Mitr Phol’s chairman Issara Vongkusolkit described the many challenges they faced over the years including problems with infrastructure, having to move their factory, water shortages and less productive labour skills.
CP Group vice chairman Thanakorn Seriburi, who is also the chairman of the Thailand-China Business Council, said that when doing business in China, it is very important to understand the regional differences.
“As in Europe, every region in China is different. For example, it is not practical to hire Cantonese to work in Shanghai – each place has its own local culture.”
A challenge faced by retailers all over the world is finding suitable sites. Thanakorn said a retailer in China needs to put the location and planned activities at the heart of the enterprise because zoning laws are very strict.
A more recent challenge is posed by soaring property prices. Retailers have to decide whether to rent or buy their properties and this is definitely a complication.
His tip for investors going into the retail business in China is to focus on quality and hire local Chinese, as outsiders do not know the local culture and are not well connected.
Despite both CP and Mitr Phol facing immense challenges when they first went to China, they have both enjoyed tremendous success.
Mitr Phol now has around 10 per cent of the Chinese sugar market and Issara said they are even being wooed by local governments to invest in industrial estates, thanks to their extensive experience in doing business there.
Thanakorn says China has come
a long way in the past few decades and companies that persevere there will be well rewarded. Issara also notes the many positive changes in China.
“In the old days we had to study a lot and go and see first-hand for ourselves what it was like, but now there is a lot more support.”
He sees many good opportunities on both sides and is confident that there will be a strong flow of Chinese investment into Thailand.
One reason is that many Chinese students are now studying here, for example at Assumption University or the University of the Thai Chamber of Commerce, which will strengthen connections later on.
He also said the healthy, long-term relationship between the two countries would encourage Chinese investors to partner with Thailand in creating new China-brand products, while Thai entrepreneurs should also consider working with Chinese partners to introduce Thai brands to China.
He added that the tax regime in China is becoming more beneficial for foreign investors. For example, Mitr Phol is now paying the same tax rate – 15 per cent – as local companies.
