China vs. Thailand Outsourcing Smackdown

Overseas product manufacturing contracts

David Dayton over at the consistently enlightening Silk Road International Blog did an interesting post comparing China to Thailand for manufacturing, entitled, Thailand vs. China.

David is eminently qualified to make this comparison because his Master’s Degree focused on “Comparative Chinese and Thai Corporate Cultures,” he is fluent in both Thai and Mandarin, and he has spent considerable time doing business in both places.

Dayton starts his post off by quoting a friend saying that “Every thing in Thailand is slow except for the internet and Everything in China is fast except for the internet,” and he then sets out the following eleven comparisons:

1. Legal requirements for export are not nearly as burdensome in Thailand

2. Thailand’s infrastructure is at least as good as China’s — ports, airports, tollways. Nothing new, I know, but this is one of the major drawbacks of working far inland in China or even close to large cities in Vietnam or Cambodia. The big plus in Thailand is that there are no inter-provincial tariffs or restrictions on the flow of goods like there is in China.”

3. Even with the recent wage increases labor is still more expensive in Thailand than in China. I’m seeing cost differences of about $50 to $75 a month between factory workers in China vs. Thailand.

4. The environment is much more “international” in Bangkok than it is in Shenzhen — more so than even Hong Kong, There isn’t as much English on signs but the exposure to “the West” is certainly as much or more. Bangkok seems to be becoming more western and Hong Kong more Chinese.

5. The advertising is much more sophisticated in Thailand than in China where it’s still a relatively immature industry. I was consciously amazed at the higher quality of both radio and outdoor media advertising in Thailand.

6. Nationalism is alive and well in both countries, but Thailand’s flavor is much less strident. China seems to be a bit more angry, with something to prove, while Thailand is much more comfortable with its unique place in the world.

7. I’m constantly told the same thing when I tell people in Thailand that I live in China: “You know, labor is more expensive here, but you get better quality work too.” Almost to a person, this was the response I heard — more than 10 times in just one day.

8. Thailand has a very well developed export base for automobiles, machinery and electronics, though China has some of this too.

9. Staffing in China is difficult in terms of retaining top-level local employees as well as in finding and retaining low-end factory labor. Thailand has a similarly tight market in top-level employees. The service levels are much higher in Thailand as is education in general. Professional standards seemhigher in Thailand as well.

10. The traffic in both Thailand and China is horrible, but each has its own perils. In China you are literally taking your life in your hands when you get into a car. Thailand is completely different. The traffic in Bangkok is so bad at almost all times of each and every day that it is estimated to lower Thailand’s annual GDP by multiple points!

11. Banking (I can’t believe I’m going to say this), but hands down China has better banks, both in terms of service and accessibility. In China if you need a bank, you can get one open from 8AM to 5PM 7 days a week. Thailand is 9AM to 3:30PM five days a week and off every holiday possible.

What do you think?

14 responses to “China vs. Thailand Outsourcing Smackdown”

  1. I read that post and disagreed. I have lived in Bangkok on and off for 8 years, speak reasonable Thai, and there is no comparison. Chalk and cheese for doing business in China. In short I think Thailand is the best country to live in the world but very disappointing for doing business. That doesn’t mean China is the best country in the world for business, but…..

  2. I read that post and disagreed. I have lived in Bangkok on and off for 8 years, speak reasonable Thai, and there is no comparison. Chalk and cheese for doing business in China. In short I think Thailand is the best country to live in the world but very disappointing for doing business. That doesn’t mean China is the best country in the world for business, but…..

