The influx of Chinese industrial products into Southeast Asia is dealing a blow to Thailand's trade, reducing its market share in the region and leading to a trade deficit with China worth nearly US$20 billion, says the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB).
The entry of Chinese online retailer Temu into Thailand is expected to worsen the situation, causing the Federation of Thai Industries (FTI), a key member of JSCCIB, to call on the government to impose more tariffs on some imported products.
"If the government has no new measures to better protect Thailand against Chinese products, more companies are likely to shut down," said Payong Srivanich, chairman of the Thai Bankers' Association, who chaired the JSCCIB meeting on Wednesday.
From January to June, imports of Chinese products increased by 7.12% year-on-year, with a value of $37.5 billion, leading to a trade deficit of $19.9 billion, a year-on-year increase of 15.6%.
In Southeast Asia, the market share of Thai electrical appliances fell to 11.5% in the first quarter this year, down from 12.7% year-on-year, while the market share of Thai-made cars fell to 18.7% for the period, dipping from 20.9% year-on-year.
These were key factors causing the Thai manufacturing sector to decrease by 1.8% in the first half of 2024 year-on-year, said Mr Payong.
The situation affected 23 industries in Thailand, which face even more pressure following the entry of Temu, which directly sells low-cost products from factories to customers.
Local small and medium-sized enterprises are most exposed to the negative impact, he said.
During the first half of this year, some 667 factories shuttered, a year-on-year increase of 86.3%, said Kriengkrai Thiennukul, chairman of the FTI.
"The average is 111 factories closing per month," he said.
Mr Kriengkrai said based on the rules of the Asean-China free trade agreement, the government must consider applying tariffs to some products to better protect local manufacturers.
"We are concerned that the state's ongoing efforts to slow the import of products from China will not be enough to protect Thai businesses," he said.