Influx of imports hurting domestic industry

The Nation has published an article noting that the Thai government has stepped up efforts to prevent an influx of imported goods from flooding the Thai market, which has caused a continuous decline in manufacturing capacity over the past four quarters. Caliber.Az reprints the article.

The Commerce Ministry aims to shield Thai manufacturers from damage and its efforts to strengthen and address non-compliant imported products, primarily from China, are nearing completion.

Thailand's industrial output for both export and domestic consumption has been on a decline for the past several quarters.

The industrial sector has expressed concerns about the dwindling production capacity and output, particularly in products intended for the domestic market. They are demanding that the government enforce stricter measures governing imported products.

Ronrong Poonpipat, director-general of the Department of Foreign Trade, noted that various products are entering the country from all over the globe, not just China. The Commerce Ministry does not have the authority to ban imports, he added, but business operators observing adverse effects or damages to the industry, can file complaints. Procedures including anti-dumping measures will be imposed to counter market manipulation.

Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI), said that a significant influx of low-priced products entered the market this year due to the fragile global economy and slow recovery in purchasing power, resulting in stagnant demand in the global market. Concurrently, the production capacity remained consistent, leading to an excess of products from various global sources inundating the ASEAN market, including Thailand. As a result, these imported products became more affordable than domestically manufactured goods.

This trend is most notably evident in the steel products sector due to reduced global construction and usage demands. Steel products from China, Japan, and several European countries have flooded the Thai market, impacting the local steel industry. The steel industry's production capacity is currently about 20% lower than the average production capacity of all industries, which stands at 59%.

The government aims to intensify measures to protect the local industry, such as implementing control standards and other safety standards to handle unrestricted imports. Each country has different measures to limit the entry of these products. Without proper government interventions, convenient access for foreign products can significantly impact the local manufacturing industry.

More than 20 industries have expressed concern at substandard low-priced products from foreign sources, whether legally imported, smuggled or counterfeit. These products are generally priced 10-20% lower than domestically produced goods, such as in the case of unregulated imported pork flooding the retail market.

Chinese products have significantly impacted Thailand, especially in the e-commerce sector. China has become a major investor, dominating significant market shares. For instance, Ali Baba, a large Chinese player in the e-commerce sector, operates Lazada, Thailand's primary e-commerce platform, and manages one of the largest warehouses in Southeast Asia in Thailand's Eastern Economic Corridor (EEC).

This dominance by Chinese products has heavily influenced consumer goods in Thailand.

Pawoot Pongvitayapanu, CEO of Pay Solution and founder of TARAD.com, highlighted the continuous influx of Chinese products facilitated by the ease of transportation systems from China to Thailand. Additionally, the use of tax-free zones allowed imported Chinese goods to be more competitive than locally produced goods, ultimately impacting market dynamics.

The adaptation to compete with Chinese products does not rely on price competition alone, but also on enhancing post-sale services and adding value to the products. Thai businesses can outshine their foreign competitors by providing customer-centric services and fulfilling their needs, distinguishing themselves from Chinese products.

Thanawat Malabuppha, CEO and co-founder of Priceza, and honorary president of Thailand’s E-Commerce Association, noted that although this issue is not new, it is becoming more pronounced in the e-commerce industry. The current situation demands attention and a strategy to manage this influx, which will likely continue and indeed intensify in the future, with platforms like TikTok boosting the sale of Chinese goods.

News reports suggest that Chinese products constitute over 80-90% of the e-commerce market in Thailand, indicating a potentially greater surge in e-commerce transactions involving these goods.