  3. …I think he gets a full 10 out of 11 which is not a bad score at all. I do think he gets it wrong on number 11 though, because many Thai bank branches in the Bangkok shopping malls (there are basically no other cities to be found anywhere in Thailand, only towns and their town folks riding tractors) (I wouldn’t even compare even Chengdu with Korat) are open until 7.30 or 8 p.m., and they work perfectly well for most basic transactions;
    And so it really depends on the kind of banking you need to do after 3.30 p.m; just try to work out your multi-million, or multi-billion, or multi-trillion dollar business finance loans in the morning; (although a couple of million baht also can be had most afternoons without too much trouble)
    Some other S.E. and etc. Asia comparisons for further “discussion and debate” or for whomever may be interested. (in either agreeing with me or telling me I am full of it) (and either would be just fine)
    In terms of living there (doing business comes later)
    -The country that has the most authentically friendly people: The Philippines
    -Best value for (your) (but not always theirs) money: Thailand
    -Worst motorbike traffic that anyone’s imagination could possibly ever even dream of, or conjure up in either their darkest or their lightest hours: Hanoi / Ho Chi Minh; (but Pattaya is getting there)
    Worst motor-car traffic jams: Manila / Bangkok neck and neck but Chinese cities are “getting there fast” (that is, getting nowhere fast)
    “Thailand is the Land of Smiles but also “Thai-Rak-Thai and you’re a Farang” (that is, for those unfortunates who are un-initiated to Thailand….the Thai rak (love) the Thai – which is the name of a big political party and also its slogan… and you’re a Westerner, and so not always loved quite as much)
    And so all of the smiling (across the Land) is much more authentic in the Philippines. To which in fairness one probably also should add though: “and long live the Spaniards even if they were so brutal while they were there” so that one needs to add a big: “thank god” (but not the Roman Catholic church) that they’re now all finally gone home. ( to Madrid or have sailed off to Cuba or Florida on the Nina the Pinta and the Santa Maria) (And Inshallah all the problems in the south will one day be solved too)
    Lowest street personal crime rate: Thailand / China; or maybe China/ Thailand. Unless you go looking for it of course in which case you’ll find it; And please don’t go strolling around Quezon City (Philippines) at night unless you’ve got your AK-47 (or Uzi) with you (and with plenty of ammo)
    Highest crime rate and the reddest teeth on the planet: PNG – Port Moresby
    Friendliest and most hang-loose and nice Muslims west of eastern Saudi Arabia and Aramco: Indonesia
    Everything works almost perfectly well but just try to go out and have some fun for under $1000 (or for any amount of money for that matter): Tokyo, Japan (and Kyoto and Osaka too)
    (or if you’re really hard up fly to Bangkok and back for the evening instead, and also try to squeeze in a round of golf in the morning if you’re not too hung over; (you’ll meet lots of your Japanese buddies on the golf course)
    Doing business (but no monkey business please)
    Thailand has been a capitalist country since just about forever (even under the Khmer Empire) and a bit more recently also let the U.S. bomb Vietnam, Cambodia and Laos to smithereens from airbases on its soil (Udon Thani, Rayong, etc.) and so was spared from getting creamed. And the benefits of that are still being felt. (no agent orange needing to be cleared out of the fields, and no land mines needing to be collected from among the mango trees) So you shouldn’t even compare it with China or Vietnam at all.
    China also still feels some of the longer and longer-term shadows of Chairman Mao and of the cultural revolution (but not the gang of four!) now converted into nationalism…. and so may Carrefour be damned and Robespierre be cursed in hell. (But may the D*lai L*ma -though only after the talks and the Olympics both are over- also go and take up permanent residence in Langley….and not in Oregon)
    The Chinese are pretty well mentally organized in a Confucian (but not a confusing) sort of way. And so usually they also “say what they mean and mean what they say”….and at least some of them are easier to do business with than some of their S.E. Asians good (great) neighbors who -a bit more often than one might wish it- tend to “say what they feel and later forget they even said it, or just change their minds”
    Indonesia is getting to be more and more o.k. now that Suharto and his crew are more or less finally all gone. (but not all) And the beaches of East Timor might be a heck of a lot more fun to swim in now if Henry Kissinger and Gerald Ford hadn’t given the Indonesian military the green light. So it’s probbly more fun to hang out in DjoDja or in Surabaya or Bandung, though the Australian peacekeepers tend to all be really “good mates”.
    The Philippines could be a really cool place if it weren’t for all of the corruption, phony and useless joker- politicians, too high a birthrate, far too much religiosity, and just too many poor people. (and which one of those things you start off with trying to fix first, is up to you since they’re all linked) Unless you’re only running a call center and making mega-bucks in which case you couldn’t care less about fixing anything. (and the banks do work and will gladly transfer all your pesos to Singapore so you can stash them)
    And Singapore is of course continuing to be even more boring than even Geneva or Berne even if it never had Calvin. (and even if its banks are doing a bit better than UBS)
    And finally may Pax Americana never ever, ever be replaced by Pax Chinesa and instead only be replaced by an Authentic Pax Globalis….(in a couple of centuries and when the planet is about 50 degrees warmer and “really cool”)
    And so please also don’t forget to do just as the good Lord said: “do unto others as you would have them unto you”…or as one mumbles when one gets married…..”until death do us part”…..
    ….For thyne is the Kingdom, the Power and the Glory….(but not of the Olympics)
    AMEN

