Photo credit: Nutthawat Wichieanbut
The surge of Chinese industrial products entering Southeast Asia is negatively impacting Thailand’s trade, resulting in a diminished market share in the region and a trade deficit with China nearing US$20 billion, according to the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).
The arrival of the Chinese online retailer Temu in Thailand is anticipated to exacerbate the situation, prompting the Federation of Thai Industries (FTI), a significant member of JSCCIB, to urge the government to implement additional tariffs on certain imported goods.
“If the government fails to introduce new measures to better protect Thailand from Chinese products, more companies may be forced to shut down,” warned Payong Srivanich, chairman of the Thai Bankers’ Association, who led the JSCCIB meeting on Wednesday.
From January to June, imports of Chinese goods rose by 7.12% compared to the previous year, totaling $37.5 billion and contributing to a trade deficit of $19.9 billion, reflecting a year-on-year increase of 15.6%.
In Southeast Asia, the market share of Thai electrical appliances declined to 11.5% in the first quarter of this year, down from 12.7% year-on-year. Similarly, the market share of Thai-manufactured cars dropped to 18.7%, down from 20.9% year-on-year.
These trends were significant factors leading to a 1.8% contraction in the Thai manufacturing sector in the first half of 2024 compared to the previous year, according to Mr. Payong.
The situation has impacted 23 industries in Thailand, which are feeling intensified pressure following Temu’s entry, as the platform sells low-cost products directly from factories to consumers.
Local small and medium-sized enterprises are the most vulnerable to these adverse effects, he noted.
In the first half of this year, approximately 667 factories closed, marking an 86.3% increase year-on-year, as reported by Kriengkrai Thiennukul, chairman of the FTI.
“The average rate is 111 factory closures per month,” he added.
Mr. Kriengkrai stated that, under the rules of the ASEAN-China Free Trade Agreement, the government should consider applying tariffs on selected products to better safeguard local manufacturers.
“We are concerned that the government’s ongoing efforts to curtail imports from China will not sufficiently protect Thai businesses,” he said.
