Opportunity Awaits Distributors In The Pacific Rim

Bangkok is a sprawling, dynamic, and city as much a part of the Asia of yesterday as a defining force of the Asia of tomorrow. As the capital of Thailand, with a population around 10 million, Bangkok is a progressive economic center that eagerly receives and consumes products imported from the Western world. But as the first domino to fall in the Asian economic crisis, Thailand has been on shaky financial legs for two years, since the summer of 1997.

But things appear to be improving. According to the International Monetary Fund, the Asian economic crisis has bottomed out, with some crisis hit countries, among them Thailand, already on the road to recovery. Although things are far from the boom times Thailand was experiencing from the eighties until July 1997, there is a consensus that the turnaround of the Thai economy is underway.

One market that did well before the crisis, and that appears poised to do well into the future, is the market for beauty products distributed and sold through Thai salons.

Bangkok, in particular, is a buzzing urban metropolis--hungry for American products and lifestyles. A recent trip to Bangkok yielded this message: Thailand holds untapped potential for enterprising distributors who are eager to take part in the coming Asian century.

The Thai Market: Life Since The Crash

"The Asian economic crisis had a definite affect on the industry," says Sang Suthisorn, owner of Panache, an upscale Bangkok salon in the World Trade Center, "Prior to the crisis, people spent more money on beauty products. They didn’t care what the best product was and just wanted the most expensive one. They were once willing to pay 200 hundred U.S. dollars for a perm."

As a native Thai who spent 17 years in Los Angeles running a successful salon, she moved back to Bangkok four years ago to open Panache. Suthisorn says her move to Bangkok has been good, despite the crisis. "People are more fashion conscious. There is money to be made here now. Although people might not be as extravagant, they still care about how they look and are willing to spend money on themselves. It has been a good investment for me. I have survived the crash and believe that better economic times will bring things back to normal."

Although she has seen sales decrease by 10 to 15 percent, Suthisorn believes things are getting better. She also believes Bangkok is a hot, growing market with an emergence of high-end beauty salons more common than even few years ago. "Thai people did not seem willing to experiment with different hairstyles or colors before. Now there seems to be more willingness to experiment. People want to be fashionable."

Gavin Lipschitz of Therapy G, a manufacturer of men’s hair loss products with a presence in Thailand, admits the past two years have been somewhat of an economic roller coaster ride. "The Thai market is making a resurgence," he says, "A year and a half ago, in the midst of the Asian economic crisis, when the baht went as low as 51 per dollar, a lot of our business plans were put on hold. Now that the baht has leveled out, and the crisis has cooled down a bit, there is a renewed sense of optimism."

Thai consumers, he says, are fairly enlightened--aware of most trends that are evident in the U.S. largely due to the expansion of Western media. For example, Thai men are now concerned about hair loss and are willing to purchase products that alleviate it. "Thai men are receptive to buying hair-loss products. Now, they are just as aware as other parts of the world."

In spite of the recent economic downturn, is Thailand still a good market? "It is a great market," says Alee Vancao (International Master Associate) for Paul Mitchell, who has been doing business in Thailand for the past five years "It has a lot of potential. The young generation is very open to new styles and colors. They constitute our best market. We have been very committed to making it a success."

Is there a huge market for Western products? "Absolutely," says Suthisorn,

"The Western media have a big influence in Thailand. After the Oscars, for example, I have had over 500 requests for the "Jennifer" hairstyle from "Friends. As long as American fashions influence the Thais, I see a tremendous demand for beauty products sold in the salons."

The Thai Salon Industry

As when breaking into any new international market, domestic relationships are always complex. Importers have to comply with a country’s laws, have literature translated to that language, and assume advertising responsibilities. This holds true for Thailand.

Is it essential to learn about Thai culture before embarking on business there? Lipschitz replies, "The more we know, the more we can contribute to selling our product. We have made efforts to adapt our business practices to the Thai culture. It has been a bit of a challenge, but nothing we were not able to overcome." Lipschitz recommends choosing distributors based on experience knowledge in the Thai marketplace. Communication is crucial, "Two smart heads are better than one," says Lipschitz, "I communicate regularly with my distributors, and I think that a key to doing good business."