  4. …I think he gets a full 10 out of 11 which is not a bad score at all. I do think he gets it wrong on number 11 though, because many Thai bank branches in the Bangkok shopping malls (there are basically no other cities to be found anywhere in Thailand, only towns and their town folks riding tractors) (I wouldn’t even compare even Chengdu with Korat) are open until 7.30 or 8 p.m., and they work perfectly well for most basic transactions;
    And so it really depends on the kind of banking you need to do after 3.30 p.m; just try to work out your multi-million, or multi-billion, or multi-trillion dollar business finance loans in the morning; (although a couple of million baht also can be had most afternoons without too much trouble)
    Some other S.E. and etc. Asia comparisons for further “discussion and debate” or for whomever may be interested. (in either agreeing with me or telling me I am full of it) (and either would be just fine)
    In terms of living there (doing business comes later)
    -The country that has the most authentically friendly people: The Philippines
    -Best value for (your) (but not always theirs) money: Thailand
    -Worst motorbike traffic that anyone’s imagination could possibly ever even dream of, or conjure up in either their darkest or their lightest hours: Hanoi / Ho Chi Minh; (but Pattaya is getting there)
    Worst motor-car traffic jams: Manila / Bangkok neck and neck but Chinese cities are “getting there fast” (that is, getting nowhere fast)
    “Thailand is the Land of Smiles but also “Thai-Rak-Thai and you’re a Farang” (that is, for those unfortunates who are un-initiated to Thailand….the Thai rak (love) the Thai – which is the name of a big political party and also its slogan… and you’re a Westerner, and so not always loved quite as much)
    And so all of the smiling (across the Land) is much more authentic in the Philippines. To which in fairness one probably also should add though: “and long live the Spaniards even if they were so brutal while they were there” so that one needs to add a big: “thank god” (but not the Roman Catholic church) that they’re now all finally gone home. ( to Madrid or have sailed off to Cuba or Florida on the Nina the Pinta and the Santa Maria) (And Inshallah all the problems in the south will one day be solved too)
    Lowest street personal crime rate: Thailand / China; or maybe China/ Thailand. Unless you go looking for it of course in which case you’ll find it; And please don’t go strolling around Quezon City (Philippines) at night unless you’ve got your AK-47 (or Uzi) with you (and with plenty of ammo)
    Highest crime rate and the reddest teeth on the planet: PNG – Port Moresby
    Friendliest and most hang-loose and nice Muslims west of eastern Saudi Arabia and Aramco: Indonesia
    Everything works almost perfectly well but just try to go out and have some fun for under $1000 (or for any amount of money for that matter): Tokyo, Japan (and Kyoto and Osaka too)
    (or if you’re really hard up fly to Bangkok and back for the evening instead, and also try to squeeze in a round of golf in the morning if you’re not too hung over; (you’ll meet lots of your Japanese buddies on the golf course)
    Doing business (but no monkey business please)
    Thailand has been a capitalist country since just about forever (even under the Khmer Empire) and a bit more recently also let the U.S. bomb Vietnam, Cambodia and Laos to smithereens from airbases on its soil (Udon Thani, Rayong, etc.) and so was spared from getting creamed. And the benefits of that are still being felt. (no agent orange needing to be cleared out of the fields, and no land mines needing to be collected from among the mango trees) So you shouldn’t even compare it with China or Vietnam at all.
    China also still feels some of the longer and longer-term shadows of Chairman Mao and of the cultural revolution (but not the gang of four!) now converted into nationalism…. and so may Carrefour be damned and Robespierre be cursed in hell. (But may the D*lai L*ma -though only after the talks and the Olympics both are over- also go and take up permanent residence in Langley….and not in Oregon)
    The Chinese are pretty well mentally organized in a Confucian (but not a confusing) sort of way. And so usually they also “say what they mean and mean what they say”….and at least some of them are easier to do business with than some of their S.E. Asians good (great) neighbors who -a bit more often than one might wish it- tend to “say what they feel and later forget they even said it, or just change their minds”
    Indonesia is getting to be more and more o.k. now that Suharto and his crew are more or less finally all gone. (but not all) And the beaches of East Timor might be a heck of a lot more fun to swim in now if Henry Kissinger and Gerald Ford hadn’t given the Indonesian military the green light. So it’s probbly more fun to hang out in DjoDja or in Surabaya or Bandung, though the Australian peacekeepers tend to all be really “good mates”.
    The Philippines could be a really cool place if it weren’t for all of the corruption, phony and useless joker- politicians, too high a birthrate, far too much religiosity, and just too many poor people. (and which one of those things you start off with trying to fix first, is up to you since they’re all linked) Unless you’re only running a call center and making mega-bucks in which case you couldn’t care less about fixing anything. (and the banks do work and will gladly transfer all your pesos to Singapore so you can stash them)
    And Singapore is of course continuing to be even more boring than even Geneva or Berne even if it never had Calvin. (and even if its banks are doing a bit better than UBS)
    And finally may Pax Americana never ever, ever be replaced by Pax Chinesa and instead only be replaced by an Authentic Pax Globalis….(in a couple of centuries and when the planet is about 50 degrees warmer and “really cool”)
    And so please also don’t forget to do just as the good Lord said: “do unto others as you would have them unto you”…or as one mumbles when one gets married…..”until death do us part”…..
    ….For thyne is the Kingdom, the Power and the Glory….(but not of the Olympics)
    AMEN

