Making a go of it in Hainan

Thai entrepreneurs operating in China’s southern island province of Hainan say the opportunities created by the island’s growing free-trade economy remain significant, but success depends heavily on mastering the Chinese language, building local networks and understanding regulatory requirements.

They shared their experiences recently with 25 Thai journalists participating in the China Learning Programme, held by the Thai Journalists Association and the Chinese embassy in Thailand.

Ornnicha Kraitheerawut, the owner of Siam Viman, a Thai product promotion and retail centre on Qilou Old Street, a historic and cultural landmark in downtown Haikou, the capital, said China’s market remains attractive to foreign investors, but operating a business as a foreign national comes with practical limitations.

“Foreigners can own businesses in many sectors, but there are still things we cannot do,” she said.

She cited restrictions on access to some Chinese digital platforms, including certain livestreaming and e-commerce functions that are widely used by local merchants.

“Even if you are legally operating a business, some platforms impose limitations because you’re a foreigner,” she said. “Those are policy-level restrictions that local authorities cannot change.”

Such limitations may appear minor, she added, but in a market where e-commerce and livestream selling have become major drivers of retail sales, they can affect competitiveness.

Building trust

Building trust with local people and authorities also takes time, she said, adding that one of the most underestimated aspects of investing in China is the importance of building relationships.

Despite having sufficient capital, Ms Ornnicha said she spent nearly two years negotiating for a retail location in a government-managed cultural tourism district because local authorities wanted assurances the business would be viable and consistent with the area’s image.

“They weren’t sure whether we could really make it work,” she said. “If a foreign-operated business fails, it also affects the image of the district.”

Authorities requested long-term lease commitments and substantial upfront payments before approving the project.

She described local networks as essential, not only with government agencies but also with community leaders, business operators and experienced investors.

“Money alone isn’t enough. Connections matter and language remains the most important factor for foreign investors seeking to establish themselves in China.

“You must speak Chinese,” she said. “You can’t rely on translators or partners forever.”

She said language skills are critical not only for daily business operations, but also for reviewing contracts, negotiating agreements and developing trust with local counterparts.

A Thai aquaculture entrepreneur who has spent 18 years working in Hainan’s shrimp industry agrees.

Supathanit Jaikra, a shareholder of Hainan Jiangsheng International Trading Co, said he arrived in China without speaking any Chinese and taught himself the language through daily interactions with employees and local partners.

“I started from zero,” he said. “In my first year I couldn’t speak at all. In the second year I gradually improved.

“People here rarely use English, so Chinese becomes essential for both business and daily life,” he said.

The entrepreneur, who operates shrimp hatchery and breeding businesses, said Hainan remains one of China’s most important aquaculture hubs due to its clean marine environment and suitability for producing shrimp larvae.

Reflecting on changes in the local business environment, Mr Supathanit said conditions for foreign investors have improved over the past two decades.

“In the early days, being a foreign businessman was much more difficult,” he said. “Now everything is more transparent and has to go through official channels.”

However, he said foreign residents are still subject to strict oversight, including periodic registration and residency verification requirements. Foreign investors should therefore pay close attention to legal contracts and regulatory compliance.

“Understanding the law is critical,” he said. “You need to know the rules wherever you invest.”

Hidden costs for Thai products

Despite the challenges, both entrepreneurs said demand for Thai products in China remains strong among Chinese customers.

However, they pointed to high operating costs, including import duties, value-added taxes, shipping costs and logistics expenses, particularly in Hainan where direct transport links from Thailand remain limited.

“Hainan still has room for Thai entrepreneurs,” they said. “The opportunities are there, but success doesn’t come easily. You need language skills, local knowledge and patience.”

Hainan island’s geography presents additional challenges because direct shipping routes from Thailand remain limited.

“If there is no direct vessel available, products may have to be routed through other ports or shipped by air,” they said. “That immediately increases costs.”

Both entrepreneurs agreed the most important lesson is not the size of China’s market, but the level of preparation required to enter it successfully.

Success requires language skills, an understanding of regulations, patience and the ability to adapt to a different business culture.

For Thai investors willing to make that commitment, Hainan may offer opportunities that have largely been overlooked by competitors focused on China’s biggest cities.

As competition intensifies in Beijing, Shanghai and Shenzhen, the southern island province could become an attractive entry point for Thai businesses seeking to tap into the world’s second-largest economy, they said.

“What people overlook today may become the biggest opportunity tomorrow,” they said.

Business environment

Reflecting on his early years in China, Mr Supathanit said operating a business as a foreigner was substantially more challenging in the past.

He recalled encountering difficulties from local vested interests and informal power networks, particularly before China’s nationwide anti-corruption campaigns.

“In those days, doing business alone could be difficult,” he said.

To reduce risks, he often chose to work with Chinese partners and maintain minority stakes in some ventures.

Today, however, he believes the environment has become far more transparent.

“Everything now goes through official channels,” he said. “It’s much more transparent than it used to be.”

Two Thai businesspeople pose for a photo in front of Siam Viman, a Thai goods retail shop on Qilou Old Street. (Photo: Anucha Charoenpo)