Intercultural Communication

WS 2006/2007

Administration: Prof. Dr. Michael Woywode

Intercultural Environment
In Thailand

Handed in at

Rheinisch-Westfälischen Technischen Hochschule Aachen

Lehrstuhl für

Wirtschaftswissenschaften für Ingenieure und Naturwissenschaftler

Group Members Email- Address Studentnumber

Janjaree Chianwichai janjaree@hotmail.com 277161
Jittra Sangkakid baifin_1@hotmail.com 277162
 Agenda

1. Introduction 3
2. General Information 4
2.1. Historical background 4
2.2. Geographic profile 4
2.3. Demography 5
2.4. Political and Administration System 6
2.5. Finance and Business 9
2.6. Infrastructure and utilities 10
2.7. Tourism 13
3. Economic 14
3.1. Economic overview 14
3.2. Economic forecast in 2007 15
4. Cultural environment 16
4.1. History of Thailand’s culture 16
4.2. The Social-Culture Environment 17
5. How to deal with Thai people when doing business 20
5.1. Negotiating with Thai Executives 22
6. Conclusion 24
Bibliography 25

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1. Introduction

A Quick Glance at Thailand

Population 64,631,595 (growth rate: 0.7%)

Birth rate 13.9/1000
Infant mortality rate 19.5/1000
Life expectancy 72.2
Density per square mile 327
Government Type Constitutional Monarchy
Legal system Based on civil law system, with
influences of common law
Capital Bangkok (the largest city)
Administrative Divisions 76 provinces
Currency Baht

Source: www.cia.gov/cia/publications/factbook/geos/th.html

Land and people

Thailand or Siam, the land of smiles is a small country with many things to offer.
Many people will find Thailand a very beautiful country for traveling and some people will
find Thailand a land of great opportunity for business. Thailand offers many things to
explore. Thais enjoy reminding foreigners that Thailand means “land of the free.” Thai
citizens are proud of the fact that the kingdom has never been a colony of Western nations.
However, Thailand has been occupied many times over the centuries by invaders from
Cambodia, Laos, Burma, and other parts of Southeast Asia. These frequent invasions have
occurred in part because the nation’s geographic location is strategic, at the crossroads of
many different civilizations.

Today, Thailand’s strategic location has positive and negative aspects. On the positive
side, most European flights to Southeast Asia make their first stopover in Bangkok, and so it
has first access to the European tourist market. Also, the nation is an ideal base for regional
business distribution in a dynamic part of the world. On the negative side, when its economy
declines, other nations are affected. For example, the so-called Asian economic flu began in
early May 1997 when the Thai currency, called the baht, was freed from its rigid exchange

3
controls, and fell dramatically. From there, the flu spread throughout Asia and negatively
affected economies as far away as Australia and South America.

2. General Information

2.1. Historical background

Formerly known as “Siam” the country was officially renamed The Kingdom of
Thailand on May 11, 1939. “Thai” means “freedom” and therefore Thailand or Sayam
(“Siam”), by local name Muang Thai, means “the land of freedom”. The Thais first began
settling their present homeland in the 6th century, and by the end of the 13th century ruled
most of the western portion.

2.2. Geographic profile

2.2.1. Geographical location

Thailand is located in the centre of mainland Southeast Asia. It has the area of
198,1151 square miles (513,115 square kilometers). The length from north to south is 1,620
kilometers. The longest width measured east to west is 775 kilometers. The northern border
is adjacent to Laos and Myanmar. The western border is adjacent to Myanmar and the Indian
Ocean. The southern border is next to Malaysia. On the east and southeast are Laos and
Cambodia. The country consists of four parts, namely, North, Central Plain, Northeast, and
South.

The Northern Part consists of 17 provinces covering an area of 169,600 square

kilometers, 80 per cent of which is mountainous. These mountains are vital water sources for
the country. Chiang Mai Province is the center of the lower northern part.

The Northeastern Part consists of 19 provinces covering 168,854 square kilometers,

another one-third of the country’s total area. Nong Khai Province, Mukdaharn Province, and
Nakorn Panom Provinces are gateways to the neighboring country of Laos.The Central Plain
consist of 26 provinces covering an area of 103,946 square kilometers. This part features

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www.nesdb.go.th/econSocial/macro/macro_eng.php

4
abundant agricultural areas. It is physically and socio-economically divided into four sub-
regions including Bangkok, the country capital, inside a perimeter of the eastern sub-region,
the upper central plain and the western sub-region.

The Southern Part consists of two longitudinal sides bounded by seas. This part
comprises a landmass of 70,715 square kilometers for 14 provinces. On the Andaman Sea
side the major provinces are Phuket, Phang Nga, and Krabi. The major provinces on the Gulf
of Thailand are Suraj Thani Province and Songkla.

2.2.2. Capital: Bangkok

2.2.3. Climate: Influenced by the monsoon, Thailand features a warm and humid
climate. The average temperature is 29 degrees Celsius. In metropolitan Bangkok, the
temperature ranges from 35 degrees Celsius in April to 17 degrees Celsius in December. In
general, there are three seasons: winter (November to February), dry season (March to May)
and rainy season (June to October).

