Cheap exports from China to the Thai market create problems for local producers

Taipei (Taiwan), September 6 (ANI): A “tsunami” of cheap Chinese imports into the Thai market is hitting local businesses, causing them to lose market share due to the price competitiveness of Chinese goods. This could lead to factory closures and economic stress in the Thai manufacturing sector.

Thai authorities have announced steps to combat the influx of cheap Chinese goods that are causing problems for the country’s manufacturing sector, Voice of America reported on Thursday.

The Bangkok Post reported on Aug. 28 that Thailand’s Deputy Prime Minister and Commerce Minister Phumtham Wechayachai said the government would set up a task force of 28 agencies that would meet every two weeks to review and amend regulations aimed at curbing the threat that cheap imports from China pose to the already fragile economy.

In a statement earlier, the Federation of Thai Industries warned that cheap Chinese goods entering the country’s economy could cause a “tsunami” in Thailand and surrounding areas. According to a VOA report, cheap imports have led to the closure of about 2,000 factories since 2023.

Pavida Pananond, professor of international business at Thammasat Business School at Thammasat University in Thailand, mentioned that all cheap Chinese goods or Chinese capital are often concentrated in Thailand’s e-commerce and electric vehicle industries. Although these Chinese investments may have increased foreign direct investment in Thailand, they have also made it difficult for many smaller local businesses to survive.

“Currently, the Chinese are facing restrictions on their products in many markets. So it’s natural that we see Chinese products targeting more emerging markets, especially in Southeast Asia. So these sectors would be exposed to direct competition from Chinese, cheaper products. And I think in the long run, it will have a bigger impact on the Thai economy,” Pananond added during a Zoom interview with VOA.

Thailand Economic and Business Research Center estimates that Thailand’s economy will grow 2.6 percent this year, thanks to tourism and exports; however, the economy will also see a decline in its manufacturing sector. Thailand’s industrial production is expected to fall 2 percent in the first half of 2024 compared with the same period last year.

Chinese e-commerce platform Temu entered Thailand in July. But observers remain concerned that cheap Chinese goods via such media will flood the Thai market. Platforms like Temu will lead to unfair competition, supply chain disruptions and rising unemployment, the VOA report said.

In addition, Srettha Thavisin, former Prime Minister of Thailand, had previously asked the authorities to investigate whether Temu had complied with relevant Thai regulations and paid the due taxes.

Nisit Panthamit, director of ASEAN Studies and associate professor at the Department of Economics at Chiang Mai University in Thailand, also expressed concerns, saying: “If you buy something from China, you have to wait for a very long time to receive the item. But local products are easy to find in the market. Now, with more goods coming from new Chinese companies, SMEs (small and medium-sized enterprises) may be hit hard.” He added that some basic Thai products may be replaced in local markets by inferior Chinese-made alternatives.

He also claimed that sales and consumption of local Thai products would decline by 10-20% by the end of 2024 due to competition from goods made in China.

A recent report in The New York Times noted that Thailand’s auto industry, traditionally dominated by Japanese automakers, is changing. In recent years, Chinese electric vehicles have entered the Thai market, prompting the closure of local car factories and raising prices for some, Thai economists say.

Meanwhile, China has defended itself against accusations of flooding Thailand’s markets and said trade between the two countries is “mutually beneficial and win-win.” The Chinese embassy in Thailand said in a statement: “Nearly 80 percent of the goods that Thailand imports from China are capital and intermediate goods that are used for production and adding value before export,” the statement said.

Most of the so-called cheap goods “are daily necessities, food, health products, clothing and accessories etc., which account for less than 10 per cent of the total value of goods imported from China,” it added. (ANI)