China's transition in 2012-13 and its impact on Thai business

This was the last meeting of the incumbent leadership and will pave the way for a transition at the five-year congress later this year.
China knows that maintaining its economic momentum is essential and that the policies and direction to come out of the March annual meeting will also affect its partners’ economies and businesses. For businesses in Thailand, the meeting’s deliberations offered some promising signals.
Thai businesses in the consumer industry could stand to benefit. The government indicated at the meeting that it would take a greater focus on raising incomes this year – shifting the economy from one driven by investment and exports toward one driven by stronger domestic consumer demand.
Thai consumer businesses should work harder than ever to immediately grow and consolidate their market presence. Electronics-parts manufacturers, for example, should already be looking at expansion plans to support greater demand for consumer electronics in the latter part of this year and into 2013.
Similarly, I believe food franchises and product brands are set for some significant sales growth. Early-to-market positioning will be of supreme importance for future growth.
The meeting also heard that officials were building the basics of a national health insurance network. This presents opportunities for Thai businesses in the medical devices or pharmaceutical manufacturing industries. Hospital and medical-care providers could also look to branch out into China, expecting to benefit from greater government support and consumer incomes.
Thai companies wanting to increase their inward foreign investment base should look toward China, which in recent years has been one of the fastest-growing sources of FDI for Thailand. Chinese investors will also be encouraged by the announcement that China’s current leadership will ease controls on overseas investment by its citizens.
As indicated in my articles in recent months, the Chinese government has renewed its commitment to developing its high technology and green industries. This will be supported by the recently established green energy think tank, the China National Renewable Energy Centre. Thailand should consider how it could capitalise on what China is doing as well as continue to aggressively pursue its own green energy goals through the support of green businesses. Alongside countries such as China, Thailand has the opportunity to lead the world into a new, cleaner industrial age.
Historically, new leadership is often keen to establish a strong start. This may indicate that we will see a pick-up in growth policies towards the end of this year and into 2013. In the meantime, and to support further growth at the beginning of the new cycle, I believe the government will continue to focus on social stability and sustained economic growth as key drivers – helping to create more opportunities for Thai businesses dealing with China.

For more columns in this series please see
www.bangkokbank.com