Chinese mall 'a threat' - Small firms and markets challenged

[StrontiumDog]

http://www.bangkokpost.com/business/...-mall-a-threat

Chinese mall 'a threat'

Small firms and markets challenged

• Published: 20/01/2011 at 12:00 AM
• Newspaper section: Business

The entry of a Chinese mega-mall has raised huge concerns that cheaper goods and strong financial support from China will hurt small Thai businesses throughout the supply chain from manufacturing to wholesale centres and community shops.

Shoppers stroll through the bustling Sampheng market (left) in Bangkok’s Chinatown and the newer Platinum Fashion Mall in the Pratunam area. Merchants are already voicing concern over a planned Chinese mega-mall that threatens to offer cheaper prices.

China City Complex, a 45-billion-baht investment by the Yunnan-based state enterprise Ashima Yunnan Cultural Industry Group, was launched with great fanfare on Tuesday. It will include Thai-China International Products City, Thailand's biggest wholesale centre for consumer and lifestyle goods, with 2 million square metres of retail space on Bang Na-Trat Road. Its first phase will open in October next year.

A huge influx of cheaper Chinese goods could defeat local producers, especially Thai SMEs with weak financial status, said Manapol Poosomboon, a vice-chairman of the Federation of Thai Industries.

"Chinese manufacturers have large economies of scale of their production and thus lower production costs per unit than Thai small enterprises," he said.

As well, he said, the Thai government lacked effective measures to control the quality of imported goods.

Thailand has no permanent distribution centre for local SME products on the scale of the Thai-China International Products City.

"I am afraid that cheaper Chinese products will be legally imported to Thailand once the Bang Na centre is opened, together with Chinese sellers. Currently, Chinese imports are brought in by Thai traders," he said. "This will definitely allow them to gain a higher market share in domestic market."

There is also no guarantee that the Chinese developer would offer cheaper space for Thai enterprises as it promised on Tuesday, and conditions for selecting Thai vendors were not clear, said Mr Manapol.

"This is definitely going to be another disaster for Thai retailers which have suffered from a large invasion of western retail giants like Tesco Lotus," he said.

Suchai Pornsirikul, chairman of the Thai Textile Merchants Association, added: "We don't mind foreign investment, but more study is needed to measure its actual benefits to local businesses, consumers and the country.

"Worse prospects are anticipated if [Chinese traders] are allowed to import products and use Thailand as a distribution centre without proper inspection. Thailand's image could be hurt."

Mr Suchai's association dates back to 1961 when it was founded by a group of traders at the Sampheng wholesale market in Bangkok.

The Thai Textile Industry Federation, which represents seven textile and garment industries, will meet today to discuss the impact of the project.

An industry source said there was a report that the Indonesian government had turned down a similar proposal by Ashima Yunnan Cultural Industry Group, which resulted in the Chinese investor shifting to Thailand.

Vallop Vitanakorn, vice-chairman of an FTI committee on industrial development, forecast an immediate impact on the Thai garment sector since local producers would rather source Chinese materials.

However, the impact could be much broader and cover a whole range of consumer products including gifts, household items, electrical appliances, leather, footwear and food.

Local products with established brands will also face competition from Chinese brands.

"Given Chinese marketing techniques, I would question our ability to compete within the next three to five years," said Mr Vallop.

But the export sector could see some upside as producers would have a wider range of materials.

Jirabool Vittayasing, secretary-general of the Thai Lifestyle Products Federation, expects the Chinese complex will dominate the domestic market.

"Many shoppers would turn away from local wholesale centres such as Platinum, Sampheng or Baiyoke, but would rather go to the new mall to hunt for cheaper goods, and then Thai wholesalers will be hurt and die off," he said.As well, lifestyle products could be copied more quickly, posing a further threat, he said.

Mr Jirabool urged the government to consider some non-tariff barrier measures to help protect local industries. And if some Chinese products from the distribution centre are sold locally, they should pay taxes just as Thai products do.

[Two cents]

Lots of stuff at Big C and Lotus come from China as it is. I'd bet half or more of Thailand's non-food products in the retail stores come from China.

[Humbert]

The people buying and selling the stuff are Thai nationals. It is they who are profiting so who is suffering? The Federation of Thai Industries needs to wake up and smell the coffee.

[hazz]

Well nobody forced Mr thaksin to give the worlds most competitive economy tariff free access to the thai market. I'm just surprised its taken china this long to take advantage of this.

[The Bold Rodney]

Of course one couldn't possibly believe for a minute that Elite Thai-Chinese connections could have any influence over "tarrif free" imports from China being allowed to continue in Thaialnd?

[Mid]

mega-mall

????

https://teakdoor.com/business-finance...-thailand.html

[taxexile]

"Given Chinese marketing techniques, I would question our ability to compete within the next three to five years," said Mr Vallop.

.. and given thai marketing techniques, such as high prices, no discounts, selling goods beyond their sell by date, a strictly enforced policy of no refunds even for damaged goods, higher pricing for foreigners and opposition to any form of competition to their grubby little cartels i would say mr. vallop is spot on with his analysis

[DroversDog]

The Chinese-Thais are worried that their cousins will out compete them. This is something to sit back and watch with amusement. The Thais do everything to protect themselves from competition from the west and forget their northern cousins are the ones with a greater ability to swamp their markets.

[dirtydog]

I reckon about half the fruit my girlfriend buys is not from Thailand, much of it is from China, but also New Zealand and Australia, and it has nothing to do with price, just that it tastes better, probably a lot less poisonous chemicals aswell.

[sabang]

Thailand's image could be hurt.

LOL.

[hazz]

Of course one couldn't possibly believe for a minute that Elite Thai-Chinese connections could have any influence over "tarrif free" imports from China being allowed to continue in Thaialnd?

I think tariff free access for china as to have been one of the worst decisions that taksin ever made for thailand, although probably a good one for him no dought.

If they try to re-impose the tariffs they are going to piss off a super power that's just a little drunk on its new status. I'm not sure that thailand's in a position to take the costs of pissing them off. And I can imagine that other trading blocks are going to start getting very arsey about getting the same treatment as china for their imports. Thailands in a rock and hard place with this, its going to be interesting to watch