China eyes Thai production base

Chinese businesses are increasingly adopting the Japanese model of focusing on Thailand as a base for expanding their overseas investments, a trade-promotion event heard.

Speaking at the “Thai-Chinese Business Forum 2013” organised by the Board of Investment of Thailand (BOI) yesterday, Pinij Charusombat, president of the Thai-Chinese Culture and Economic Association, said that as economic ties continue to blossom, more Chinese investment was expected to pour into Thailand. 

“Chinese investors are looking to expand their production bases overseas, including Thailand, as China faces tougher manufacturing conditions at home due to higher production and labour costs, anti-dumping action by trading partners, and higher logistics costs. Thailand, which has close relations with China, is well positioned to serve as a new production base under the closer cooperation brought about by the Asean-China Free Trade Agreement,” Pinij said. 

Chinese investment in Thailand is primarily aimed at producing goods for re-export to the Chinese market and to third countries. Among the Chinese products that have faced anti-dumping duties are television screens, which have been hit by a US levy. Chinese investors may see manufacturing in Thailand as a way to avoid such anti-dumping duties, Pinij said.

The closeness and mutual familiarity of the Thai and Chinese peoples will also encourage Chinese investors to focus on Thailand more than on other Asean countries, Pinij ventured.

He pointed out that the value of Sino-Thai trade was expected to reach US$100 billion (about Bt3 trillion) by the end of next year, up from the current $70 billion. 

Chinese investment in Thailand is expected to rise steadily in the coming years, he said.

According to BOI data, the Chinese are already the second-biggest foreign investors in Thailand after the Japanese. Total initial investment by Chinese firms was worth Bt14 billion last year.

Pinij also said more Chinese tourists were visiting Thailand. By the end of 2014, the number of Chinese travellers to Thailand is expected nearly to double to 5 million from 2.78 million last year. 

At yesterday’s forum, hundreds of Chinese businesspeople engaged in business-matching activities with 200 Thai enterprises. It is projected that this matching will result in trade deals worth $10 billion. Various business sectors were represented, including electronics and parts, automobiles, food, rubber, tapioca, and property development.

Industry Minister Prasert Boonchaisuk said that each year between now and 2016, Thailand and China target bilateral-trade growth of 20 per cent, investment expansion of 15 per cent, and growth in tourism between the two countries of 15 per cent.