A comparative study for the promotion of local cottage industry
and tourism between North and Northeast district in Thailand
Implications from the Local Branding strategy of Thailand
Kiyoto KUROKAWA, Yokohama National University *Key Words：
Brand strategy, OTOP, Geographical Indications (GI), niche market, East-West corridor
JEL Code: R58
1. Introduction
1.1 Research questions
The government of Thailand has established several unique local development approaches.
Those approaches were under the central government in the initial stage. But those turned into
endogenous movement year by year. And the uniqueness of the rural development policy wasexpanded. The development of Thailand’s tenth five-year plan has been based on theSufficiency Economy. The plan puts people firmly at the centre of development, and aims for anambitious review of all the nation’s resources in order to deliver more balanced, sustainable, andequitable growth. (UNDP [13] 2007)
The major aims of this paper are three-fold. First, it tries to assess local development policy
under the decentralization and political confusion process in Thailand. Second, it tries to show
the evidence of the stableness of the local development by conducting case studies between thetwo districts, North and Northeast. Finally, the local branding strategy will be examined. Due toThailand’s rural enormous market and the growth of wealthier households, the rural area has
become the emerging market. Many local brands such as “OTOP” and “Chiang Mai Brand” areestablished in the market today, some with a greater presence, others more limited.
But in Japan, this decentralization process and its value are still unknown. In Thailand, thepolitical stability was steadfast because of the presence of the King. However, the general
understanding of the recent political confusions under the aged King brought a bad image
toward the political stability in Thailand. After the several field surveys, the author established ahypothesis; the economic stability of the Thailand has established under the decentralization andpolitical confusion periods with the establishment of the local branding strategy of the localcommunity. And how local area like North and Northeast tried to find out their own branding
strategy by using their local resources will be discussed.
1.2 Methodology
A case study has been used in this research in order to meet the purpose. Since this survey isof a qualitative character, the empirical data has been collected through semi-structured
interviews within three respondent segments in the case organization: management,*Kiyoto KUROKAWA, Graduate School and Research Institute of Environment andInformation Sciences, Yokohama National University
Address: 79-1 Tokiwadai, Hodogaya-ku, Yokohama 240-8501 JAPAN
Tel/Fax: +81-45-339-4498
e-mail: kurokawa@ynu.ac.jp

communication and marketing strategy. We conducted our study by looking at available
secondary data, and have ensured the credibility of our study by evaluating various sources
regarding the information required in order to answer our research questions.
2. Literature review
2.1 Review of the recent political development
We believe there was no drastic change in the field of local development policy in Thailand.
Prime Minister Abhisit was basically succeeded the Thaksin’s economic policies, which theDemocrat Party criticized as populist. We believe that the political confusions after the 2006
Thai coup d'état brought a new decentralization, especially in the field of local cottage industry
and tourism. There are still broad critics toward the stability of the economy of Thailand evenafter the victory of Ms. Yingluck in July 2011. And traditionally, there are many critics on thedemocracy of the Thailand such as “Political commentators have regularly asserted that the Thai
populace, and especially the rural populace, lacks the basic characteristics essential for amodern democratic citizenry.” (Connors [3] 2003).
And “Thailand is a tale of two democracies - that of sophisticated urban elites and that of arural, often isolated, parochial interest that views political activity, especially elections, asopportunities for personal or community benefit.” (Albritton and Guo [1] 2003)
Those views brought misunderstandings toward the stability of the Thai economy, especially inthe field of local development policy. There is some political scientist who believes the good
aspects of the Thai Rak Thai as follows.“The ways in which Thai Rak Thai gained its mandate
through the 2001 election can probably be understood as enhancing democracy’s quality, along
precisely the lines that had been envisioned by the authors of the new constitution.”(Case[2]2007) The latest analysis of the new government can explain the stableness of thegovernment after 2001. And the prominent support toward the Thanksin’s party in Northeastdistrict. (See Table-1.)
Table-1 Votes obtained and the number of seats in the National AssemblyNortheast
Bangkok
All Thailand
Thak

Demo

Total

Thak

Demo

2001

Total

69
6136
29
83746%
7%
46% 29%
2005
126
2
136
32
4
3777%
6%
58% 34%
2007
100
5135
927
36
59% 18%
41% 53%
2011
104
4
126
102336
64% 15%
42% 45%
Note: Upper: number of seats, Lower: Votes obtained.