  5. Hey Max. There’s a lot there that shows you’ve plenty of Asia experience but some of it is a little behind. For example Thai Rak Thai is the party booted out of power during the coup.
    But yes the nationalism of Thailand and resentment of Western influence does simmer there. Its difficult to judge it for me now because whatever anyone says I (and that’s probably we) are the pampered and privileged Westerners in the big scheme of things and it’s impossible to be subjective I guess.
    Good overall comment there though.

  6. Hey Max. There’s a lot there that shows you’ve plenty of Asia experience but some of it is a little behind. For example Thai Rak Thai is the party booted out of power during the coup.
    But yes the nationalism of Thailand and resentment of Western influence does simmer there. Its difficult to judge it for me now because whatever anyone says I (and that’s probably we) are the pampered and privileged Westerners in the big scheme of things and it’s impossible to be subjective I guess.
    Good overall comment there though.

  7. Thanks Charles or Khap Khun Khap. I do know that Thai Rak Thai was Thaksin’s party and that he got booted out of power. I was a mile away the night it happened and saw the tanks roll by. And I also know he wants to fire poor Goran the Good Swede since Manchester City isn’t doing well enough. (but could it, with him owning it?)
    Though his people are back now under another name and a rose by any other name would smell as sweet (or about as rotten) in Thailand as in Elizabethan England. I just didn’t go into a long explanation because I didn’t think it would interest most readers.
    And I also thought my comment was too damned long already as it was. And I tried to make it funny because I think we can always use a bit of humour so we don’t all fall into clinical depressions as we witness some of the things happening in our world….and so maybe a little accuracy got lost that way. (to make the “jokes” all fit)
    But I am glad you liked it, and yes it’s true that by now I have been literally all over Asia. And so round and round she goes and where she stops nobody knows!
    But I’d rather it stopped around here somewhere than in the States which -it’s sad to say- seems to be getting more unpleasant to be in by the day; though I am absolutely sure that any one of our three good candidates will turn it all around in no time flat….. and so Oklahoma City here I come to get my (last) kicks on route 66…all the best, Max

