February 29, 2024

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Thailand’s tech edge will attract South Korean firms

South Korean businesses are increasingly entering promising Southeast Asian markets, but the number of Korean companies operating in Thailand is still far lower than that in Vietnam.

Thailand currently has around 400 Korean companies operating within the region. It is Korea’s 18th-largest trade partner in the world and the third-largest market for Korean companies in Southeast Asia, after Vietnam and Indonesia.

Korean companies remain largely unaware of Thailand, seeing it mostly as a tourist destination instead of an investment destination. The industrial boom has not yet formed for Korean companies in Thailand.

As a result, Thailand’s business infrastructure for Korean companies is less available, which prompts them to seek safer places like Vietnam, where there are many legal and financial organizations for Korean companies.

However, the lack of Korean firms could be an opportunity. In particular, the cosmetics and food markets are fast-growing here, and Thai people are positive about Korean products. The electronics and steel industries have been traditional sectors for Korean companies here. Of about 400 companies, more than half are related to electronics and steel.

In recent years, more Korean internet, cosmetics and home-shopping firms are making inroads into the market thanks to the popularity of Korean culture, which has grown since a major Korean drama became a hit in Thailand in 2001.

In addition, Korean houseware sells well on home shopping channels. Korean firms that have entered Thailand include home-shopping firms as well as cosmetics firms.

Less labour-intensive, more high-tech

One Korean company doing business in Thailand is the first vendor to a major electronics firm.

It makes steel pipes for air conditioners and refrigerators, key parts that generate cold wind within the appliances. Half of sales come from the electronics firm. The rest comes from foreign electronics companies.

Thailand has better parts infrastructure than Vietnam because most parts can be sourced in the region. Thailand is quite stable in terms of policies for foreign companies. It does not change rules repeatedly. The Thai people are generous to foreigners and Thai workers efficient and work well.

Thailand has been a good place for manufacturing with its generous tax breaks and skilled but affordable labour force. However, the country’s policies and its labour force are changing.

The Thai government is changing the rules to benefit only those foreign companies with new, eco-friendly or advanced technologies. General manufacturing firms will no longer enjoy tax incentives.

This has prompted foreign companies to develop new technologies instead of relying on cheap labour.

One firm, after having paid corporate tax three years is now planning to develop new and high technologies for further tax incentives. Currently, corporate income tax is 20 per cent in Thailand.

Two years ago, the firm developed new pipeline technologies and got corporate tax benefits for the plants for three years.

In addition, labour-intensive work will no longer be attractive for foreign companies. The Thai government increased the minimum wage by 7 per cent in April last year, having previously raised it in 2017.

Labour costs are rising and Thai workers are now wary of difficult, dirty and dangerous work. If Korean companies seek this market only to deploy cheap labour.

Instead Korean companies can take advantage of the country’s technology-driven initiatives and environment and invest in better, more efficient technology while also paying their employees fairly and reaping the benefits of tech tax incentives.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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