Could Thailand be an alternative to India for consumer goods?

The import of Thai products is growing in Bangladesh on the back of higher demand and good quality in a country where the consumer class is fast-expanding.

Babywear, cosmetics, fashionable footwear, fancy products, spices, fresh vegetables, fruits and foods, nuts and snacks segments are full of Thai goods.

Thai boutique hotels, restaurants, beauty parlours and salons are springing up in major cities like Dhaka, Chattogram and Khulna as well as in many district towns.

Local businessmen choose the Southeast Asian nation as an alternative to two major sourcing destinations: India and China. In fact, Thailand has become a very popular alternative destination, especially to small and medium traders mainly for two reasons: better quality and geographical location.

Many businessmen don't want to rely on India and China. Goods are smuggled into Bangladesh from India as the two countries share more than 4,000 kilometres of borders, while China can't always supply quality food at affordable prices.

For instance, Antu Kareem, managing director of Pentagon International, a consumer goods distributor, began stationery business in Bangladesh in 2000.

He used to import ball point pens from India. His business had been on a roll as the demand was high. He was an agent of nearly 15 Indian consumer goods in Bangladesh.

But, his profitable business faced a major setback all on a sudden when similar kinds of branded goods started slipping into the country through borders. The business nosedived overnight.

He desperately tried to keep his business afloat, but to no avail.

With the changed situation, he also changed his sourcing destination and chose Thailand, as there is no possibility of the products being smuggled into the country.

"I did not choose China as people do not have faith in Chinese goods. Japan is a very expensive destination and I also have to follow a lot of rules and regulations if I do business with Japan," Kareem told The Daily Star.

The US could have been another potential source, but he did not choose the American market as it required a lot of capital.

"I thought only Thailand can be my perfect choice in Asia as I can buy all goods at competitive prices with shorter lead time and quality goods."

He started business with Thailand in 2005. Today, Kareem is the sole distributor of Kodomo-branded goods in Bangladesh. Currently, he distributes branded items such as shampoo, soap, toothpaste, face powder and utensils.

Kareem's annual turnover is Tk 100 crore and sells Tk 40 crore worth of Kodomo-branded goods in the country. 

"My business is very good now and I don't have any fear about smuggling."

Thailand is far away from Bangladesh. However, geographically it is closer to the country compared with other Asian countries. "This is the biggest advantage of doing business with Thailand," he said. 

Many local small and medium-sized businessmen can't afford the business of consumer goods with the US and European countries, although there is a big demand for the goods from the regions.

"However, Thailand can offer all those goods at competitive prices," Kareem added.

Like Kareem, Abdus Salam, head of business for food division at Fair Group, is another businessman who supplies snacks of the Thai brand Tong Garden all over Bangladesh.

Every year, Salam, who previously had trading relations with India, imports $1.5 million worth of snacks of the brand and distributes them through his agents. He has been doing business with Thailand for the last 10 years.

"Bangladeshi consumers have more trust in Thai products than goods from other Asian countries like China and India."

With the rising demand of Thai goods, Salam's business is growing at 20 per cent year-on-year.

"The secret to the business's success is that there is no border between Bangladesh and Thailand through which goods can be smuggled into."

He applauded the Thai embassy in Dhaka for working relentlessly to promote Thai companies in Bangladesh for many years.

"The embassy's cooperation helped a lot grow business here. Thai people are very cooperative. We feel encouraged," Salam added.

Superstores also sell Thai fresh foods and vegetables, dehydrated foods and fruits, according to Kamal Bayazid, owner of Thai Corner (Food).

Almost all superstores have a separate Thai corners as the demand for the items from the Southeast Asian nation is increasing, he said.

Bayazid supplies Thai fruits, vegetables and pastes of spices to superstores.

The three businessmen demanded Bangladesh sign a free trade agreement (FTA) with Thailand for easing business as the demand for Thai goods is going up.

The import duty on some of the Thai goods is more than 200 per cent, importers say.

For instance, importers have to cough up Tk 200 to import one kilogram of nuts. Such a high duty is a major barrier to flourishing trade between the two countries, they said.

Commerce Minister Tipu Munshi discussed the issue of signing an FTA during a recent visit to the country.

"The Thai government is very eager to sign an FTA. We are also actively considering to strike the FTA with Thailand and some other Asian countries soon," he told The Daily Star.

At the fifth joint trade commission meeting between Bangladesh and Thailand in Bangkok in January, the minister demanded trade benefit on the exports of 36 Bangladeshi products to Thailand.

"Our export basket is narrow. So, we can't exploit the Thai market that much," said Munir Hossain, vice-president of the Bangladesh Thai Chamber of Commerce and Industry.

"We can send garment items to international retail chains such as H&M and Zara, which have presence in Thailand."

If the proposed FTA is inked, textile, garment, pharmaceuticals, jute and jute goods and light engineering of Bangladesh should be included.

"Otherwise, Bangladesh might not benefit from the FTA," Hossain added.

Thai businesses are widening their footprint in Bangladesh at such a breakneck speed that Thai Airways has tripled its daily flights to and fro Bangladesh, apart from state-run Biman Bangladesh Airlines and some private airlines.

"We are seeking Thai direct investment in the industries like hospitality, textile, motor parts and hotel management as they are already strong in these areas," Hossain added.