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Chinese investment in Thailand has been significant in recent years. China has become one of the largest investors in Thailand, contributing to various sectors of the Thai economy.
However, doing business in Thailand is not without its challenges for Chinese firms.
Understanding and respecting cultural differences is crucial in building strong relationships, especially when it comes to countries as diverse as China and Thailand. With its unique blend of Buddhism, Hinduism, and animism, Thailand’s culture is truly one-of-a-kind.
Thai society places a high value on respect, harmony, and hierarchy in social interactions, and taking the time to learn about and appreciate these cultural nuances can go a long way in fostering positive and productive relationships.
Thai people also have a high-context communication style, which means they sometimes rely more on non-verbal cues and indirect expressions than on explicit words. Chinese culture, on the other hand, is more influenced by Confucianism, Taoism, and legalism.
According to Joe Horn-Phathanothai, founder and CEO of strategy613 :
Chinese firms come to Thailand because they have a low risk, stable and friendly environment with cheap and high-level industrial competency
But there is often quite a bit of a lack of understanding of the local environment as they basically stick to themselves. This is also because they don’t speak very well English or Thai.
Chinese people tend to be more direct, pragmatic, and competitive in their communication and behavior. They also have a low-context communication style, which means they prefer clear and straightforward messages.
These cultural differences can lead to misunderstandings and conflicts between Chinese and Thai business partners, employees, and customers. To avoid these problems, Chinese firms should invest in cross-cultural training and education for their staff and managers. They should also hire local experts or consultants who can help them understand the Thai market and culture better.
Political and legal environment
Another challenge is the political and legal environment in Thailand. Thailand has experienced several coups and political unrests in the past decades, which have affected its stability and security. The most recent coup occurred in 2014, when the military overthrew the elected government and established a junta, and imposed strict censorship and restrictions on civil liberties and human rights.
Although Thailand held two general elections in 2019 and 2023, and returned to civilian rule, the political situation remains uncertain and volatile. Additionally, Thailand has a reputation for corruption and bureaucracy that can increase the cost and risk of doing business.
Another challenge is the political and legal environment in China, namely the anti-corruption campaign.
Since China has implemented its anti-corruption campaign, there is a constant fear of being accused of corruption, or getting kickback from an external adviser. Thus, Chinese companies tend to do everything in internal or hire an adviser at the last minute.Joe Horn-Phathanothai, founder and CEO of strategy613.
Human resource challenges
Thailand has a shortage of skilled and qualified workers, a low level of English proficiency and digital literacy that can hamper communication and collaboration. Thailand also has a high turnover rate and low productivity among workers that can affect the quality and efficiency of operations.
Chinese companies may need to invest more in training and development, as well as offer competitive salaries and benefits, to attract and retain talent.