2.2.4. Local Time: GMT+7

2.3 Demography

2.3.1. Population

The total population in Thailand is 64.63 million people2. The average age is 72.2 years.3
Most Thais have Thai nationality. Other major ethnic groups are, for instance, Chinese,
Indian, Malay, and hill tribes. Thai is an official language. Foreign language services are
available in major cities. For religions, 90 percent of the population is Buddhist. The
remaining 10 percent are Christian, Muslim and Hindu. The age structure of the Thai
population covers three different age ranges: 0-14 years, which consists of 22% of the total

2
www.cia.gov/cia/publications/factbook/geos/th.html

3
www.boi.go.th/thai/how/demographic.asp

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population (male 7,284,068/female 6,958,632); the second age range is 15-64 years or 70% of
total population (male 22,331,312/female 22,880,588); and 65 years and over, or 8% of total
population (male 2,355,190/female 2,821,805). The population growth rate is 0.68%, while
the birth rate is 13.87 births per 1000 population. The overall death rate is 7.04 deaths per
1000 populations. Life expectancy at birth of total population is 72.25 years, for male
population it is 69.95 years and for female it is 74.68 years. Total population literacy rate (age
15 and over who can read and write) is 93.8%.4

2.3.2. Per Capita income

GDP (Purchasing Power Parity) $585.9 billion (2006 est.)

GDP – real growth rate 4.4% (2006 est.)
GDP - per capita (PPP) $9,100 (2006 est.)
GDP - composition by sector agriculture: 10%
industry: 44.9%
services: 45.2% (2006 est.)

Source: www.cia.gov/cia/publications/factbook/geos/th.html

2.4 Political and Administration System

Thailand's government structure has undergone gradual evolution in response to the

changing environment. Despite the preservation of the kingdom’s monarchical system,
established over 700 years ago, Thailand has become one of Asia’s strongest democracies in a
relatively short period of time. It has a check-and-balance system similar to that of any
Western democracy, with a Prime Minister as the head of government

From Absolute Monarchy to Parliamentary Democracy

The first Thai state, the Kingdom of Sukhothai (1257-1378), adopted a paternalistic form of
government. The King, while enjoying absolute power, personally paid close attention to his
subjects’ well being. However, Sukhothai was a fragmented city-state and the lack of a

4
www.literacyonline.org/sltp/country/thailand.htm

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centralized government led to its fall in the late 1300’s. Its decline coincided with the rise of
the increasingly powerful Ayutthaya Kingdom to the South. During the Ayutthaya period, the
power of the monarch rose, as Ayutthaya inherited a Khmer system of government based
upon the Hindu concept of divine kingship. Under the reign of King Borommatrailokkanat
(1448-1488), Ayutthaya’s political administration underwent a major reform. The sakdina, a
feudal system, which allowed almost everyone in the kingdom to hold land based on their
rank, satisfying both nobles and commoners, lasted until the 19th century. Moreover, the civil
and military administrations were separated and the government was centralized, making
Ayutthaya one of Southeast Asia’s strongest and richest empires for three centuries.The
capital was moved to Bangkok in 1782, marking the beginning of the Rattanakosin period,
which saw the continuation of the Ayutthaya system of government. Thus, for over three
centuries, Thailand’s political administration was by and large carried out without drastic
reform. Nevertheless, by mid 1800’s, the threat of imperialism became a major issue. King
Chulalongkorn (1868-1910), seeing the need for political reform, decentralized the
government. He carried out a major reorganization of the central and local administrations,
which formed the basis of the present system. The central government was further divided
into a number of departments and the local administration was led by an appointed governor
of each province. His administrative reform and rapid modernization proved successful both
in maintaining the country's independence through the turbulent years of colonial threat and in
providing a foundation for a modern system of government. King Chulalongkorn’s
successors, King Vajiravudh and King Prajadhipok, had a great interest in parliamentary
democracy. However, some intellectuals, educated abroad, called for an immediate
democratic transition. On 24 June 1932, they staged a bloodless coup, demanding an
establishment of a constitutional monarchy. To avoid bloodshed, King Prajadhipok agreed to
the abolition of absolute monarchy for the sake of his people, transferring power to a
constitution-based system of government. On 10 December 1932, Thailand's first constitution
was signed.

2.4.1. The Government

Smaller cabinet committees have been set up to help screen proposals from the various
ministries before submission to the full cabinet. This process enables the government to
ensure that no incompatible policies are made. The committees may also be assigned by the
Prime Minister to thoroughly examine the merits of each project or policy for the cabinet so
that the latter will not have to go into such details before deciding on proposals, thus

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streamlining its work. The Office of the Prime Minister is a central body, which in itself ranks
as a ministry, whose responsibility is largely concerned with formulating national policy.
Some of its primary subdivisions are the Budget Bureau, the National Security Council, the
Juridical Council, the National Economic and Social Development Board, the Board of
Investment, the Civil Service Commission and several other organizations vital to the
formulation of national policy. The twenties ministries are divided on a functional basis. After
the financial crisis of 1997, the Ministry of Finance, the Ministry of Commerce, the Ministry
of Industry and the Ministry of Agriculture and Co-operatives have assumed an increasingly
important role in the Thai Government. At the same time, the Ministry of Defense, the
Ministry of Interior and the Ministry of Justice are in charge of maintaining peace and
security in the country. In addition, the Ministry of Education, the Ministry of University
Affairs, the Ministry of Public Health, the Ministry of Science, Technology and Environment,
the Ministry of Labor and Social Welfare, the Ministry of Transport, the Ministry of
Information, Telecommunications and Communications, the Ministry of Social Development
and Human Security, the Ministry of Culture, the Ministry of Sport, the Ministry of Natural
Resources and Environment and the Ministry of Energy are concerned with improving
infrastructure and human capital in Thailand. Finally, the Ministry of Foreign Affairs,
equivalent to the US Department of State, is responsible for strengthening relations between
Thailand and the outside world.The head of career civil servants in each ministry is the
Permanent Secretary, who has administrative control over all the departments of the ministry,
each of which is headed by a director-general, also a career civil servant.

