Limited Manufacturing Seen After Thai King’s Death

Overview

On the 13th of October 2016 King Bhumibol Adulyadej passed away. Shortly after, an official period of mourning begun for Thailand, lasting for 12 months. With respects to be paid, what affect will be seen upon the Thai manufacturing industry?

Article Highlights

  • King Bhumibol Adulyadej passed away on the 13th of October
  • A period of mourning has begun, seeing an immediate disruption throughout many industries.
  • A possible new era may have begun

 

After the death of the revered King Bhumibol Adulyadej, Thailand has gone into mourning. Due to a different set of cultures, Westerners are surprised to learn about this period of mourning, which lasts for up to a year and results in normal services and events being either cancelled or scaled back, especially within the first 30 days. This has led to many questions about whether the Thai manufacturing industry will feel any effects.

Thai Manufacturing Disruption

Immediately following the king’s passing, disruptions occurred throughout industries. Companies who rely on manufacturing in Thailand received news that their orders had been cancelled. Other factories sent employees home to properly pay their respects. This trend has been seen nationwide. Thai manufacturing is not the only industry that has slowed down; so has the service industry, as well as consumption and almost every sector as a whole.

It should be noted that while the official period of mourning will last 12 months, it is the first 30 days that see the strongest actions. After 30 days, the country will get back to normal relatively quickly. Official government advice still encourages tourists and visitors to travel. If you are considering visiting Thailand on business to get an inside look at the Thai manufacturing industry, don’t cancel your plans. However, it is highly recommended that you read up on the cultural norms specific to this time period. This may include wearing sombre-coloured clothing and refraining from boisterous behaviour that may be considered disrespectful. Alcohol and spirited celebrations may play a part in business in some countries, but in the current climate in Thailand, they would be considered disrespectful.

Certain economists have questioned whether the passing of the king will be damaging to the Thai manufacturing industry as a whole. As more and more companies look to move their operations and begin manufacturing in Thailand, the disruptions may put off some of these companies. However, despite initial reports that suppliers and factories were cancelling orders, it is believed that the majority are now back to business. Those companies which are still not quite back up to full speed are expected to do so soon.

Cultural Lessons to be Learnt

An importing lesson can be learnt from what we have seen happen in Thailand. When considering international destinations in which to base your manufacturing, you must consider many factors. Cost, quality and lead times are aspects considered by every company beforehand; however, it is usually softer factors that shock Western companies the most. Few would have considered the effects the passing away of the country’s king would have on the Thai manufacturing industry. Every year, companies also complain about the extended production break that arises in China when they celebrate their New Year. These are examples of cultural differences that can come as a surprise.

A New Era?

Over the last decade, owing largely to the process of globalisation, the Thai manufacturing industry has benefited greatly. However, following the military coup in 2014, the country has seen a significant amount of political stability. King Bhumibol Adulyadej had served for over 69 years, providing consistency. However, the revered king’s death should continue to add to the long-term political uncertainty facing the country and the Thai manufacturing industry.

Security is a factor that attracts outside foreign investment. This is one of the reasons why China has managed to grow as quickly as it has. Investors feel that their money is secure, the economy is relatively stable and, ultimately, the government is willing to invest itself in the economy. However, due to recent events, Thailand has gone from looking like a strong possibility for foreign companies to being a much less viable option. The new era will decide whether the Thai manufacturing industry sinks or swims. Only time will tell if Thailand lives up to the potential many economists see in it.

Closing

There are many examples of why effective planning should always be carried out before moving one’s factory to the other side of the world. No one could have predicted the unfortunate passing of the Thai king, but the cultural mourning process could have been researched. In the grand scheme of things, the 30 days it may take before the Thai manufacturing industry is back to normal is relatively short. It is similar to the amount of time Chinese labourers take off during their New Year. However, to have your order cancelled without any warning would certainly cause a bit of a panic if one does not have a backup plan. Overall, when it comes to manufacturing in Thailand or any other country that is vastly culturally different from your own, it certainly pays dividends to invest in prior research and contingency planning.

If you enjoyed this article and would like to read more about manufacturing in Asia, you may want to read our brief overview of Vietnam here.

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