Thak
248
41%37761%
233
41%26555%

DemoTotal

12827%
9623%
16440%
15942%

500
500
480500Thak=Thaksin’s party, Demo=Democrats party (Source: Adopted from Takahashi [11] 2011)2

From the table-1, we can easily understand that the poorest district strongly supported
Thaksin’s party.
2.2 Previous researches
We can have three categories, (1) specific case studies, (2) financial studies and, (3)categorization of the cottage industrialization. However, in any cases, rural branding strategy
research, especially for the impact on the poor remote area is still limited.
Specific case studies
Takei [10] (2007) and Kaewmanotham [8] (2008) also recognize the notable success ofOTOP activities in the villages where they conducted field research. Takei collected 80
interview sheets in a basketry village of the Ang Thong province while Kaewmansothan
conducted a similar survey in the Baan Tawai village of the Chiangmai province. Both authors,
however, observed an expansion of income differentiation as a result of the OTOP activities
between landowners and small peasants in Takei’s village and between newcomers andtraditional villagers in Kaewmanotham’s village.
Dunn has conducted field surveys in Leeled Tambon in Surrathani. And she recognized theeffectiveness of OTOP for encouraging the local tourism. And many women were benefitted bythis strategy. (Dunn [4] 2007) These studies were quite useful for local people who were goingto start their new local business in terms of describing conditions of the successes.
Financial studies
For financial Access, some researches indicted the link between local development policy andfinancial reform. After OTOP in 2001, BAAC amended their loan regulations and started newloans under OTOP members’ guarantees only. “In the year 2004, the total amount of credit
provided was 6, 316.85 million baht, of which 87.59% of the beneficiaries are women.”(Sutthawaree [9] 2006)
Categorization of the cottage industrialization
To have a clear brand image, we need the story of the products. Accordingly, we would like topoint out Ikemoto’s study ([7] 1996). He identified four category of Thai cottage industry:-Imported-skill industries: Triangular Pillows-Traditional industries: Madmee silk-

Tourist industries: Souvenirs such as pottery, umbrellas and fans.

-Raw material based-industries: Fish sausages

The story of the product becomes the most important component for adding value. Some OTOP
products clearly indicated these four category.
2.3 Organizational Development
2.3.1 Cottage industry promotion
For cottage industry, Ministry of Interior introduced OTOP (One Tambon One Product)3

movement in 2003. And the central government introduced it with help of Japanese government.
Thai government has been promoting the cottage industry through the manufacturing ofattractive products based on the native culture, tradition and nature. This campaign is called
OTOP because the target area is the administrative unit called Tambon, which is the equivalentof village or town in English.
2.3.2 Tourism promotion organization
For tourism, Tourism Authority of Thailand (TAT) is responsible for regional development byintroducing tourism. And TAT established "Thai Ecotourism and Adventure Travel Association"(TEATA) in December 1997 to promote eco tourism. It was a new challenge to reduce theeconomic gaps between urban and rural area with the harmonization between development andenvironmental protection.
2.3.3 Branding committee
The North district has established a Geographical Indications, which are intended to designate
product quality, highlight brand identity, and preserve cultural traditions. Chiang Mai has
assigned this brand name “Chiang Mai Brand” as a symbol to represent the high quality of theproducts. In order to reach this standard, it has been necessary to focus on creating a newattitude, provincial image under the management of the Chiang Mai Brand Committee.
2.3.4 Researches for regional development
The government encouraged local universities to work for local economy. The simple
innovation and findings from the traditional cultures and resources became a mainstream of theresearch activities in both North and Northeast district of Thailand.
Thai Research funds
The TRF (Thai Research Fund) was established in 1992. The function of TRF is similar to
JSPS (Japan Society for the Promotion of Science) in Japan. But TRF is under the strong
initiatives of Ministry of the Prime Minister’s office.

