Perfect time for Thailand to jump in as European firms leave China: TNSC
Thailand should take advantage of the current trend of European firms moving out of China, by negotiating more free trade agreements (FTA)s with European countries.
Chaichan Charoensuk, chairman of the Thai National Shippers’ Council (TNSC), said on Friday that a survey had found that most European firms found doing business in China tough due to political interference.
The survey was conducted by the European Union Chamber of Commerce, and 55% of its 570 members said doing business in China is not as “attractive” as in the past. The firms also do not expect the situation to improve in the next five years.
“The survey found that 10% of European businesses have already withdrawn from China, and some 20% are planning to shift their regional offices to Singapore or Malaysia,” Chaichan said.
He added that the main reason for this is the US-China trade war, which is indirectly affecting China-based EU manufacturers who rely on supply chains and markets in the US.
The trade war escalated in 2019 when both China and the US began employing protection measures in key industries like semiconductors, batteries for electric vehicles, minerals and pharmaceuticals, he said.
TNSC reckons that in the initial phase of European companies moving out of China, some Thai exporters who supply raw materials like rubber and plastic pellets will be affected.
“However, once the companies settle in other countries like India, Vietnam and Indonesia, the supply chain will be re-established and Thailand will benefit greatly from FTAs with European countries,” he said.
Furthermore, he said, Thailand should also use this as an opportunity to replace the EU as a supplier of raw materials to China, especially in the automotive, petrochemical, and electronic industries.
Last year, trade between Thailand and China rose 1.53% year-on-year to 3.69 trillion baht, accounting for nearly 18% of Thailand’s overall trade and making China the Kingdom’s top trading partner.
Amid the global economic slowdown, the International Monetary Fund (IMF) estimates that China’s economy will bounce back this year with an estimated GDP expansion of 4.5-5.2% in 2024, signalling fast growth since the pandemic.
