The Good, The Bad, And The Thai
Many readers who have expressed an interest in setting up some kind of business in Thailand have sometimes been put off by reports of unscrupulous Thai business ethics. There are, as we all have found, various cultural differences between Thais and farang regarding the values we put on honesty and trust. However, like everywhere in this world of ours there are good and bad in every race so we should not automatically think we are going to get a raw deal just because we are in Thailand. Any businessman worth his salt is going to get the best deal for himself he possibly can. So I would like to relate two episodes I encountered when I was looking to open a business in Hua Hin a couple of years ago.
One piece of advise which seems common to all foreigners in any country in the world, when looking to break into commerce in their new country, is get a good local lawyer. The theory goes that a local contact will save you much stress in future dealing with prospective landlords, suppliers etc. Also, of course, it is assumed a local lawyer will be well conversant with the law of the land, both locally and nationally. To this end I approached a lady lawyer whose company also acted as agents for businesses and houses, owned by Thais, for rent. The agency side of the business was conducted with the help of a couple of German guys she had hooked up with. I should add she was already married to a Thai man and the German associates were purely on a business level.
Initially all went well and I, and my Thai lady, were taken to various restaurants and guesthouses in the town to view and speak to the owners. During one of these outings I happened to mention to Otto (not his real name) my visa would be running out shortly and I would have to do a visa run. ‘No problem’ he told me. ‘Mrs X can do that for you) I duly handed over my passport and 8000 baht to her and she assured me my passport would be returned ‘within days.’
We were finding it difficult to find exactly what we wanted. Thing were either too big, too small, too expensive or very cheap because of their location. On one visit to the office Mrs. X said she had a brilliant idea. The building which the offices occupied had three floors and the upper two had previously been run as a disco by a couple of Scandinavians who had ‘Fallen out and gone home!’ So we went and had a look and, sure enough, the place had a good sound and lighting system. Though on the small side it could probably cater for around 300 people, not too bad for a town the size of Hua Hin. We discussed cost and Mrs. X informed me she wanted 600,000 baht ‘key money’ and a monthly rent of 10,000 baht. During the conversation she had put forward the idea of opening a go-go bar as there was not one in the town at all. It was at this point alarm bells started ringing.
I had been to Hua Hin twice before and become friendly with a couple of Thai families. During our present visit my Thai lady and I had also been befriended by a Thai couple who ran a coffee shop in the main square. It had always been impressed on me how quiet and orderly Hua Hin was because of the summer palace and the regular visits by members of the Royal Family, especially the King. The idea of running a go-go bar just did not fit in with the image I had built up of the town. One member of the families I had become friends with was a policeman and he happened to be at my friend’s restaurant a couple of nights later. He told me very emphatically there was no way the police would allow a go-go bar to be run in town, especially fronting the main road through town which His Majesty, and other members of the Royal Family, frequently travelled along.
Next day in the coffee shop Niki, my partner, was tell Mrs Pom about the matter when her husband came in. When he heard who I had been dealing with he became very agitated and said I should not deal with this woman ‘At any cost!’ He then related the following story.
His main work was as a builder and he had bought the coffee shop as an interest for his wife, though he did help out quite a lot. A couple of years previously he had built a new house on some land he owned and had taken on Mrs X to act on his behalf in either selling or renting the property. After many false starts, and always billing him for the time she had allegedly spent dealing with prospective customers, she came up with a man who bought the house. A price was agreed, including her commission, and the buyer handed over the money to Mrs X. My friend had still, after nearly 2 years, been given the money. Whenever he or his wife went to see Mrs X she always had some excuse. Lost paperwork was the favourite when it became clear to her both the other parties had spoken to each other and she could no longer claim any delay was the other man’s fault.
I went back to see Mrs X and, under advise from Niki who told me how bad it could be to make a Thai angry, I decided to offer such a ridiculous price she would turn me down flat. So I offered 200,000 baht key money and 3,000 baht monthly rent. I was very surprised, and worried, when she said that would be O.K. I made some excuse about wanting to think things through for a few more days and left. Niki then went up north to visit her family so I went back to Mrs X and told her Niki had left me and I could not run a business in Thailand without a Thai partner and would have to, reluctantly, withdraw my offer.
Meanwhile I still had not been given my passport back so I was in the tricky position of being an alien with no documentary proof I had a right to be in the country. My passport was returned eventually with a 30 day visa stamped by the Thai immigration on the Thai/Malaysia border. I could have done that myself for a lot less than 8,000 baht.
It later transpired Mrs X had been a very naughty lady indeed. She had run several other scams similar to the one involving my friends plus managing to several plots of land to a number of ‘buyers’ for each plus running a forged visa racket for farangs. I never did find out if my visa was genuine or not. (I never had any problems and obtained a genuine B visa in Singapore a couple of months later with the paperwork being done by a very honest lawyer who has offices in Bangkok, Pattaya, Hua Hin and Phuket.)
