Be Thai, Use Thai

What's worrying is about the new industrial standard bill (1195-2536) is its implementation. The government hopes that the bill will serve as a barrier for foreign goods, while at the same time support locally-made products, while trying to create better public safety standards.

However, Thai audio components still have a host of problems that can't be supported by using non-trade barriers, or by just opening up a "golden opportunity" for Thai audio makers.

Thai consumers continue to suffer from the belief that products made in the US or Japan are far superior. In fact, this perception is so deeply rooted that it would be difficult to remove in a short time.

The lessons learned by Magnet might tell us why being a high-quality Thai brand is so tough. Today, there are no more than 10 audio brands made by Thai firms that are accepted for their standard and quality. But the acceptance always comes with a "but" or an "if" at the end.

Magnet has become the leading brand due to its ability to develop quality products for export. Next come the mid- to high-end makers like Vatiros, XAV, TS Audio, Viola, Granite and Aurist. Another brand that had an excellent reputation in the past, but could not withstand the losses, was TAS. A real pity.

The Thai audio industry is mostly based in small shops rather than big plants, resulting from the owner's love for sound.

But the response from Thai consumers is usually negative. Plus, with the import duty, imported parts carry high prices and these businesses suffer from cost disadvantages compared to mass-produced goods from abroad.

What's really annoying is that parts or important IC chips produced in Thailand are all exported, so Thai audio companies must purchase them from abroad - at high prices. The result? Thai companies are unable to buy low-priced parts and produce the components at a low cost.

Apart from cheap labour, the entry of major manufacturers to set up plants in Thailand doesn't really help the industry.

Let me tell you about Magnet. It was started with a small budget by a Thai engineer almost 20 years ago. From the beginning, circuits from abroad were duplicated and cheap parts were sourced for assembly. It offered low-cost kits for electronics students to choose from.

After gaining popularity, Magnet started designing its own circuits, and graduates from Chulalongkorn University's Faculty of Engineering were called in to help.

Sales of Magnet audio components were consistently high due to its improved design and quality. It also had its own PC board factory.

But problems started when foreign products became cheaper, while Magnet's costs were increasing. Even though sales remained at the same level, Magnet didn't have the huge buying power that foreign factories have.

So, Magnet walked straight into a brick wall. Without the economies of scale, in that Thai components can't be cheaper than foreign rivals, this similarity in pricing is an acid test for Thai consumers. Can they trust a Thai brand?

Although being in the business for almost 20 years has given Magnet strength and stability unlike other local brands, winning over consumers who favour imported products is proving difficult. And, with Americans and Japanese firms moving their production bases to China, the costs are dropping even further.

What is surprising is that even though Thais are starting to accept locally-made audio components, certain leading audio experts tend to be negative about the products. They are still biased, and think only foreign brands are acceptable. If the experts think like this, then how can the consumers support Thai products?

Pongthorn Malakul na Ayutthya has been the owner of Magnet since its early shop house days to the large factory it is now. He turned to exports, and was highly successful in supplying products to an American brand.

But the biggest splash has been creating of the Marsh brand for the US market through a joint venture with an American friend. It was voted by the highly popular Absolute Sound magazine for the Golden Ear Award. Today Marsh, which is manufactured in Thailand, is sold both in the US and at home.

When we speak of Thailand in terms of the international market, people immediately think of agricultural produce, not electronics, and, if Thais continue to look down on local products, it will remain a huge obstacle for any Thai firm to overcome.

Although Magnet and Marsh are well-accepted overseas what we must ask ourselves is: why do consumers still consider Thai products inferior?