2.4.2. Recent Political Developments

On 6 January 2001, the first general election under the 1997 Constitution--the so-called
people’s constitution--was held. The Thais, proud of their democracy, participated actively in
the election, as represented by the relatively high voter turnout of 69.95 percent. The Thai
Rak Thai Party, established in 1999 by Dr. Thaksin Shinawatra, a police officer turned
business tycoon, received a landslide victory, winning a total of 248 seats. On 9 February
2001, Dr. Thaksin was appointed by His Majesty the King as Thailand’s 23rd Prime Minister.
He made history in the Feb. 2005 elections and became first prime minister to serve two
consecutive term. His Thai Rak Thai Party won in a landslide. He was criticized during his
first term for alleged corruption, for failing to control the insurgency in the south, and for an
ineffective response to Thailand's avian flu outbreak, but his deft handling of the tsunami
crisis increased his popularity in the days leading up to the election. A year later, however,

8
Thaksin faced intense criticism when he sold his family's share of a communications company
for nearly $2 billion without paying tax. About 60,000 demonstrators gathered in Bangkok
and called for his resignation. In addition, two of his cabinet members resigned in protest.
Facing mounting criticism over the sale, Thaksin dissolved parliament in late February and
called for early elections. He announced his resignation in April; just days after his Thai Rak
Thai Party won 57% of the vote in national elections. After leaving office for seven weeks,
Thaksin again returned to the role of prime minister.

In September 2006, the military, led by Gen. Sondhi Boonyaratkalin, staged a

bloodless coup and declared martial law while Prime Minister Thaksin Shinawatra is at the
meeting of the UN General Assembly in New York. In October, Surayud Chulanont, a
respected retired general, was sworn in as prime minister. The military council that installed
Chulanont announced that a new general election would be held in late 2007, after a new
constitution has been written.

2.5 Finance and business

2.5.1 Currency: Baht ( 1 Baht = 100 Satang )

2.5.2. Major currency exchange rate:

Average Buying Rates

Average
Country Currency Telex
Sight Bill Selling Rates
Transfer
United State US Dollar 35.5307 35.6284 35.8537
United Kingdom Pound Sterling 69.2543 69.4429 70.1546
European Union Euro 46.5567 46.6810 47.2233
Japan Yen (100) 29.2516 29.3345 29.7543
Hong Kong Hong Kong Dollar 4.5324 4.5492 4.6006
Singapore Singapore Dollar 23.0562 23.1270 23.4809
Switzerland France Swiss 28.5971 28.6720 29.0528
Australia Australian Dollar 27.9536 28.0437 28.5142
Canada Canadian Dollar 30.4652 30.5735 31.0101
Republic of China Yuan Reminbe 4.5645 4.5839 4.6442

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Remarks: Currency exchange rate of the Bank of Thailand as of February 23, 2007

2.5.3. Working hours

Government agencies 8.30 a.m. - 4.30 p.m. Monday-Friday

Private Business 8.30 a.m. - 5.00 p.m. Monday-Friday

Banks 9.30 a.m. - 3.30 p.m. Monday-Friday

Department Stores 10.00 a.m. - 9.00 p.m. Daily

Remark: Some banks operate beyond normal business hours, and during holidays. Foreign
currency exchange services are open daily, closing long after banking hours.

2.6 Infrastructure and utilities

2.6.1. Transportation

Aviation: There are totaling of 36 airports, seven of which are international airports:
Suvarnabhumi International airport has operated since 28 September, 2006, Don Muang,
Chiang Mai, Chiang Rai, Hat Yai, Phuket and U Taphao (run by Thai Royal Navy). There are
29 domestic airports, 26 regional airports, and three private airports are being operated at
Samui Island, Sukhothai Province, and Trad Province. Suvarnabhumi International Airport is
able to accommodate 45 million passengers a year, 3.0 million tons of cargo per year, and 76
flights per hour.

Waterways: Formerly, the main international port is Bangkok Port, located on the Chao
Phraya River bank, but water depth constrained the capacity of this port. Vessels must be no
more than 12,000 tons gross, less than 172 meters long, and not require a depth of over 8.2
meters. Laem Chabang Deep Sea Port in the eastern region, 130 kms from Bangkok, was
developed to be the main international port with a capacity for vessels no more than 33,000
tons gross. Mab Tapud Port, located in the eastern region, is the port for industrial settlement
in this region. In the south, there are two main ports in Songkhla and Phuket. Along the Chao
Phraya River, there are three more private ports. For bulk vessels, which carry mainly
agricultural products, there is Ko Sichang Port in the eastern region, close to Laem Chabang.

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Deep Sea Port: There are about 10 main ports scattered in the south, mainly for fishing
vessels, as well as numerous small fishing ports. Considering approximately 6,000 kms of
inland waterways, only 1,750 kms can be used for transportation. During the dry season, that
distance is reduced to 1,000 kms.

Railroads: Total rail access is 4,347 kms. The railroad center, Hua Lum Pong Train Station,
is located in Bangkok. There are four main railroad routes. The northeast route starts from
Bangkok to Nakorn Ratsima, Khon Kaen, and Udon Thanee and ends in Nong Khai (624
kms) with a sub route from Saraburee to Nong Khai (575 kms), and another sub route from
Nakorn Ratsima to Ubol Rajathanee. The northern route from Bangkok to Chiang Mai (751
kms) includes a sub route to Sukhothai (457 kms). The eastern route from Bangkok to
Aranyaprathed (255 kms) has a sub route to the Deep Sea Port (134 kms) and another
connecting to the northern route at Saraburee (168 kms). The Southern route to Narathiwas
(1,159 kms) has various sub routes to the Southern provinces. Total distance covered by
railroads is 3,890 kms.

