Chinese auto makers set up plants here

Despite the slowdown in the automobile industry, Chinese businesses are establishing factories in Thailand to make right-hand-drive vehicles for the Asian market.

They also see Thailand as a promising market. 

Kasikornbank is offering a business-matching service for Thai auto-parts producers and Chinese auto-makers with a target of at least Bt500 million in sales over the next year. 

Patchara Samalapa, executive vice president of KBank, said yesterday that the Thai auto industry recently exhibited rapid growth of 30-40 per cent largely because of the government’s first-car-buyer programme. 

Although that programme has ended, the industry continues to see growth of 10-15 per cent. Operators have responded by installing new machinery, leaving them with excess capacity.

Despite a local-content requirement of at least 40 per cent, Chinese operators are confident enough in Thai firms’ ability to produce their vehicles and high-quality parts to make this country their production hub for right-hand-drive vehicles for Asia and Australia.

Besides creating opportunities to expand markets for both local producers and their Chinese counterparts through match-making, KBank offers support in the form of trade financing for Chinese auto producers and credit-limit increases for small and medium-sized enterprises to expand capacity and sales. 

Three Chinese companies are participating in business-matching meetings – SAIC Motor-CP Co, Dongfeng Automobile (Thailand) Co and Brilliance Auto International Trade Corporation. These top brands produce passenger cars, small trucks and vans. On the Thai side are at least 30 companies with high market potential and products in demand among Chinese producers.

Pipat Aneaknithi, another KBank executive vice president, said that at least 40 of the 82 car producers in China were joint ventures with foreign investors. The other 42 are local. 

Under the JVs, Chinese manufacturers have been able to develop and produce local-brand vehicles that have entered international markets. Their government’s policy 

to support overseas investment plays a key role in expansion abroad. 

In Asean, Thailand, Indonesia, Malaysia, the Philippines and Vietnam show the greatest growth potential as production bases for Chinese operators.

According to the Thai Automotive Institute’s 2012 report on car manufacture and distribution in Asean, Thailand topped the list with 2.5 million units, reflecting the country’s complete supply chain with international manufacturing standards. 

Chinese auto companies can be assured that their vehicles made in Thailand will be recognised and trusted abroad, the report said. Zero- duty treatment as well as sharing borders with several upcoming markets will also make Thailand an efficient distribution centre for Asian markets.