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Southeast Asia grapples with challenges from a surge in affordable Chinese imports
Countries are striving to attract Chinese investment while tackling unfair trade practices in a way that avoids direct confrontation with China.
Chinese products have been raising concerns among different local businesses in countries across the SEA region. This is due to the competitive pricing and large-scale production capabilities of Chinese manufacturers, which often challenge local industries. Additionally, concerns about product quality, intellectual property rights, and market saturation have further fueled debates among stakeholders in the region.
Key takeaways
- Southeast Asian nations, such as Thailand, are facing challenges in competing with a surge of affordable Chinese imports, which are affecting local manufacturers and businesses.
- Thailand and its neighbors are implementing measures like stricter import inspections, tariffs, and bans on e-commerce platforms to protect domestic industries.
- Countries are striving to attract Chinese investment while tackling unfair trade practices in a way that avoids direct confrontation with China.
Thailand, in particular, is feeling the pressure, with local manufacturers struggling to compete. Rising production costs, coupled with an influx of cheaper imports, have placed immense strain on domestic industries. Additionally, the rapid pace of technological advancements has left many local businesses scrambling to modernize their operations to remain relevant in the global market. As a result, policymakers are being urged to implement measures that support local manufacturers, such as subsidies, tax incentives, and investment in workforce training, to help them regain their competitive edge.
In 2022, bilateral trade between Thailand and China exceeded $126 billion, with significant Chinese investments bolstering the Thai economy. Yet, this relationship comes with challenges.
Thailand’s manufacturing sector, one of the country’s economic pillars alongside agriculture and services, has been hit hard.
Data from the Department of Industrial Works reveals that 2,000 factories closed in 2023, resulting in significant job losses.
Local businesses have long criticized the impact of cheap Chinese imports. The effects are evident at Bobae Shopping Mall, a popular retail and wholesale market in Bangkok. Many shops remain closed despite the peak holiday shopping season.
Banchob Pianphanitporn, owner of Ben’s Socks, has been in business for 26 years but has seen sales decline by 50% over the last decade due to competition from Chinese imports.
Pianphanitporn explained that he sells socks for 150 baht ($4.38) per dozen, but Chinese products go for 85 baht ($2.48). He added that customers often choose the cheaper option, overlooking the superior quality of his products.
In response, Thai authorities have implemented stricter inspections on imports and introduced a 7% value-added tax on goods priced below 1,500 baht ($43.77).
Government data indicates a 20% reduction in low-quality imports since July, but many local merchants remain unconvinced of significant change. While officials attribute this decline to stricter import regulations and enhanced quality checks, merchants argue that the market is still flooded with substandard goods. They claim that the visible impact on consumer trust and product availability remains minimal, raising concerns about the effectiveness of the new policies.
Other Southeast Asian nations face similar challenges. Indonesia has proposed a 200% tariff on some Chinese clothing and ceramics, while India is considering a 25% tax on steel imports to protect local producers.
Meanwhile, Vietnam recently banned Chinese e-commerce platforms Shein and Temu for failing to comply with business registration laws.
Experts suggest countries like Thailand and Vietnam are looking to attract Chinese investment for local production, creating competitive ecosystems without directly challenging China’s trade practices.
As Southeast Asia adapts to the economic dominance of its largest trading partner, the balance between cooperation and competition remains delicate.
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