I have had to be very careful in not identifying this lady because the last I heard (about 6 months ago) she has been charged with a number of offences by the police and was awaiting trial. Whether this has happened or not I do not know, or even if there are sub-judice laws in Thailand, but as I want to come back again soon I am not taking any chances!
Now this lady was by far and away the worst Thai person I have encountered, though no doubt someone out there has come across worse. We are all familiar with the scams Thais who come into regular contact with tourists operate, and being aware we can take some precautions not to get ‘bitten’, but she was the first to come to my notice who ripped off everybody!
The other face if Thai businessman came to me fairly quickly after my lucky escape from the wiles of Mrs X. Niki and I had been staying in a Condotel while waiting for something more permanent and the lady who was receptionist spoke excellent English. She told us she had a friend who owned property, but was too busy to run a 3 storey guesthouse with a restaurant on the ground floor. Through her we were introduced to the owner and, deciding this was the property for us, negotiations began in earnest.
On viewing the building it was obvious the place had been neglected for several months, though the structure was good and the bedrooms all had cable TV. and hot water power showers. The kitchen, though, was a disgrace and did not appear ever to have had the grease cleaned from walls or ceiling. It was clear quite a sum of money would have to be spent on the place before we could open for business.
The Thai gentleman who owned the guesthouse also had 3 other restaurants he and his family ran as well as being a director of the local hospital which was why the guesthouse had been closed at the end of the previous high season and left neglected. They had only used the pace as an extra freezer store for their other businesses. So there was going to be quite a lot of room for negotiations, but would there be any attempt to rip the farang off.
As in all negotiations he started by pointing out all the positives and I pointed out all the negatives. One of his positives was a proven average turnover of 60,000 baht a week. My negatives included the amount of time and money which would have to be spent on the place before we could open, plus we would be opening in the low season. He started by asking a monthly rent of 60,000 baht, but I think that was just a fishing expedition to see how gullible I might be. After a minimum of toing and froing we settled on a rent of 20,000 baht a month for the first 6 months, 30,000 for the second 6 months then 40,000 baht for the second year. We would then renegotiate annually. As things turned out I had to return to U.K. after the first year due to illness, but of course we were not to know that at the time.
Maybe this was not the best deal ever struck in the world, but it suited both of us. After a couple of weeks very hard work cleaning, decorating, laying new carpets in the guest bedrooms and completely refurbishing the kitchen we were ready to open. It did cost a fair amount of money, but that was all part of the deal.
There are many good things to be had from dealing with Thai people, not least their standing in the local community. The owner sent several farang families to us as paying guests and had an advert for the guesthouse in his other restaurants. We were also sent a number of Thai guests who had come to Hua Hin on family matters and I was expected to give them a discount against my normal rates. Yes, I became involved in the 2 tier pricing system but you know what they say about ‘When in Rome…!’
Other Thai friends also sent people to us, and on no occasion was I expected to pay any commission. These guests were sent as a gesture of friendship and not business. Opposite the guesthouse was a very popular seafood restaurant, It was so popular people would literally come down from Bangkok Friday night to eat there over the weekend. At first the owner of the restaurant ignored me, though I know he had been very friendly with the owner. Then a couple of Indian families opened a curry house next door and relationships between the seafood place and us thawed. They started sending over for deserts, which they did not do, and then one evening I saw the owner outside watching a football match on our TV. I invited him in, which he was a little reluctant to do but I discovered this was because he was embarrassed about his English, and we shared a couple of beers and watched the match. From that time on every weekend he sent at least one Thai family over to see if we had an available room and the only commission paid was 50 baht to the car park guy so these people could leave their cars there.
My own feelings about dealing with Thais is the same as dealing with any new business relationship. Proceed with caution, get the best deal for yourself as you can while allowing the other party to keep face by also making a good deal and try to deal with Thais direct rather than through farang intermediaries. Yes, of course there are rogues out there who will try and rip you off. Yes, being in a foreign country with a, to us, quite a strange language can be hurdles which can cause problems especially if things go to law. Get a truly honest lawyer, and they are there if you look hard enough for them and again ask Thais locally as well as ex pats. But please do not tell me you can not get ripped off in Farangland, that we do not have our share of dodgy lawyers or that scams are a Thai preserve.
Maybe was lucky meeting a number of straight, honest and friendly Thai families. I would like to think these are, in fact, the general rule rather than the scam merchants. As has been said in Stick’s column many time most of the scam merchants are those who come into regular contact with tourists. Probably like all countries the more you get away from the capital the less chance there is of meeting dodgy business people. Anyway, please do not be put off coming to Thailand by the stories of rip-offs. Take care, as you would when investing money at home, and a good lifestyle without all the grief told in the horror stories can be had.
One must do as much research as they can if they plan to start a business in Thailand. Anyone who moves to Thailand, fails to understand the language, and the culture – at least as far as is possible, yet expects to do well in business is fooling themselves. One should do their homework thoroughly first.