Thailand is the market that many people tend to overlook when traveling to Southeast Asia.
Compared with the popularity of Vietnam and the size of Indonesia, Thailand seems low-key.
However, after inspection, the Shanghai counterparts who participated in the tour had a common sigh: the competition here is not as fierce as imagined, and the market maturity is much higher than imagined.
According to the 2023 annual report of the Thailand Building Materials Industry Association (TBIA), the size of Thailand’s building materials market is approximately 420 billion baht (approximately RMB 82 billion), with an average annual growth rate of 7.2% in the past five years.
Among them, interior decoration materials (including floors, walls, bathrooms, and lighting) account for 38% of the overall market and are the fastest-growing segment.
The penetration path of Chinese building materials into the Thai market is significantly different from that of Vietnam and Indonesia.
In Vietnam and Indonesia, Chinese building materials mainly enter through engineering channels (B-end direct sales); while in Thailand, Chinese building materials are heavily penetrated through retail channels – the proportion of Chinese building materials SKUs in HomePro (Thailand’s largest building materials supermarket chain with more than 100 stores) and Global House increased from about 8% to nearly 23% between 2019 and 2023.
This means that the Thai market’s acceptance of Chinese building materials continues to increase, but the competition path is channel-based rather than project-based, which is different from the usual engineering direct sales logic in China.
An important feature of Thailand’s building materials market is that European brands (Germany, Italy) have long occupied high-end minds, Japanese brands (TOTO, LIXIL) have a strong position in the field of sanitary ware, while Chinese building materials are mainly concentrated in the mid-range and mass price segments.
The significance of this pattern is that the Thai market has natural price positioning expectations for Chinese building materials. To enter the high-end market requires additional brand building costs; but the demand in the mid-range market is large enough, and Chinese building materials have obvious advantages over European and Japanese brands in terms of design diversity and delivery speed.
Among the participating companies in Shanghai, there is a brand that specializes in customized aluminum alloy doors and windows. After an inspection, it was determined that Thailand’s high-end residential renovation market is its entry point – because Thai high-end residential owners have a strong demand for personalized customization, and the delivery cycle of local Thai brands and European brands is generally more than 120 days, and this company can deliver in 45 days.
This structural difference is the real market opportunity.
Thailand is relatively friendly to foreign-invested enterprises. According to the Foreign Business Act B.E. 2542, construction and decoration services belong to the third category of restricted business, and the proportion of foreign equity must not exceed 49%. However, restrictions can be exceeded by applying for a Foreign Business License (FBL).
The application period for FBL is about 60-90 working days, the conditions are relatively transparent, and the Thailand Board of Investment (BOI) provides tax incentives and exemptions from equity restrictions for specific categories of foreign-invested enterprises.
Overall, Thailand’s compliance threshold is lower than that of Vietnam and Indonesia, making it a more friendly first-choice landing destination for companies with less overseas compliance experience.
For Chinese building materials companies that want to enter the Thai market, there are the following standard practical solutions:
1. Prioritize channel-based paths when entering the Thai market: establishing supply relationships with large building materials chains such as HomePro and Global House is the most efficient channel entrance. The review cycle is usually 3-6 months, and strict requirements for product quality certification and delivery date stability are required.
2. Enter with differentiated products rather than price competition: Find the structural advantages of Chinese building materials in delivery time, customization capabilities or supply of specific categories, rather than using “cheaper than Europe” as the only selling point.
3. Pay attention to BOI preferential policies: BOI certification by the Thailand Investment Commission can provide corporate income tax exemptions for up to 8 years to foreign-funded enterprises in specific industries, which is a substantial cost reduction for small and medium-sized construction and decoration enterprises.
