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Economy











Background
The Thai economy has expanded its base greatly in the past 25 years, diversifying its original agricultural base to include tourism, high-end manufacturing, logistics and services.

Viewed from Bangkok it appears Thailand has long since outgrown its agricultural and small-town roots. Although Thailand has certainly to a great extend managed to create a sophisticated economy within a relatively short period of time small rural town aspects and business mentality are still significant elements in the overall economy.

Bangkok is Thailand's showcase to the outside world but the actual economy is driven by upcountry developments.

Rural Thais are still best approached via small, traditional and unorganized (retail) infrastructures as these offer the highest penetration levels reaching the highest number of potential consumers. Although mobility has greatly increased (as per the start of the 1990's owning a car upcountry was only for the priviliged few) it is still certainly not yet common for families to own motorized transport beyond a single motorcycle making large central shopping centres not always easily accessible.

Rural incomes
Average rural incomes are significantly lower than those in the main metropolitan area's of Bangkok and Chiang Mai. Besides these 2 cities Thailand has no other large cities that would fit the profile of an international metropolis. Even large upcountry cities like Nakhorn Ratchasima and Khon Kaen (both in the northeast -Esan- part of the country) have a distinct rural economy.

The published upcountry income levels paint a distorted picture. Although a total combined monthly family income of 200.- to 250.- will put an upcountry family already in the middle class category actual cost of living is so low that freely disposable income on this level may be at least 50.- to 75.- a month. The low penetration level of upcountry organized retail and entertainment infrastructures, combined with limited mobility opportunities making it hard to move beyond the immediate city limits, leave families often with a large part of their monthly incomes with nothing to spend it on.

Under these conditions traveling door-to-door sales people are able to tap into this large reservoir of pent-up demand with all kinds of goods for which most families do have the required funds.

Business community
As in most Southeast Asian nations the Thai business community is dominated by the Overseas Chinese and, to a lesser extend, the Non-resident Indians (Indians living outside India regardless whether they still maintain Indian nationality or have assumed the nationality of their host country).

This is most obvious in larger cities but even in smaller rural communities local businesses will almost always be owned by one of these 2 groups. Of the Overseas Chinese the Teo Chiu are the dominant group. The majority of the Non-resident Indians consist of Sikhs.

As even large (publicly listed) enterprises maintain a family-company structure (and is either Chinese or Indian owned) it is very rarely the case that ethnic Thais will be found in positions of higher management.

Diversity
Thailand is geographically vertically a long stretched-out country. From north to south the distance is almost 2,000km. What is portrayed to the outside world as Thailand includes only the central heartland and Bangkok. Northwest mountain communities, Northeast Esan and the muslim dominated south of the country all have their own different languages and distinctive cultural values. An approach appealing to "western" oriented Bangkokians can be totally counter productive in an upcountry area.

Sales policies taking the local dynamics into account can be hugely successful, even when it concerns products that traditionally never formed a part of daily life. Examples are pick-up trucks, yoghurt, Yakult, Foremost icecream.