Roads: Thailand’s national road network covers 90 percent of the country’s total area, or
approximately 25,000 kilometers. Within the capital city of Bangkok, there is an expressway
system, connecting traffic in the inner city areas, with average toll fees of 25-40 Baht. Other
transportation services available in towns throughout Thailand include buses, mini-buses,
taxis, car rentals, motorcycles for hire, Sam Lor (Tricycles with passenger car) and Tuk-Tuk
(three wheeled motorized taxi). The initial base fare for an air-conditioned metered taxi is 35
Baht.

Mass Transit system in Bangkok: There are three kinds of mass transportation systems. The
first one is Bangkok Metro, officially called the Mass Rapid Transit (MRT). It is Bangkok's
underground metro system consisting of 18 stations. It was constructed by the Mass Rapid
Transit Authority of Thailand (MRTA) and operated by Bangkok Metro Public Company
Limited (BMCL) under a 25-year concession. The MRT is officially known in Thai as
rotfaifah mahanakhon or "metropolitan electric train", but it is more commonly called rotfai
taidin, literally, "underground train". The second one is Bangkok Sky-train is the elevated
metro system in Bangkok, Thailand, operated by Bangkok Mass Transit System Public
Company Limited (BTSC) under a concession granted by the Bangkok Metropolitan
Administration (BMA). The Sky-train with 23 stations along 2 lines was opened on December
5, 1999. Another mass transportation is bus service covering 106 lines servicing Bangkok
Metropolitan.
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 2.6.2. Communications and Telecommunication

Telephone: Telephone service continues to expand but landline use is falling, as cellular
phones become increasingly popular. In the first quarter of 2006, 16.1 per cent of the
households in Thailand had a registered landline telephone. In the last 2-3 years, increasing
rate of landline telephone dropped, due to the expansion of mobile phone users.

Internet: Thailand started using the Internet in 1987. Internet use increased dramatically
between 1999 and 2006. At the present, there are 7 million-service users or 11 per cent of
total population, which increased from 1.5 million service users in 1999. Currently, there are
18 internet service providers, five of which are major players.

2.6.3. Energy

Electric Supply: Thailand uses 220 volts, 50 Hertz, and a two-prong plug.

Petroleum: Today, seven refineries with total capacity of 1,037 million barrels per day are
being operated in Thailand.

Natural Gas: Product capacity in Thailand is 2,884 cu ft. /day. There are gas separation
plants with a total capacity of 2,158 cu ft. /day.

2.6.4. Water supply

Currently, there are three water supply organizations in Thailand: Bangkok Metropolitan
public Water Supply Authority, Provincial Public Water Supply Authority, and the other local
administration and private enterprises with concessions which supply water to local
communities.

2.6.5. Education

Thailand’s literacy rate is 93.8 percent. Education in Thailand is provided mainly by the
government through the Thai Ministry of Education. Children are required to attend six years
of elementary school and at least the first three years of high school. There are public and
private schools. Education is divided into two levels with 6 years of elementary school
(Prathomsuksa) and 6 years of high school (Mattayomsuksa). Some local schools have only
elementary school and 3 years of high school.

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 2.6.6. Healthcare

The Thai health sector consists of various agencies both public and private. Regarding health
care providers, primary health care units are located in rural areas while hospitals are in urban
areas and act as the referral system. In terms of health care purchasers, there are three main
health insurance funds. These are a 30 Baht scheme, the social security scheme and the civil
servant benefits scheme. Manual medical records, which contain the basic information of the
patients of these systems, do not link the services delivery units to the payment system. The
Ministry plans to develop an electronic health information system to link the three systems in
order to improve their quality and provide more efficient use of resources plus have enough
information to support the MIS for public health.

2.7 Tourism

Tourism Industry: The tourism industry plays a major role in the economic and social
development of the Kingdom. Thailand is known around the world for its cuisine, the
hospitality of its people and its ancient cultures. The number of international arrivals
continues to increase each year. Specialized tourism facilities include the Tourist Police Force
and Tourist Service Centers. The Tourism Authority of Thailand projected a total of 13.8
million international visitor arrivals by the end of 2006. Revenue earnings from tourism are
projected at 486 billion baht. For 2007, the Tourism Authority of Thailand (TAT) has targeted
14.8 million international visitor arrivals with estimated target revenues of 547.5 billion baht.
The above figures are preliminary estimates. Exact totals for 2006 are not immediately
available.

Regulations for Foreign Visitors to Thailand

Foreign nationals visiting Thailand must possess valid passports or accepted traveling
documents and appropriate visas before entering the country. Visitors from certain countries
do not need visas but most foreign visitors require, at the very least, a visa on arrival, which is
valid for 30 days. Tourist visas are available at Royal Thai embassies and consulates and are
valid for 60 days. Non-immigrant, diplomatic and official visas are valid for 90 days.

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Major Tourist Attractions:

Beaches: for instance, Pattaya, Phuket Province, Samui Island, Koh Chang Island, Cha-Am,
and world-class islands in Phang Ngan Province and Krabi Province.

Nature Reserves and National Parks: such as Phu Kradueng in Loei, Doi Inthanon in
Chiang Mai, Khao Yai in Nakhon Ratchasima.

Cultural Heritage: such as the serene Lanna Culture of Chiang Rai, Phayao, Phrae and Nan,
the spicy I-san cuisine of Nong Khai, Udon Thani, Khon Kaen and Kalasin, and traditional
festivals throughout the country.