What opportunities are there for American companies to import products to Thailand?

"Beauty products always sell well in Thailand," says Suthisorn, "For example, if you watch TV between 7 and 9 p.m., the majority of advertisements you see will be for shampoo. Even with the economic crisis, Thai people are concerned about appearance, especially the younger generation. I would say that there’s a big opportunity for American investors dealing with beauty products.

What are some of the things that make a product really sell well here in Thailand? "The first thing is smell," says Suthisorn, "In America, people often read labels to make a decision. In Thailand, the first thing people do is to smell the products. Packaging is important but not as important as smell."

Working With Distributors: The Role of Education

For U.S. companies planning to break into the Thai market, the role of distributor relations and education needs to be taken into account. There is an overall lack of hands-on support from international salon manufacturers in Thailand that works against long term success. To succeed in Thailand involves a commitment to educating distributors and salon operators.

"Distributors in the U.S. have been exposed to many different products and as a result have a much higher base level of knowledge," says Vancao, "Therefore, they understand the need for marketing and promotion. Thai distributors and designers are relative novices and take a little longer to see the potential for growth from marketing approaches we take for granted."

Most salon owners are self-taught, and are more reluctant to embrace change. As a result, American product manufacturers need to make product education the cornerstone of their business development plan. "At Paul Mitchell, we not only instruct salons in the art of hair design, but in the art of business. We show them how to "sell up"--suggesting a perm, color, or new style to increase sales and move more product."

Paul Mitchell credits teaching business building skills as a key to their success in Thailand. "U.S. businesses who want to sell products in Thailand need a program for training people, not only in product knowledge, but in how to sell their products. Teaching designers how to display products, both artistically and in a business sense, is one example."

Keeping in close contact with the country is another important factor. Through Paul Mitchell and Associates, a team that does trade shows and promotes products, Vancao visits Bangkok often to stay on top of things. "The local distributors are the part of the team and go to individual Thai salons on a regular basis to educate designers and monitor progress. When we teach new methods for using the products in a very advanced way we make sure we monitor progress over time."

Lipschitz agrees that education is crucial for business success. "We provide audio cassettes, written information, anything to help them sell products. Our materials are written in English, and then translated to Thai. We have not conducted seminars in Thailand, but that will happen eventually."

English is widely spoken in Thailand, but the lack of fluent English skills should be factored in to all marketing materials and activities. "If salon owners do not speak English, they may be less inclined to buy products. Paul Mitchell makes every effort to hire distributors who speak fluent Thai. "In every country we sell to, we have an interpreter who works with the distributors to make sure communications run smoothly."

Surprisingly, there is a lack of trade shows in Bangkok. As a result it can be difficult even for savvy salon owners to find the products they need. "There are only a few trade shows available to me…maybe once a year at most," says Suthisorn, "I often have to rely on my U.S. and European connections to get much of what I need and sell."

Succeeding In Thailand

It appears that the door is wide open for U.S. salon product distributors to break into the Thai market. Name recognition, persistence, and an understanding of the Thai marketplace are key. "Generally, our customers only trust the products that they know," says Suthisorn, "That is why we usually just stock Sebastian and Paul Mitchell. If more products were available, and if Thais knew about them, I would sell a wider variety of products. We would all do better in the end."

I would say that the most important thing for hair-designers is to educate clients as to what they are using, why they are using it, and how to use it," says Vancao, "Just those three simple steps."

"Thailand is a hot, untapped market,” says Vancao, "Especially compared to other countries next to it. Because the government in Thailand is more open than many of its neighbors, you have fewer obstacles in the way of regulations. And Thai people love the American stuff. As long as you provide the education from the initial stages on products will sell quickly. I think the most important thing is education and the art of business, especially in the Asian markets. Some countries can be closed-minded. The trick is to convince the (Asian) beauty industries that there is a lot of money to be made as long as they do the proper footwork.