A renewed US-China trade war is putting Thai small and medium-sized enterprises (SMEs) at risk as the dispute between the world’s largest economies will intensify the influx of cheap Chinese products into the Thai market, says the Federation of Thai Industries (FTI).
Local manufacturers are not only concerned about the impact of stiff US tariffs on imports from Thailand, but also reduced sales as the country is flooded with Chinese imports.
“Chinese goods are 20-40% less expensive than Thai goods,” said ML Peekthong Thongyai, vice-chairman of the FTI, referring to a recent FTI poll.
A total of 45% of 540 executives and members of the FTI said that this price gap was noticeable when Thai and Chinese products are compared. Some 21.1% of respondents said Chinese imports were only 10-20% cheaper.
Chinese entrepreneurs have the advantage of lower costs and better technology, said ML Peekthong.
He said that as the US-China trade war simmers, Chinese companies are expected to reroute their shipping to Southeast Asia, including Thailand, from the US.
Trump announced last week that he was imposing an additional 34% tariff on imports from China to the US, causing Beijing to reciprocate with a 34% retaliatory tariff on US goods earlier this week.
That response then prompted Trump to impose a total of 104% in duties on goods from China.
Companies in China need to seek new markets and Southeast Asia is an expected target, said ML Peekthong.
Chinese firms cannot rely much more on domestic sales because there is a glut of products, he said.
Seventy-one percent of the respondents to the FTI survey believe Thai companies, especially SMEs, will lose market share to Chinese imports.
A full 62% want the government to tighten legal measures to better protect local sellers, followed by enforcing the 1999 Anti-Dumping Act (44.6%) and reviewing tax-free zone criteria (39.6%).
Manufacturers operating in a tax-free zone are not subject to duties when importing machines or raw materials for use in the zone.
Respondents also voiced support for Thai entrepreneurs using high-quality and eco-friendly materials to add value to their products (54.6%), followed by greater use of technologies (52.4%) and improving standards of finished products (44.3%).