Chapter I

Introduction

Problem Statement

Thai spa business has a high growth rate both in domestic and oversea
country. Because Thai spa service is a business that can capture lifestyle of
consumers, who are more interested in their healthy and shape in nowadays.
Thai spa business has an outstanding services .By nature of Thai people’s
characteristic always presents a warm atmosphere welcome to foreigners to
come to visit Thailand. That can boost popularity from foreigners towards Thai
spa services as well.

Moreover, Thai government sector also realizes the potential and

growth trend of Thai spa business, then it issues a policy to make Thailand as
the “Capital of Spa in the world”. Especially the Department of Export
Promotion has goal to increase standard level of Thai spa business as
international standard level.

Thai spa business is one of service sectors which have been

promoted by the Department of Export Promotion since 1997. Today, Thai
spa service wins its huge popularity from foreign tourists as Thai spa outlets
established by many foreign investors in oversea. The success of Thai spa
business effect to other spa-related business creates job opportunity and
earns foreign revenues of more than 15,000 million baht per year to the
country. (Source: www.spathaitrade.com)

As the growth rate of Thai spa business, which also effect to the others
business ,which related to Thai spa business. Thai spa product is one of
related business, which take an impact in positive way. Due to Spa products
are used in Spa services activities and massage treatment.

Almost Thai spa products make of Thai herbal ingredient with giving
benefits to body with naturalness and less chemical substance. That makes
an impression to foreigners, who come to Thailand and use Thai spa service
and get an experience from Thai spa product as well. Nowadays, Trend of
healthy lifestyle will be increase continually, it also influence to high demand
of natural products. This is a great opportunities of Thai spa products can
capture this trend of healthy lifestyle consumers around the world.
 In 2007-2008 the Thailand export of cosmetic/soap and skincare had
growth rate at 24.46% and 61.75% ,But in 2009 was dropped down to 20.78%
due to global economic crisis from United state and soared gasoline price ,
unstable political in Thailand and rising of Thai baht currency, which impacted
to foreign buyers slow down an orders. In Jan - Aug, 2010 Thai exporting of
cosmetic/soap and skincare that export value is 1,359 million US dollar and it
growth rate is at 38.68%. The Top export countries are Japan, Indonesian,
Malaysian and Australia or equal 54.58% of total export value of
cosmetic/soap and skincare from Thailand. (Source : Thai export statistic of cosmetic
Aug 2010 / Department of Export promotion)

Table of Main export countries of Thai cosmetic/soap and skincare

Value : Million US Dollar Growth rate : % % of Total Market

2010 2010 2010
Country
2008 2009 (Jan - 2008 2009 (Jan - 2008 2009 (Jan -
Aug) Aug) Aug)

1. Japan 164.92 275.68 343.67 -6.83 67.16 136.00 8.27 17.44

25.28
2.Indonesian 143.46 133.77 111.40 19.93 -6.75 20.84 7.19 8.46 8.20
3. Malaysian 697.71 152.57 110.08 487.12 -78.13 15.96 34.97 9.65 8.10
4. Philippine 106.78 122.72 93.66 20.53 14.92 10.18 5.35 7.76 6.89
5. Australia 105.41 106.18 83.11 14.91 0.73 24.35 5.28 6.72 6.11
6. Vietnam 84.88 100.37 72.94 39.25 18.24 18.94 4.25 6.35 5.37
7. Cambodian 44.61 53.19 49.62 20.65 19.22 41.06 2.24 3.37 3.65
8. United
54.51 70.00 47.55 26.38 28.42 20.87 2.73 4.43 3.50
Kingdom
9. Burma 40.77 45.61 41.45 44.74 11.86 53.35 2.04 2.89 3.05
10.Singapore 58.96 54.59 40.67 11.88 -7.41 5.05 2.95 3.45 2.99
Total 10
1,502.0 1,114 994.2 83.69 -25.79 44.88 75.28 70.52 73.14
Countries
Others
493.2 465.9 365.0 18.61 -5.53 24.20 24.72 29.48 26.86
Countries
Total Value 1,995 1,580 1,359.2 61.75 -20.78 38.68 100.00 100.00 100.00

(Source : Thai export statistic of cosmetic ,Aug 2010 / Department of Export promotion)
 Especially, In Japanese market, Thai Cosmetic/soap and skincare has
been increased from 142.62 Million US Dollar in 2009 to 343.67 Million US
Dollar in 2010 or 136% of growth rate. Because, Nowadays, Japanese
consumers are interested in cosmetic ,which make of herbal or natural
ingredient such as herbal soap , herbal haircare ,herbal skincare and herbal
deodorant. Which is effect to popularity in Thai spa product to worldwide
market both quality and standard. And trend of export of Thai cosmetic/soap
and skincare products are increasing continually.

