Bangkok--17 Sep--JETRO Bangkok, - Promising areas of service trade are franchises of “Thai-ness”, including Thai spas, Thai restaurants, and Thai media content industry - Thai-owned restaurants abroad brings in an income of Baht 30,000 million per year - Japan allows ownership of 100% for restaurant business, plus markets in Japan are open wide for Thai franchises. The Japan External Trade Organization or JETRO Bangkok, together with Thailand’s Department of Export Promotion recently invited a franchise expert from Japan to help Thai business owners shape business model for service trade. This contribution is a continual plan to promote “Thai service trade” — franchising business from Thailand to Japan, especially spa and restaurant businesses, as well as to enhance Thai media content industry. Mr. Haruhiko Ozasa, JETRO Bangkok’s Trade Cooperation Department Director, said, “Franchising Thai businesses to Japan is feasible and the market is so far away from saturation. The laws related to franchise operation are supportive, not controlling. For example, investors in restaurant businesses can take 100% ownership because Japan liberalized investments since 1969, thus stimulating the expansion of foreign franchises in Japan.” “Additionally, Japanese consumers welcome services from Asian countries; for instance, “Ya Kun Kaya Toast”, Singaporean toast and coffee shop, and “Little Sheep”, hot pot restaurant from China, entered into Japan in 2006 and gained spontaneous popularity in Japan thanks to their originality. Thai services, including restaurant service, also have a big potential in Japanese markets because Thai service encompasses rich value, particularly Thai wisdom, culture, and heritage reflected through the Thai way of living,” said Mr. Ozasa. Mrs. Somjin Plengkhum, Deputy Director-General, Department of Export Promotion, said “The promotion of Thai service trade to foreign markets is a good opportunity for Thailand to earn more revenue streams as Thailand is an export-based country. Thai-owned restaurants in foreign countries generate up to Baht 30,000 million. Therefore, DEP supports businesses owners to have their own brands, to achieve higher efficiency in business operation, and to invest in foreign countries.” Mr. Tetsu Kaeida, JETRO Expert and Japan Franchise Association Executive Managing Director, said “Japanese markets respond to foreign franchises very well, and franchise expansion has been in an upward trend. Major franchises are convenient stores, restaurants, and other services. Altogether 1,146 franchise brands were registered in Japan in 2005, an increase of 58 brands or 5.3% from the previous year. 234,489 franchise branches were operating in 2005, up 8,352 branches or 3.8% from the previous year. Yen 19,388,800 million sales were reported in 2005, a rise of 3.6% compared to the previous year. As for restaurant business, there were 457 franchise restaurant brands in Japan in 2005, which run as many as 56,865 branches, with sales of Yen 4,060, 821 million. These franchises include foreign eateries such as western or Chinese foods, fast foods such as sushi, ramen and hamburgers, and bars or coffee houses.” Mr. Kaeida, former General Manager of the well-known convenient store Family Mart, continued, “Franchise business in Japan is attractive to foreign investors as foreign franchises currently earn a market share of 30%. Moreover, Japanese consumers are more open to foreign products and services since many of them have traveled the world and enjoy consuming imported products and services. There are four key success factors: first, franchise businesses must develop their business models to match with Japanese working and consumption cultures; second, the products and services must have their unique selling points or originality; third, the businesses must be equipped with good marketing; and fourth, a good franchise system is essential. The last one is related to a good logistics operation, which helps reduce operating costs of business owners.” Mr. Kaieda, during his visit to seven leading Thai franchise companies, said that Thai franchises possessed incomparable strengths, particularly their originality, that differentiated Thai franchises from others, such as work philosophy, capability of company owners, good franchise structure, and good service training modules for franchisees. In the mean time, Thai franchises could improve their technical issues, including making a detailed contract with franchisees, developing an efficient feedback system to franchisers, and advancing management of the training system for franchisees. Mr. Boonchai Leeraphante, President of Franchise and Thai SMEs Business Association and Chief Executive Officer of Yentafo Kruengsong, said “Thai businesses are advised to improve the standard quality of their products and services to be able to enter into and compete in the Japanese markets, since the standard of practice in Japan is much stricter than in Thailand. Equally importantly, Thai businesses should communicate the value of Thai-ness and Thai culture to reach Japanese consumers. Thai food is popular in Japan, following French and Italian foods but by a wider gap because Thai food involves eating culture which needs an experience and understanding to appreciate.” “Thai restaurants wishing to franchise their businesses to Japan,” Mr. Boonchai continued, “should also consider modifications of products and services, such as offering ‘Ready to Cook’ meals to preserve good tastes as well as avoid cooking complications and ingredient procurement abroad.” In September and October 2007, JETRO Bangkok is going to invite two more experts from Japan to give counsels on Thai restaurants and Thai spas. For more information, please contact: Chutima Duangpanich, PR Dept., JETRO Bangkok, Tel. 02 253 6441 ext. 147