Early review indicates that Thai SMEs account for more than 70 per cent of total manufacturing establishments
in the country. The evidence suggests that SMEs play a vital role in the nation’s economy and wellbeing. The
largest concentration of SMEs, in terms of numbers, can be found in the textile and apparel sector, followed by
food and beverages, metals and metal products, and wood and wood products.
Despite these governmental programs Thailand SMEs still face many challenges, domestic and external, which
could hinder their resilience and competitiveness. They include: i) Ongoing difficulties in obtaining funds from
financial institutions and the government. Usually the interest charges by financial institutions on loans borrowed
by SMEs are high, and this is compounded by a lack of financial transparency by SMEs; ii) A lack of human
capital is the most significant challenge facing Thai SMEs. It is often too expensive for SMEs to employ a
professional and competent workforce; iii) SMEs face a high level of international competition; this includes
from AFTA member countries and competition from MNCs or new competitors (for example from China and
India); iv) A lack of access to better technology and ICT which hinders more efficient and productive business
operations; v) A high level of bureaucracy in government agencies hinders efficient SME business development
operations; vi) A low level of research and development expenditure; and vii) A substantial orientation towards
the domestic rather than international market place.
Having identified some of the challenges facing SMEs in Thailand, we prescribed some strategies that the
government and its agencies responsible for SMEs, and SMEs themselves may adopt. The government should
play a leading role in educating SME practitioners on the incentives available to them and how to access them.
These incentives should be delivered through an establishment that really cares for the success and sustainability
of SMEs in the country.
On the other hand, SMEs in Thailand should not totally rely on government agencies; they should attempt to find
their own path of progress by relying on strategies which allow them to access new markets, increase their
revenue and expand their customer base. First, SMEs facing challenges arising from a more integrated and
liberalized world (for example from AFTA, or the ASEAN-China free trade agreement), should consider
networking and forming strategic alliances as viable options. By identifying and cooperating with these allies,
SMEs in Thailand can gain access to overseas markets, increase sales and revenue, access external sources of
funds, gain technological know-how, and become more resilient and stronger to withstand domestic and foreign
competitive onslaughts among other benefits. Second, SMEs should always invest in market research, R&D, and
innovation in order to increase their competitiveness. By embarking on market intelligence they will be better
able to understand the needs and wants in the marketplace. Such an understanding will assist in delivering
superior value to customers and more than their competitors are able to do. This in turn will increase customer
retention rates. Third, “Small is beautiful” the saying goes. SMEs should therefore leverage the advantages of
being small by deploying the relationship marketing strategy. The relatively small customer base of SMEs makes
them more suitable for long-term customer relationships. By establishing long-term relationships with customers
they are able to build customer loyalty and in turn reduce the cost of operation. Prior research (for example
Reicheld 1993; Ndubisi 2003) has shown that it is far cheaper to serve an existing (loyal) customer than to attract
and serve a new one. Lastly, another strategy SMEs should consider is counter-trade. Counter-trade, or
reciprocal trade, can assist SMEs in overcoming capital shortages, especially when they contemplate going
overseas. A counter-trade strategy can also be used to access closed foreign markets besides allowing for transfer
of technology and technological know-how from advanced countries to SMEs in developing nations like
Thailand.