Even though, Situation of Thai spa products still have been grown, but
It dropped down in 2009 because of global economic crisis from United state
and soared gasoline price , unstable political in Thailand and rising of Thai
baht currency ,which is factor that impact to Thai spa product growth rate drop
down. To reduce risk factors of dropping growth rate and increase completive
advantage (Economic of Scale) of Thai spa products. Government and related
departments try to looking for new market for more opportunities to expand
Thai spa products market.

In April, 2010 , Ministry of Commerce and National innovation

Agency(NIA) cooperate to promote Thai products ,especially in natural
product group, such as Health Foods ,Natural Beauty and Spa products, in
order to capture new market in Middle East Asia country. Which is a high
potential market with high purchasing power and high consumption.
The Corporation between Ministry of Commerce and National innovation
Agency(NIA) is to create opportunity and development potential Thai products
to match with consumers in Middle East Asia by create quality standard level
and value added into Thai products and services
(Source: Bangkokbiznews.com, 2 April, 2010)

UAE (United Arab Emirates or Dawlat al Imarat al Arabiyya al

Muttahidah) consists of seven states, which are Abu Dhabi, Dubai, Sharjah,
Ajman, Umm al-Quwain, Ras al-Khaimah and Fujairah. The capital and
second largest city of the United Arab Emirates is Abu Dhabi. It is also the
country's center of political, industrial, and cultural activities.

UAE the one of Middle East Asia country that Thai government sectors
and private company sectors have considered as a new potential market for
Spa services and products. UAE has a plenty resource of crude oil or 10% of
total world crude oil and export crude oil equal 30% of its GDP. It is also has a
natural gas resource as the 4th of world ranking.
 Even though, the UAE main revenue are from both crude oil and
natural gas resource, but it can rapidly develop on the others business
industry exclude energy sector, with growth rate at 64.1% of total its GDP.
Especially, Dubai city ,one of seven state in UAE has tried to develop to be
center of Logistics , Transportation ,Commerce trade and Financial
investment in Middle East Asia region, that effects to Dubai city has a huge
growth in export trade value from international trade ,exclude crude oil, such
as Tourism industry, Construction industry and Financial industry .Besides,
there are trade policy to promote and support to seven states in UAE that
make expansions in Seaport industry ,Warehouse industry ,Refinery crude oil
industry and Petrochemical industry. Nowadays, UAE government focuses on
diversification development policy for developing economy of UAE by not
depending on crude oil and natural gas only. UAE government also issue
policy to attract foreigner investors come to invest in Economic free zone,
where is the center of distribution shipment to Middle East Asia regions with
no import tax.

Dubai city is popularity for western investors to travel and do business,

because the regulations law is support to foreign investments such as
exception personal tax income or any business taxation, freely international
money transfer and foreigner investors can own shareholder 100%. These are
reasons, why numbers of western investors and businessman are increasing
in Dubai city every year.

Dubai city has revenue from crude oil 3% and 97% revenue is come from
tourism, logistics, international trade, construction industry and financial
services industry. Especially tourism industry is an important industry, which
drives Dubai’s economy. There is expectation that the number of foreigner
tourist will be increase 11.2 million people within 2012.Because there is policy
to support tourism industry at any direction to attract more foreigner tourist
visiting to Dubai city. Thus expansion of hotel and services sector is
increasing continually for providing growth of foreigner tourist in every year.

Trend of growth economy in UAE Especially in Dubai city that focus on

international trading and tourism ,which effect to a larger number of foreigners
businessman and tourist travel to UAE and Dubai city and also effect to Thai
spa services and products in positive direction .