Niche Market tourism: includes long stay programs, cruises, wedding / honeymoon
packages, ecotourism, soft adventure packages, medical tourism, and specialized events for
certain festivals such as the Songkran Festival (traditional Thai New Year festival) or the Loy
Krathong Festival.

Manmade: such as Rattanakosin Island, Bangkok, Elephant Nature Centers, Amusement

Parks, museums throughout the country, etc.

3. Economic

3.1. Economic overview

Economic summary: GDP/PPP estimated in 2006 is $545.8 billion; GDP per capita is $8,300.
Real growth rate accounted for 5.0% and the inflation rate, 4.8%, while the unemployment
rate is 1.4%. The economy is heavily agricultural, with rice by far the leading crop. Thailand
is the world's leading exporter of rice (1990). Other commercial crops include rubber, corn,
kenaf, jute, tapioca, cotton, tobacco, kapok, and sugarcane. Thailand's teak, once a major
export, is still a valuable commodity. Marine and freshwater fisheries are important; fish
provide most of the protein in the diet, and some of the deep-sea catches (mackerel, shark,
shrimp, crab) are exported. Thailand is also a major exporter of farmed shrimp. Tin, by far the
most valuable mineral, is a major export item. Tungsten, lead, zinc, and antimony are also
mined for export. Iron ore, gold, precious and semiprecious stones (especially sapphires and
rubies), salt, lignite, petroleum, asphalt sand, and glass sand are exploited on a smaller scale.

14
Thailand has substantial hydroelectric potential, which is being developed; projects have
been constructed on the Ping, Mekong, Phong, and Songkhram rivers. Industry is growing
and is centered chiefly in the processing of agricultural products; rice milling is by far the
most important, followed by sugar refining, textile spinning and weaving, and the processing
of rubber, tobacco, and forest products. During the 1980s and 1990s, electronics became
important causing a substantial rise in the per capita GDP. Lumbering is concentrated in the
north. The country also has a small steel mill, an oil refinery, tin smelters, and vehicle and
machine assembly plants. Small factories, many of which are in the Bangkok area,
manufacture building materials, jewelry, glass, pharmaceuticals, and various consumer
goods. Tourism is the leading source of foreign exchange, and handicraft production has a
ready market in the tourist trade.

Bangkok is a key point on round-the-world air routes. It is the political, commercial, cultural,
and transportation center of the country, with a port that can accommodate smaller ocean-
going vessels. Thailand's railroads originate in Bangkok and extend to Chiang Mai, the Korat
plateau, and to Cambodia, Laos, and Malaysia; a corresponding network of paved highways
has been constructed.

3.2 Economic Forecast in 2007

Thai economy in 2007 is projected to grow at 4.0-5.0 percent with support from a
pick-up in domestic demand while export volume is expected to decline due to expected
slowdown of the trading partners' economies. Thanks to a downward trend in inflation and the
improved political situation, real total consumption is forecast to grow in the range of 3.7-4.7
percent due to improving private consumption and increasing government current
expenditures in FY2007. Real total investment is expected to grow in the range of 5.6-6.6
percent resulting from a recovery of real private investment as the interest rate is anticipated
to decline in 2007. Also, given the earlier-than-expected disbursement of FY2007 capital
expenditure, it would restore investors’ confidence and increase input in private investment.
In 2007, export of goods and services is forecast to slow down to a range of 5.8-6.8 percent,
while import of goods and services is expected to accelerate in the range of 6.4-7.4 percent in
line with improved domestic demand. Thus, net export, which has been the key economic
driver in 2006, is expected to play a less significant role in driving the Thai economy in 2007.

On external stability, the current account in 2007 is expected to record a surplus in a

range of 0.3-2.3 of GDP, mainly contributed to by a higher income from the tourism sector.
15
However, the export value of goods in USD is forecast to grow at a decelerating rate in the
range of 9.2-11.2 percent due to a slowdown in global demand. The import value of goods in
USD is expected to accelerate by 9.6-11.6 percent, thanks to an improving domestic demand.

4. Cultural Environment
4.1 History of Thailand's culture
The cultures of Thailand as expressed in her religion, arts and literature, social system habits
and customs reveal a unity in a general sense with her neighbors, the Cambodians, the Mons,
the Burmese and partly the Malays, but with varied characteristics. It can be said that the
cultures of the above races era homogeneous whole with local diversities and details thrown
in. To study one nation's cultures, is to study them as a whole. Fundamentally, the culture of
Thailand may be summed up in one word, religion. For everything, arts and literature, social
system, habits and customs is developed and clustered around her religion. It is in quite recent
times only that there have been some changes in the culture due to western influence. Thai
culture tends to become secular in the progressive parts of the country; but to the people as a
whole religious culture is still a living force.
To conclude, the culture of Thailand is midway between the two great cultural systems of
Asia, China on the one side and India on the other. Chinese culture did not penetrate further
west beyond Annam; nor did Indian culture go further north than the Indo-Chinese Peninsula.
They came to a halt at one another's bulwarks and did not penetrate further. The Annamites,
though ethnologically Indonesians, were domiciled in China far back in historical times as
one tribe of the Yueh or Viet, and absorbed much of Chinese culture. When they came down
to the Indo-Chinese Peninsula, they met the Chams who were highly hinduized people, the
Khmers or the Cambodians. Naturally Chinese culture could not penetrate further for it met an
opponent of equal force. Due to the nature of the country and to other facts peculiar to the
north of the Peninsula, Chinese culture did not penetrate far for lack of easy communications.
Whatever Chinese cultures the Thai brought from Southern China, they adapted to their needs
suitable to their tropical surroundings, developing them independently by using the old
materials. In their way of life the Thai and the Chinese can mix very well but not with the
Indians, even though they have imbibed Indian culture appreciably. The one drawback of the
Thai is the climatic conditions of the country. Living in the tropics where food is in
abundance and the weather fair, they have become lethargic. But a taste for the arts has been
developed by the leisured and elite classes, hence the arts as developed by the Thai though
mostly inspired directly or indirectly by India, are uniquely their own. Buddhism suited their
tastes and temperaments very well, so they readily adopted it. Accustomed to living in
16
isolated groups in their mountainous districts of the North their political conception and
consciousness were confined to their village and city only. But when they became masters of
Central Thailand where there was on e vast plain, they adapted Indian culture. Being still
virile race and with genius they evolved these cultures again as peculiar of their own.
Different from Thailand is Burma. Though Burma is a neighbor of India, she did not take
much of India culture, especially Hinduism. She adopted only Buddhism tinged weakly with
Hinduism. Judging by the physical features of the Thai or Siamese in Central Thailand they
differ in stature and color from their brothers in the north. They become shorter and darker
gradually southward and there is no doubt that they mixed immensely with the Mon-Khmer
and Austronesian families. They lost physically but gained intellectually through fusion of
new blood. Thailand therefore formed the meeting place of the two great cultural systems,
which came to a halt and fused into a new one with double layers of culture.

