Chinese business wave takes over Sampheng and Pratunam

Explore Bangkok’s long-established commercial hubs, Sampheng and Pratunam, which have been prime locations for entrepreneurs for over a century. These historic trading districts are now facing a major upheaval as Chinese investors make aggressive market inroads. 

Backed by substantial capital, expertise, technology, and strong business networks—along with investment incentives from the Thai government, including visa-free entry and foreign investment promotion policies—Chinese enterprises are rapidly setting up diverse businesses and retail operations with ease and flexibility.

A field survey of the Sampheng and Pratunam trading districts reveals significant changes driven by new entrepreneurs, particularly Chinese investors. 

They have established a wide range of retail businesses, including accessories, personal items, restaurants, beverage shops, supermarkets, ready-made products, and even Thai fabrics. This aggressive expansion by Chinese capital has had a severe impact on local merchants and small retailers.

Setthapong Srisuphonvanij, President of Thai Textile Merchants Association, stated that Chinese entrepreneurs are expanding their businesses in Thailand across various sectors, primarily focusing on ready-made products. In Sampheng, the presence of Chinese investors in the textile industry remains limited, and their businesses do not primarily deal with raw materials.

The majority of ready-made clothing products from China are marketed and distributed outside the central trading areas. However, as businesses dealing in ready-made clothing experience declining sales and market share, the impact will eventually extend upstream, affecting raw material suppliers in Sampheng as well.

Sampheng Undergoes a Major Transformation in a Decade

Over the past 10 years, Sampheng’s textile raw material sector has undergone significant changes, reflecting broader shifts in the district’s commercial landscape. Fabric retailers have expanded to new locations, business dynamics have evolved across generations, and customer traffic has declined. Unlike in the past, Sampheng is no longer as densely packed with shoppers, as businesses increasingly shift toward online platforms, reducing the necessity for customers to visit the area in person.

“Global-scale competition has been ongoing for a long time. The closure of Thai textile factories was not due to domestic competition but rather the result of intense competition in the global export market,” said Setthapong.

Chinese textile manufacturers possess multiple strengths. With each production cycle, they can supply both the domestic market and export globally, giving them a significant economy of scale advantage. Additionally, China leads in manufacturing technology, and for certain raw materials, its expertise surpasses that of other countries, making them difficult to replicate elsewhere.

“Sampheng has changed significantly. It was once a go-to destination for fabrics, but later shifted towards gift shops. In the past, the crowds were so dense that people could barely walk, moving along with the flow. While some areas remain busy today, overall, traffic has thinned, allowing for easier movement. Additionally, shoppers once carried large plastic bags, but now their shopping bags vary in size—likely influenced by online shopping, which has reduced the need for in-person visits,” Setthapong noted.

Chinese Investment Disrupts Small Retailers in Sampheng

Kanjana Amornthirakul, a doll shop owner in Sampheng for over 30 years, has long sourced her products from Thai manufacturers in Ratchaburi province. She observed that Sampheng's market landscape has changed dramatically, especially in the past decade. Over the last 1-2 years, the number of Chinese investors setting up businesses in the district has surged. Many Chinese entrepreneurs, seeing the area's business potential, have encouraged others from China to establish operations in this prime location.

In addition to Chinese investors, entrepreneurs from neighbouring countries such as Laos, Cambodia, and Myanmar have also entered the market with mobile vendors, competing with local businesses. As a result, Chinese and neighbouring country entrepreneurs now make up about 30-40% of the market, while Thai entrepreneurs still account for 60-70%.

“The concern with the entry of Chinese entrepreneurs into Sampheng lies in their greater capital resources. Chinese investors can do business with fellow Chinese more easily than Thai entrepreneurs can. The language barrier is one issue, as communication is more seamless between Chinese speakers. This creates a disadvantage for Thai manufacturers who order from Chinese factories. Moreover, modern Chinese manufacturing is equipped with advanced technology and innovation, and their lower production costs give them an edge. As a result, Chinese products can stand out in terms of quality, allowing them to be priced higher as consumers believe in their value, which appeals to Thai customers as well.”

