A “tsunami” of cheap Chinese imports to the Thai market is impacting local businesses, causing them to lose market share due to the price competitiveness of Chinese goods, potentially leading to factory closures and economic strain within the Thai manufacturing sector.
The Thailand administration had announced measures to combat the inflow of cheap Chinese goods, which is problematic for the country’s manufacturing sector, the Voice of America reported on Thursday.
The Bangkok Post reported on August 28 that Thailand’s deputy prime minister and minister of commerce, Phumtham Wechayachai, said the government would set up a task force comprising 28 agencies that would meet every two weeks to review and revise regulations to curb the threat of cheap Chinese imports to the already weak economy.
In a statement issued previously, the Federation of Thailand Industry had warned that the cheap Chinese goods entering the country’s economy could cause a “tsunami” in Thailand and the surrounding region. According to the VOA report, from 2023, the low-cost imported products had resulted in the closure of around 2,000 factories.
Pavida Pananond, a professor of international business at the Thammasat Business School at Thammasat University in Thailand, mentioned that all low-priced Chinese goods or Chinese capital are often concentrated in Thailand’s e-commerce and electric vehicle industry. Although these Chinese investments may have increased foreign direct investment in Thailand. But it has also made it difficult for many smaller local enterprises to survive.
“Right now, the Chinese are facing restrictions on their products in many markets. So, it is natural that we are seeing the Chinese products targeting more emerging markets, particularly in Southeast Asia. So, those sectors would be at risk of having direct competition from the Chinese, cheaper products. And I think in the longer term, there also is more impact on the Thai economy,” Pananond added during a Zoom interview given to VOA.
An estimate by the Thailand Economic and Business Research Center predicted that the Thai economy will grow by 2.6 per cent this year because of tourism and exports; however, the economy would also witness a downfall in the manufacturing sector. Reportedly, for the first half of 2024, Thailand’s industrial output decreased by 2 per cent compared to the same period last year.
The Chinese e-commerce platform ‘Temu’ entered Thailand in July. However, observers continue to remain worried that cheap Chinese goods through such mediums would flood Thailand’s market. Platforms like Temu will lead to unfair competition, supply chain disruptions, and rising unemployment, the VOA report claimed.
Additionally, Srettha Thavisin, Thailand’s former prime minister, previously asked authorities to investigate whether Temu has complied with the relevant Thai regulations and paid its due tax.
Nisit Panthamit, director of ASEAN Studies and an associate professor at the Faculty of Economics at Chiang Mai University in Thailand, also raised concerns by saying, “If you buy it from China, you have to wait for so long to get that item. But the local products are easy to find in the market. Now, after more goods are coming in from the new Chinese companies, that’s why the SME (Small and Medium- Enterprises) might be heavily impacted.”
He further added that some basic Thai products may be replaced in local markets by inferior Chinese-made replacements.
He also claimed that by the end of 2024, there will be a 10 per cent to 20 per cent drop in the sales and consumption of local Thai products because of competition from more Chinese-made goods.
A recent report by The New York Times noted that Thailand’s auto industry, traditionally dominated by Japanese car manufacturers, is changing. In recent years, Chinese electric vehicles have entered the Thai market, which has resulted in local auto factories being closed and some suffering from price soaring, economists in Thailand say.
Meanwhile, China defended itself against accusations of flooding markets in Thailand and said that the trade between the two countries was “mutually beneficial and win-win.”
Chinese Embassy in Thailand in a statement said, “Almost 80 per cent of the goods that Thailand imports from China are capital goods and intermediate goods that are used for production and added value before being exported,” the statement said.
Most of the so-called cheap goods “are products used in daily life, 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.
(With ANI Inputs)
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