4.2 The Social-Cultural Environment

The extended family is the basic social unit, and often the village and the wat
(temple) are also considered part of this basic social unit. The king is the primary provider of
social cohesiveness. Thais are a pleasant and tolerant people. European travelers in the 19th
century described Thais as respectful, mild-mannered, hospitable, and fun loving. Since then,
little has changed. Dealing with Thais can be a wonderful experience. In any given
circumstance, Thais strive to keep their moods at bay and refrain from displaying emotions.
Foreigners should never lose control of their emotions, and they should not be overly
assertive. This is considered poor manners. Because Thais avoid confrontation at all costs,
they will usually try not to say “no.”(This is similar to the Japanese negotiating style.) Instead
of saying “no,” they often make implausible excuses or pretend they do not understand
English. They may tell you they must check with higher authorities, even when such
precedent does not exist. Likewise, Thais find it difficult to accept a direct negative answer
from you. So when you have to say “no,” say it indirectly whenever possible. The national
airline and the Thai Tourist Promotion Board have long called Thailand the “land of smiles.”
While anecdotal evidence suggests Filipinos have the brightest smiles in Southeast Asia,
Thais are very likable people. They use their smile as a communication device to convey both
positive and negative messages, and so this can confuse a foreigner. For example, Thais will
smile when they play down embarrassing situations, present requests, turn down requests, etc.
A soft-spoken people, they dislike impulsiveness and displays of anger, and so frank
arguments are often counterproductive, since they embarrass Thais. They are quite polite and
expect you to be polite in return. Because of their gentle demeanor and smiling countenances,
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Thais are generally well liked by other Asian nationalities. This assumption is concluded from
a cross-cultural survey done by Donald W. Hendon from Dillard University of Louisiana. He
gathered the primary data in the seminars from 2,648 business executives in seven Asian
nations during the time period 1979-1998. The seven nations are: Hong Kong (N = 216, all
Chinese), Indonesia (471, all Indonesians, no Chinese), Malaysia (349, all Chinese),
Philippines (903, all Filipinos), Singapore (160, all Chinese), Taiwan (395, all Chinese), and
Thailand (154, all Thai.). (Expatriates were excluded when constructing these tables.)
Respondents were asked how much they liked, trusted, and respected/admired 15 ethnic
groups: Chinese in China, Chinese in Hong Kong, Chinese in Malaysia, Chinese in
Singapore, Chinese in Taiwan, Indians in India, Indians in Malaysia, Indians in Singapore,
Indonesians, Japanese, South Koreans, Malays in Malaysia, Malays in Singapore, Filipinos,
and Thais. While Thais were liked the most, they ranked fifth in being trusted and seventh in
being respected/admired.
It is important to note that enjoying life is one of the major goals of many Thais. Jobs should
have some element of fun, and so Thais generally do not like jobs that are difficult,
monotonous, or high-pressured. On the other hand, almost all Thais are Buddhist. Buddhism’s
major tenet is that all life is suffering. This contradicts the modern Thai’s view of life-life
should be fun, and people should enjoy it to the fullest extent.

Thai Culture for everyday life

Thai cultural habits distinctly differ from those accepted in the West. Firstly, Thais welcome
each other by a salutation known as Wai, rather than by shaking hands as westerners do. All
the greetings, such as Hi, Hello, How are you, Welcome, Good morning and so forth, as well
as Good bye and See you later, are also called Sawasdee in Thai. To distinguish between men
and women, Thai language uses the gender markers.

Thai Hospitality

Hospitality is the essence of Thai people's nature and while greeting guests into their houses
or offices; first off, they cater guests with a glass of water. Likewise in the restaurants, first,
you'll be served up cold water no matter you haven't order anything yet. Prior to entering a
Thai house, make sure to take off your shoes. The same is true in Buddhist temples and in
traditional Thai restaurants where guests are seated on the floor. It is appropriate to mention
that it is quite natural for Thai folks to sit whether squatted or right on the floor. In most
households, the floor is also used as a dining table. Most houses don't have beds either, just
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the mattresses. Traditionally, rich Thai families have got large in size and short tables made of
teakwood, used to serve the food and while eating, to sit on.