Thai spa services are popular to UAE people and foreigner both businessman
and tourist due to consumers are interesting in their healthy more and
purchasing power both Dubai people and foreigners. Moreover Thai spa is
accept by worldwide in outstanding services with Thainess atmosphere ,mind
services and spa products, which make of Thai herbal as main ingredients to
serve to customers.
 As same as the positive direction of Thai spa service also effect to
demand of Thai spa products in the same direction in UAE. In means that
there are an opportunity for Thai entrepreneurs to expand Thai spa products
market to UAE .Also there are supporting from Thai government such as DEP
( Department of Export promotion )and Thai Ministry of Commerce want to
support and promote Thai natural products group, that are Health
food ,Natural Beauty and Spa products to expand to Middle east market .

Thai cosmetic products have a potentiality to penetrate in UAE market,

especially herbal cosmetics, which contains herb or natural as ingredient
Facial care, spa products and herb or natural products that are also popular in
UAE market as well (Source : Department of export promotion in Dubai branch
report,June,2009)

However, In Ended of 2009, the Dubai crisis emerged because of over

investment in many mega projects to make Dubai city as center of economy in
Middle East Asia. But Most of money investments on many mega projects are
loaned from foreign financial institutions. And Dubai world cannot pay debt at
due date to foreign financial institutions. So that Dubai World Company is
owned by Dubai government have to delay to pay a loan at least 6 months.

Thai camber of commerce and Broad of Thai trade believe that this
Dubai crisis situation will not impact to Thai export as much. Because most of
Thai products exported to Dubai as a small proportion and it still have a strong
economic in others seven states in UAE. Especially in Abu Dhabi city is export
crude oil as 90% of UAE, that Abu Dhabi will not take an impact from Dubai
Crisis as much. Further Abu Dhabi city is center government of UAE will not
ignore this Crisis problem ( BangkokBiznews,27 Nov 2009)

The Department of export promotion is confident that at present the

Dubai crisis is relief some. Dubai government have a policy to delay many
mega project. However ,Mrs. Srirutt Ruttapana , Ex-director-general of
Department of export promotion, assure that Thai products can penetrate in
Middle east Asia market certainly because it is an emerge market. Even
though, Dubai crisis occurred but there are some area will not take that impact
such as Abu Dhabi , Qatar and Kuwait which have revenue from export crude
oil more than 90% .This is a potential market with high purchasing power of
Middle East Asia market. ( Phachachatdhurakhit,04 Mar,2010 )
 With the opportunities and threats of Thai spa products in UAE is
facing in present time. The development of export Thai spa products has
potentiality to compete in world-market and high potential market in UAE,
that is very necessary issues for Thai spa product to penetrate and gain
competitive advantage in UAE market. Besides Thai spa product also has
competitive advantage in natural resource of herb in Thailand, and
government section also try to support and promote continually in developing
to export Thai spa product.

Then this paper was created to study and analyze the competitive
advantage of Thai spa products towards UAE market. To Study both internal
and external factors, which are related competitive advantage of Thai spa
products towards UAE market. To improve strength and decrease weak
points of Thai spa products in order to satisfy customer’s need in UAE market
and gain competitive advantage above competitors in UAE market.

Objectives of the study

1. To analyze factors that influences an increasing consumption of Thai spa

products in UAE

2. To analyze the key success factors in Thai spa products in UAE

3. To study information related with marketing strategy of Thai spa product

for export, to study internal factors and external factors of exporting Thai spa
products, to study potential in exporting Thai spa product

4. To analyze the strength, weak, opportunities and threat of Thai spa

products in UAE

5. To study problem and find out solution plan for exporting Thai spa in UAE
 Benefits of the Study

The writer has expected that this study will be the benefits to MBA’s
candidates, Thai spa product entrepreneurs, investors and anyone who are
interested in this subject.

1. Can be the information to increase potentiality of competition and

development Thai spa product for export to UAE

2. To be a guideline for Thai spa product industry can adjust strategies

to compete in UAE market.

3. to better understanding basic concepts of competitive strategy and

applying the concepts for doing international business.

4. To be the information for the investors who want to invest in Thai

spa product business for exporting in UAE.

5. To be a guideline for the interested parties who would like to do the

further study.

Scope of Study

The range of the study would be as follows

1. The data is collected during 2005 to 2010

2. This study will focus on Thai spa products export to UAE