Thailand’s large domestic market and strategic location in the heart of Southeast Asia make it a natural target for foreign direct investment (FDI). Chinese companies have increasingly started to invest in Thailand as their own manufacturing sector slows down.

As the second largest economy in ASEAN, Thailand’s position makes the country a good choice as a hub for Chinese multinationals. Bordering four other countries (namely Cambodia, Myanmar, Malaysia, and Laos) makes having a base in Thailand ideal from a logistical standpoint.

In addition, Thailand is an attractive option for Chinese manufacturers to set up facilities in. Labor and factory overhead costs are higher in the country, but businesses don’t seem to care. Thailand’s proximity to other export markets is enough of a boon for these international firms to overlook higher costs.

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.

 

Chinese Financed Rail in Thailand

China has recently made an agreement to finance several different rail projects in Thailand.

 

Chinese Companies Invest in Thailand More Than Ever

Over one thousand Chinese-owned businesses now operate and invest 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 in 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.

 

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's experienced with trading stocks and buying property in Thailand, Cambodia, and elsewhere. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

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