Thai food and Table manner

Thailand is not just the Land of Smiles, at the same time it is every bit the Land of Gourmet
Food as well. Thai table manners and a way the dishes are prepared and served, have its own
distinct course. Normally, in Thai restaurants one will be given a spoon and fork for the main
meal, and a short spoon with small bowl used for soups. No knifes, since the food is whether
already cut down into small enough pieces, or could be easily sliced by spoon. The idea is to
eat with a spoon in your right hand and a fork in your left to help push foods onto the spoon.
Chopsticks are served when ordering noodle dishes. Naturally, one will be given a knife and
fork when ordered steaks or similar western food dishes.

Needless to mention that fragrant rice is the base component in Thai-style dining. It's prepared
as the classic Thai steamed rice called Khao Soay, and served right on a plate or in small
bowls from which you put it into your plate. Except deserts, all other dishes are served in no
particular order, just as soon as they ready, and are eaten all together as well. Typical Thai
dinner consists of several dishes placed and occasionally even cooked (fondue style) right on
the table, and are tucked in by taking small portions from selected dishes simultaneously and
topping the rice in your plate. Numerous sauces and aromatic spices including chilli oils are
always at hand. As drinks, aside from ice water, Thais opt for some light beer, or an
occasional glass of whisky-rocks-soda, rather than the wines. To elaborate further upon Thai
habits, Thais like to add spice not only into the food they eat, they equally enjoy to add spice
and excitement to everything they do, even in simple daily routine activities.

Thai Peculiar Ways

Thais respect the elders and referring with regard to the older common people as Pee,
meaning the older brother or sister. It's also customary to call the youngsters as Nong,
meaning the younger brother or sister. And while in restaurants or similar places, a polite and
more appropriate way to address the staff is either as Pee or Nong, rather than a waiter or
waitress.
All Thais have the nicknames, which are used in informal, casual contacts. In contrast to the
real names, which are quite long and hard to pronounce, Thai nicknames by and large made
up of single syllable sounds: Lek, Nid, Na, Su, Sak, Som, Boon, Mem, Tae, Ae, Gai, Goong,

19
Pook, Moo and so forth. Some of these names can be hilarious, for instance, Moo means Pig,
yet no offence is intended or taken. One will not see Thai couples hugging, embracing,
kissing, or any other acts of explicit affection on streets or in public places. It is unacceptable
by the norms of Thai society. And for that matter, any display of strong emotions in public,
especially when inhered in loud speaking or noisy arguing, is considered as disrespectful.

Rules and Exceptions

Modern Thailand is indeed an open and forward-looking society embracing almost everything
that comes its way. Still, Thai folks are rather conservative in regards to the Thai women's
behaviour and dress. The well-favoured female bodies might not be flaunting, and the dress
fashion should vacate all foreplay matters to the imagination. As a behavioural trait, the long-
standing tradition of making a curtsey is still customary for Thai girls.

5. How to deal with Thai people when doing business

The Thai culture exercises significant influence on business dealings. Although the
Thai people are tolerant of different behaviors, the optimal approach is one of politeness and
respect without ever losing one’s temper or raising one’s voice. Conflicts should be resolved
by polite discussion. There is a unique Thai identity, giving rise to “the Thai way” of doing
things. Personal ties and trust are also important to the Thai people; accordingly, direct
personal questions are common and not inappropriate. Yet, people tend to be indirect in their
dealings with each other and go around an issue rather than directly to the key point. Thus,
tasks may be accomplished less efficiently and less quickly than with a direct approach.
However, since the Asian crisis of 1997, the middle class is beginning to challenge
established norms of a paternalistic society by questioning and arguing for openness,
transparency, and accountability.
Free enterprise prevails in Thailand, with not much government interference. A large
share of Thailand’s population is self-employed. So there are many entrepreneurs involved in
small businesses. The environment is attractive to foreign investment. However, there are
many large corporations as well. The largest Thai firms have often diversified locally and
abroad. Chinese families are key players, and so are foreign and government investors. As in
many
Southeast Asian nations, many Thai business executives are Chinese. However, ethnic Thais
predominate in the government. Titles are very important to Thais, and so foreigners will

20
impress them by including more than one title on business cards. (It is preferable to have one
side in English and the other side in Thai.) Thai names are generally quite long. Since the
adoption of surnames in the 1920s, ethnic Thais generally have two names - the first name is
the given name, the second name is the surname. When writing to them, use Khun as the title,
followed by the first name. Never use the surname. Since the first name is usually shorter than
the surname, this makes it easier for a foreign to communicate.
Thais have a strong sense of hierarchy in business and in family matters. Decision-making
revolves around the hierarchical centralized nature of authority and the dependence of the
inferior upon the superior. Thus, the typical supervisor is authoritarian, and he or she makes
the decision autonomously. Since Thais are generally unassertive, the inferior unquestioningly
obeys. A benevolent superior and respectful inferior is the Thai ideal. Decision-making rests
exclusively with top officials of firms, and delegation is rare. Most of the time, top officials
do not expect challenging ideas and initiation from subordinates. Management is autocratic
and paternalistic. Please remember that because of the Thai deference to rank and authority,
all requests and correspondence must pass through many layers before reaching top
management. This means foreign negotiators should be flexible and patient in their
negotiations with Thais. Foreigners should allow sufficient time to reach their goals. Finally,
please remember that because of Thais’ strong sense of hierarchy, you need to appoint only
one expatriate manager to serve as your spokesman (men are preferred to females) in
Thailand. This person must not serve only a public relations role, this person should be the top
manager who actually is in charge of the business enterprise. Having several people in charge
of important functions only confuse Thais.