Thai Businesses Struggling with Multiple Impacts

When comparing investment capital, Thai entrepreneurs often have weaker financial backing. For instance, Thai building owners can set high rental prices, such as 300,000-400,000 baht per month, which Chinese investors are willing to pay. 

However, small Thai business owners cannot afford such high costs, leading to significant negative impacts. As a result, many small Thai businesses have been forced to either move out of Sampheng or switch to selling different products.

In addition to increasing competition, Sampheng is also facing the consequences of a declining economy, leading to a sluggish market. What was once a thriving business area, with sales in the hundreds of thousands baht per month, has now seen sales fall to just a few tens of thousands. 

The future remains uncertain, and it is unclear how many small Thai businesses will remain in this key trading district.

“The shop, as a small business owner, still wishes to continue trading in this location for as long as possible. We buy handmade dolls from Ratchaburi, which are produced by elderly artisans. I would like to call for the Chinese investors entering Sampheng to do business in compliance with the law, including company registration and tax payment, so that the country can benefit the most.”

Factory Renting Space to Sell Children's Clothing

Meanwhile, in the Pratunam area, one of Thailand’s largest wholesale and retail markets for ready-made garments, Chinese clothing entrepreneurs have been expanding their businesses. 

In particular, the Baiyoke Tower I, 4th floor, opened a store selling products from Huzhou, Zhejiang Province, with the China Huzhou Overseas Children’s Clothing Center launched in late June 2024. The store is operated by Zhejiang Youtao Clothing, a major manufacturer of children’s clothing that exports to Walmart in the US, and Huzhou Golden Power Garment, a large producer specializing in R&D and design. The store is now officially open in the heart of the Pratunam area.

Huai Khwang: A Popular Trading Area

However, with the increasing presence of Chinese investors, Huai Khwang has seen a significant rise in the number of Chinese entrepreneurs entering various businesses, including pharmacies, restaurants, and supermarkets. 

The density of Chinese-run businesses in this area is higher compared to other locations due to its proximity to the Embassy of the People's Republic of China in Thailand.

Chinese nationals feel more comfortable opening businesses in this area, which has turned Huai Khwang into a new, popular trading hub for Chinese entrepreneurs.

Chinese Investment Set to Surge in Thailand

Chanin Udomsirath, the owner of the "Lui Chinn" page, who studied in China and is familiar with Chinese business practices, stated that the influx of Chinese investment into various commercial areas of Thailand is expected to increase in the future. This is due to China's ongoing economic slowdown and the country's policies encouraging its entrepreneurs to invest globally, including in Thailand.

“When compared to other ASEAN countries, Thailand offers a highly attractive investment environment due to its business-friendly regulations and the established network of Chinese businesses that have already entered the country, making Thailand a top investment destination in ASEAN,” he said.

Moreover, the new wave of Chinese businesspeople is not limited to major cities. They are increasingly spreading out to various provinces across the country, as seen by the growing number of Chinese nationals in different areas, actively seeking opportunities to open businesses and engage in trade.

Concerns Over the Rise of "Gray" Chinese Investments in Thailand

Another concern surrounding the influx of Chinese investment in Thailand is the entry of "gray" Chinese capital, which is not always legitimate. 

These gray Chinese networks are typically involved in businesses such as zero-dollar tours, entertainment establishments, online gambling, real estate, call-centres, zero-dollar transport, counterfeit goods production, illegal money lending, and illegal visa services. 

The revenue generated by these businesses does not benefit Thailand, as it is primarily sent back to China.

This concern is echoed by various sectors, and as Thailand moves into 2025, the full impact of Chinese investments on the country's economy remains uncertain. 

While some businesses may be registered and pay taxes in Thailand, the overall financial benefits may not stay within the country, as much of the revenue is funneled back to China. 

The most concerning impact is on small Thai entrepreneurs, who will face increasing difficulty in competing in a fully liberalized market.