The National Innovation Agency (NIA)The NIA was created as an autonomous organization under the supervision of the Ministry ofScience and Technology. NIA uses academic and financial support mechanisms in conjunction
with its principal strategy of knowledge management for innovation development. These newscheme encouraged local universities’ innovation activities.
2.3.5 Working groups for NSEC and EWECThe North-South Economic Corridor (NSEC) and the East-West Economic Corridor (EWEC)
are expected to expand the local trade and tourism. Under the strong initiative of international
donors, all the stakeholders formulated some working groups. And this idea is increasing its
value year by year. By using EWEC, many Thai visitors visit Vietnam and vice versa. And theworking groups are preparing corridor logo to identify them.

43. Case studies from North and Northeast district
3.1 Potential value of the local economy of North and Northeast district
The Author has started field surveys in North and Northeast since 2008. And the author
conducted the field surveys with the collaborations of Khon Kaen University in Northeast andChiang Mai University in North district.
3.2 Case studies of local branding strategies
3.2.1 Baan Tawai: OTOP Tourism Village (North district)
Baan Tawai is only 20 Km away from Chiang Mai city. It has 282house holds
and 839 people (2007) OTOP recognized its value and presented 5 stars andstarted OTOP Tourism Village project in 2004. Kaewmanotham observed
income differentiation, economic gaps as a result of the OTOP activities
between new comers and traditional villagers. (Kaewmanotham [8] 2006)
With the increased internationalization of food and product markets,geographical indications have become a key source of niche marketing(Geographical Indications [6].2011) To protect the original value, themunicipal office of Chiang Mai has assigned this brand name “Chiang Mai Brand” as a symbol
to represent the high quality of the products.
3.2.2 OTOP village of Triangular Pillows (Northeast District)
We conducted interview surveys to the managers of the producers in Ya Sothon in 2010. They
did not use any brand logo but OTOP. To protect the brand value of the triangular pillows, thecore villagers made a united effort to have “Kinship Links”. The core technique to formulate
triangular is quite unique. Without special trainings of the skilled teacher, no one can produce
real Triangular Pillows, they said. OTOP is very familiar to people in Thailand. However, thiscase demonstrated the real branding value of the product.
3.2.3 Sweet Sticky Candy (Kalamae) OTOP group (North district)
This is the typical small OTOP group, which produce traditional sweet sticky candy, so called
Kalamae in Thai. The local government identified the excellence of the group and guided to get
Halal logo to expand the market toward the visitors from Muslim country. Especially, there arethree direct flights in a day from Malaysia.
3.3 East-West Economic Corridor (EWEC) (Northeast District)
The author conducted interview survey in Danang city, Vietnam to see the impact of EWEC.
Danang city is trying to be a tourist destination of Northeast Thailand by offering beautiful
seaside and they have also prepared industrial parks and residents for retired people.
3.4 Stable business development for retired foreign people (North district)
Even after the political confusion in 2006, Japanese residents were increased. And more thanhalf the Japanese residents are elderly people. And the growth rate of Bangkok is decreasing,5

but the growth rate of the local cities is much higher than Bangkok.
4. Discussions
We found that the branding strategies were identified such as local OTOP brand, GI like Chiang
Mai Brand. In addition to the certification of the brand value, there are also to keep the essential
technique within the kinship. Emerging new local business was the essence of the local
economic stability during the political confusion. These local business is expanded among local
districts beyond the international border.
The local branding issues around North and Northeast district can be described as follows(Figure-2). The significant change of the economic flow is local to local link and the strong
needs to identify their originality in this linked global market. The local branding strategy canbe essential factor of the localChiang Mai Brand

Myanmar

OTOP brandNorth
district

China

Northeast
district
Laos

BangkokVietnam

Cambodia
Halal Logo

Foreign
RetiredMalaysia
Figure-2: Needs of the Local Brands

Cultural pursuits, Foods

5. Conclusion and policy implications
5.1 Conclusion
A conclusion drawn from this research is the importance of local initiative. When it comes tothe formulation and implementation of brand strategies, identification of the local resources areessential. Factors influencing the decision of local brand strategy can be; the possibility to findout niche market aimed at satisfying specific market needs. Factors influencing the decision of a
local adaptation strategy of the brand can be; cultural differences, history and heritage, betterknowledge of the local market.
5.2

Policy Implications

Traditional local economic assistance was within the link between urban and rural. But, recent
local economy should be evaluated by their local resources and local initiatives. In this paper,
we have examined emerging new local businesses, which urban can not create. The central
government should encourage the local initiatives.

6