Thais are hard workers. Many people work long hours in that nation in order to earn as much
money as possible. The more money one has, the higher one’s status. For some occasions,
Thais may ask for bribes. Money does not always go to the top person in an organization. A
junior employee who holds an important role and has the chairman’s ear is an important
person to cultivate, and quite often this person will ask for bribes. The act of accepting bribes
in the Thai language is referred to as “eating,”. Gifts, of course, are perceived differently than
bribes. Bribes are always in cash, while gifts are not. Some generally accepted principles
concerning gifts include: Never open a gift in the presence of the giver. When invited for
a meal, bring flowers, cakes, or fruit. However, do not bring carnations, as they are associated
with funerals. Other acceptable gifts include women’s cosmetics, perfume, brandy, neckties,
tie clips, cigarettes, illustrated books from your nation, dolls in native dress, and stationery.

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 5.1. Negotiating with Thai Executives
There are three aspects to be kept in mind when negotiating with Thai executives. First there
is body language, second is the method of utilizing entertainment, thirdly, always dress well.
Body Language
Negotiating is both a social and business function in Thailand. To function effectively, then,
the foreign must know more than social do’s and don’ts. For example, Thais will show the
“wai” sign often. This involves placing the hands together in what westerners may interpret as
a prayer-like gesture, with the tips of the fingers under the chin. Similar to the Japanese
practice of bowing and the Indian practice of “namaste,” foreigners should also offer the
“wai” sign in return, and they should initiate the “wai” sign when meeting Thais who are
older and/or who hold higher positions (business, social, etc.). Other important information
about body language includes the smile, the head, the feet, the hands, pointing, and the eyes.
The smile is a used to thank somebody, but it also serves as an excuse of an intended
inconvenience. One should smile back, which indicates to the Thai that you are granting a
pardon for the inconvenience. It is also used to shield Thais from embarrassment as well as a
show of amusement that does not involve ridicule. However, if a Thai begins laughing for no
apparent reason in a business meeting, the foreigner partners should change the subject. The
Thai is embarrassed. Most foreigners have heard that one should never touch the top of a
Thai’s head nor show the soles of the foot to a Thai. This is because Thais believe that the top
of the head is inhabited by the “spirit essence”. While the most important spirit inhabits the
top of the head, the least important and most dirty spirit inhabits the feet. So never point your
feet toward a person, nor should you cross your legs in front of an older person. It is
appropriate to cross your legs at the ankles, but not so that one leg rests on the opposite knee.
Foreigners should try to keep their hands hanging down inoffensively by their sides. They
should never be used to slap a person on the back. A polite touch at the elbow is usually done
to draw attention. Quite often, however, a male Thai will take the hand of another and hold it.
It is not a sign of homosexuality, but rather a sign of friendship and helpfulness. On the other
hand, public displays of affection between men and women are not condoned. Never wave
your hands about in an attempt to make yourself understood, for such action will create
confusion and often will be interpreted as anger. To get attention, beckon with the palm down,
moving your fingers inward in a sweeping manner. Never call somebody using the index
finger with the palm up. This insinuates that the person to whom you are beckoning is a dog.
Pointing with a finger, while less offensive than pointing with a foot, is acceptable only for
objects and not for people, even those of inferior rank. Foreigners will note that Thais seem to
hold eye contact longer than most westerners do. Thais use their eyes and eyebrows often in
22
their daily communication. While foreigners should not fear prolonged eye contact, Thais will
become offended if they think you are staring at them.

Entertainment protocol
Thai negotiators expect to entertain you and to be entertained by you in return. In fact, quite
often your initial meeting with your Thai negotiating counterparts may be over lunch or
drinks, so that they can get to know you. However, do not expect to discuss business over
lunch. To entertain a small group, it is best to take them to a western restaurant in a five-star
hotel. Arrange a buffet supper for a large group. Unlike in the Middle East, always include
Thai wives in your invitation. Expect to eat with western-style forks and spoons - but not
often with knives. It is quite important to keep the fork in the left hand and the spoon in the
right hand. (Reverse the process if you are left-handed.) Cut with the side of the spoon, not
with the fork. Use the fork to push food into the spoon. Never take the last bit of food in a
serving dish. Wait until it is offered to you and then refuse politely the first time. When it is
offered again, accept it. It is considered an honor to have the last bit of food. Drink tea or beer
with your meals. Drink water only if you have seen it being poured from a glass of mineral
water. Although many Thais smoke after dinner, do not be the first one to light your cigarette.
Always pass cigarettes around to the men at the table. Although traditional Thai women do
not smoke in public, it is acceptable for western women to do so.

Manner of dress in a negotiating setting

As stated above, Thai business and government executives are very formal in their dress. The
better dressed one is, the more successful one is - that is how Thais think. For business
functions, foreign men should wear lightweight suits with white shirts and ties. Slacks and
jackets are not as acceptable. Foreign women should not wear black dresses, however, for
Thais reserve this color for funerals or mourning. However, black is acceptable to wear at
formal events if it is accented with other colors.

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6. Conclusion

People often go abroad without any preparation at all and invariably encounter
misunderstandings that could be avoided. To minimize these, getting some intercultural
training—learning about the system of values, expectations, and behaviors that make up a
culture—goes a long way towards functioning effectively in the world. This is especially
important to those who expect to profit from their dealings abroad.

In conclusion, the most effective way for foreigners to deal with Thai people when doing
business is to be extra polite and quiet, not boisterous. Learn and practice the basic do’s and
don’ts. Wear modest and fashionable clothing. Prepare in advance a program, which will
instill pride in the Thai person and help him/her to build self-esteem. Learn about family
members, and offer to assist with schooling, weddings, and funerals. Join individuals or
family or company staff in charity projects, many of which will revolve around the Buddhist
temple activity. In general, behave in a benevolent paternalistic manner. This has proven to
be the most effective way to achieve success in building a long-term business relationship.

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