  8. There’s just one point I know I can agree with – Hong Kong is indeed becoming more Chinese, ever since 1997. It’s sad really, I was so young I don’t really remember the colonial days, but I do remember all the good pubs and night time TV (and high quality advertising). Also just people being generally nice and polite. But anyway.
    Have to add though, I am starting to see a lot more expats in HK now. Guessing it’s because it’s been a “decade” since the handover and companies are starting to see HK hasn’t completely defied capitalism (?).
    I used to remember thinking (in around 2004) that all of a sudden Mandarin has replaced English in HK. There was not a single soul who would order bread and butter pudding. But when I went back in Xmas 07, I’m seeing 5 expats at least, on the MTR/ in the streets every day, never used to (well not since I started noticing the change anyway). There are more adverts with good humour too. Of course, I was seeing about 10 Mandarin speaking people on the MTR too!

  9. Thanks Charles or Khap Khun Khap. I do know that Thai Rak Thai was Thaksin’s party and that he got booted out of power. I was a mile away the night it happened and saw the tanks roll by. And I also know he wants to fire poor Goran the Good Swede since Manchester City isn’t doing well enough. (but could it, with him owning it?)
    Though his people are back now under another name and a rose by any other name would smell as sweet (or about as rotten) in Thailand as in Elizabethan England. I just didn’t go into a long explanation because I didn’t think it would interest most readers.
    And I also thought my comment was too damned long already as it was. And I tried to make it funny because I think we can always use a bit of humour so we don’t all fall into clinical depressions as we witness some of the things happening in our world….and so maybe a little accuracy got lost that way. (to make the “jokes” all fit)
    But I am glad you liked it, and yes it’s true that by now I have been literally all over Asia. And so round and round she goes and where she stops nobody knows!
    But I’d rather it stopped around here somewhere than in the States which -it’s sad to say- seems to be getting more unpleasant to be in by the day; though I am absolutely sure that any one of our three good candidates will turn it all around in no time flat….. and so Oklahoma City here I come to get my (last) kicks on route 66…all the best, Max

  10. There’s just one point I know I can agree with – Hong Kong is indeed becoming more Chinese, ever since 1997. It’s sad really, I was so young I don’t really remember the colonial days, but I do remember all the good pubs and night time TV (and high quality advertising). Also just people being generally nice and polite. But anyway.
    Have to add though, I am starting to see a lot more expats in HK now. Guessing it’s because it’s been a “decade” since the handover and companies are starting to see HK hasn’t completely defied capitalism (?).
    I used to remember thinking (in around 2004) that all of a sudden Mandarin has replaced English in HK. There was not a single soul who would order bread and butter pudding. But when I went back in Xmas 07, I’m seeing 5 expats at least, on the MTR/ in the streets every day, never used to (well not since I started noticing the change anyway). There are more adverts with good humour too. Of course, I was seeing about 10 Mandarin speaking people on the MTR too!

  11. For outsourcing matters I think it is quite important to keep in mind WHAT you want to outsource, before comparing the two countries.
    If you are looking at software development outsourcing my take is that Thailand is the clear winner (when compared to china):
    – Best value for money
    – Lowest competition (at the moment)
    – Best internet (access and speed)
    Best regards
    Jimmy Borch
    CTO
    DanAsian
    http://www.danasian.dk

  12. For outsourcing matters I think it is quite important to keep in mind WHAT you want to outsource, before comparing the two countries.
    If you are looking at software development outsourcing my take is that Thailand is the clear winner (when compared to china):
    – Best value for money
    – Lowest competition (at the moment)
    – Best internet (access and speed)
    Best regards
    Jimmy Borch
    CTO
    DanAsian
    http://www.danasian.dk

  13. We’ve found a potential supplier for our base material in Chumburi Thailand. If we come to agreements with them we will probably relocate our cut and sew operations to Thailand. We now manufacture in Zhejiang, China. Does anybody have any advice for us on what to expect or anything related to us changing from China to Thailand? Jimmy Wood Pres., Reflectionite.

  14. We’ve found a potential supplier for our base material in Chumburi Thailand. If we come to agreements with them we will probably relocate our cut and sew operations to Thailand. We now manufacture in Zhejiang, China. Does anybody have any advice for us on what to expect or anything related to us changing from China to Thailand? Jimmy Wood Pres., Reflectionite.

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