With companies in China looking to expand globally and diversify beyond the mainland, Thailand’s large domestic market and strategic location in the heart of Southeast Asia make it a natural target for foreign direct investment (FDI).
Thailand is the second largest economy in ASEAN and the fact that it shares land borders with four other countries – namely, Malaysia, Cambodia, Myanmar and Laos – makes the country a good choice as a hub for Chinese multinationals to do business throughout the region.
In addition, Thailand is an attractive option for Chinese manufacturers to set up facilities in. While labor and factory overhead costs are higher in Thailand, natural resources and the need to be closer to export markets in ASEAN are enough to draw investment.
Xu Gen Luo, chairman of Thai-Chinese Rayong Industrial Realty Development, said that with rapid development in China, businesses in the country have been trying to integrate more with the global economy.
“China is a young country whose modernization and industrialization progress has taken place for only 30 years. It takes time for Chinese companies to improve and strengthen themselves first before expanding their business into global markets”, said Xu.
Over one thousand Chinese-owned businesses now operate in Thailand. These are mostly in the manufacturing and infrastructure sectors, but cover all industries.
China is also the largest importer of Thai products, and Chinese FDI in Thailand totaled over US$1.1 billion in 2014. The two nations have a goal of achieving over US$100 billion worth of bilateral trade in 2015.
The countries have much to offer each other. China will see its sphere of influence grow along with its economic might. As China invests and trades with other countries, diplomatic ties improve and there is space to negotiate terms such as settlement in Yuan.
Likewise, foreign investment will increase Thailand’s competitiveness and give it an advantage over its neighbors. This is more important than ever with the ASEAN Economic Community coming into effect at the end of 2015.
“We are looking forward to the ASEAN Economic Community (AEC)” said Xi, saying that the ten countries in Southeast Asia could mutually complement each other in terms of capital, resources, labor and trade.