Red flag raised on Chinese products in Thai e-commerce

By The Nation

 

 

E-commerce accounted for only 3 per cent of Thailand's total trade, but the country is one of the main markets of Chinese e-commerce giants as Thai consumers are more likely to shop online while Chinese products are popular in the country.

 

One of the reasons Chinese products keep flowing into Thailand, aside from their cheap prices, is the government's policies such as the Eastern Economic Corridor project (EEC) and tax privileges. The government wants to attract capital from foreign countries, it also allows foreign products, especially from China, to enter the country easily.

 

Government measures sought

 

Pawoot Pongvitayapanu of the Thai e-Commerce Association, who has been in the e-Commerce business for years, said Chinese e-commerce investors, especially those in the ECC are now allowed to invest in infrastructure. Previously, foreign companies set up factories and hired local operators while Chinese investors rented space in Thailand to stock export products under the Free Trade Zone agreement for distribution in country and other Asean nations. 

 

Pawoot said he recently had a talk with Kanit Sangsubhan, secretary-general of the EEC Office, and was told that the EEC office is planning to send more Thai products to the Chinese market which will benefit Thai manufacturers. 

 

He said the Revenue Department is adjusting the tax structure on foreign products sold in Thailand. They will be taxed from the first baht. The prices of goods ordered from abroad will be collected 7 per cent VAT from the first baht. If Thailand doesn't have any protective measure against the invasion of foreign goods online, the country will see a trade deficit with China, affecting a wide range of retail businesses nationwide including the production sector

 

Chinese products top market

 

Chinese products account for 60 to 70 per cent of sales on Thai e-commerce platforms and 20-30 per cent in total sales to foreign countries.

 

“I collected data from Lazada website on October 11, divided by category and origin of the product, and found that there were 41.77 trillion products on Lazada, comprising 21.99 trillion of domestic products or 52.65 per cent, and 18.65 trillion of Chinese products or 44.65 per cent, which was a significant share while not many products from other countries were available,” said Pawoot.

 

Some categories have a large numbers of Chinese products such as shoes, watches, luggage, sports equipment. There are 60-70 per cent of Chinese products in the infant, smart device and toy categories. Among IT products or gadgets, especially on Lazada, products from China account for over half of the total. 

 

After the opening of ECC, these products will be distributed more quickly.

 

However, consumers will pay less. What will be missing is the middleman who buys Chinese products for sale. The first batch of products to be affected are gadgets manufactured in China which carry cheaper prices since they come directly from the factory. There is also a dark side as fake items have been found among cosmetic products.

 

Thailand may lose Bt50 billion

 

"When China has a direct delivery channel and dumps millions of products into Thai hands in just a few days. I personally predicted that this year, Thais will order products through Lazada worth over Bt1 billion. By 2020, it is expected to be over Bt10 billion, or with an average growth rate of 30 per cent per year, and within 5 years, Thais will buy Chinese products through Lazada up to Bt50 billion," Pawoott said.

 

For Thai traders, the chance of competition is rather small. Entrepreneurs must try to look for other products and create their own brand in order to compete with these Chinese products.

 

Entrepreneurs should adapt

 

At the same time, Thai businessmean should not rely on any platform but balancing ports and analysing for positive channels. They also need to self-collect customer information and start marketing with those customers without going through anyone, be it marketplace or social media. The merchant should own channels which he can manage hinself. 

 

Thai e-commerce is currently growing although E-Market Place in Thailand has died since nobody can fight Lazada or Shopee. However, there is still another segment that still has potential, living on the side of social commerce - Merchants who sell and interact with customers on Facebook and LINE. Looking deeper into certain categories such as supplements, consumer products, or beauty products, Chinese products have not penetrated the market yet because of certian problems with the FDA.

 

Research found that Thailand is the leader of the social e-commerce market, with a 40 per cent growth rate a year, outpacing all nations in the world. 

 

Thanawat Malabuppha, president of the Thai E-Commerce Association, said the Thai online market grew 30 per cent a year, with an annual value of Bt200 billion.

 

According to Priceza, a shopping search engine, SMEs and start-up business should penetrate into the online market which are social media 40 per cent, E Market Place 35 per cent, and E-Tailers or Brands website 25 per cent, with the most popular products being maternal and child products, health, beauty, fashion, clothing and electronic products, among others.

 

Borderless online commerce will begin to play a major role which could be seen from the number of Chinese products. According to data from three marketplaces in Thailand, this year the number of products has increased by 174 million per cent, with 77 per cent in Chinese products.

 

Control on Chinese products

 

Online traders need to know that at present, 80 per cent of the competitors of the same product are not based in the country, so there must be a direct way to sell products to customers while the Customer Lifetime Value (CLV) market is still developing. Currently, the Indonesian market is as attractive as Vietnam since it is a big market but a local partner is needed. 

 

Startups that invest in new products will find it difficult to compete amid the invasion of Chinese product. They must have a clear strategy for certain group. At the same time, the government should have measures to prevent Chinese goods from spilling in including encouraging startup investments, such as exempting tax for small traders.

 

"The e-commerce market has grown a lot since it's easy to access and fast. The most popular products are fashion, beauty, electronics devices, and smartphones. The only concern is the overflow of products from China. The government must take action and protect entrepreneurs before drowning in Chinese products" Pawoot said.

 

Source: https://www.nationthailand.com/business/30379814

 

-- © Copyright The Nation Thailand 2019-12-26

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3 hours ago, webfact said:

Red flag raised on Chinese products in Thai e-commerce

That is too funny. Red Flag with 5 stars on it they might mean. They must be joking!

3 hours ago, webfact said:

There is also a dark side as fake items have been found among cosmetic products.

You think?

4 hours ago, webfact said:

The government wants to attract capital from foreign countries, it also allows foreign products, especially from China, to enter the country easily.

Hear that, Donald. Thailand tariffs American goods and lets them sit at the nosebleed level, while letting the Chinese dump their stuff for nothing.

The thing is simple Thais want to put up barriers to protect their own country. Too bad its the consumers missing out as they will have to pay higher prices.

 

Thais just need to innovate to compete, i like globalization it helps consumers. Thais just need to make better and cheaper products to compete. If they cant then they are wrong. 

 

Barriers should only be set up if companies are subsidized by the state.

 

People buy <deleted> products as better products from the west are taxed too high. The ones who suffer are consumers.

The EEC Trojan horse is finally understood.

 

Lazada and Shopee own Thailand eCommerce and will completely dominate eCommerce in Thailand funded and supported by Alibaba money and access to products.

 

2020 will be a really interesting year for Thailand...on many levels.

 

 

 

21 minutes ago, robblok said:

People buy <deleted> products as better products from the west are taxed too high. The ones who suffer are consumers.

Wrong! The ones that suffer is the environment since the crappy low quality products will end up in the bin soon and get burned or buried into thai soil/air.

1 hour ago, robblok said:

The thing is simple Thais want to put up barriers to protect their own country. Too bad its the consumers missing out as they will have to pay higher prices.

Thai ministers put up barriers to protect Thais from European products to ensure domestic goods sell in the market place, Chinese goods are allowed to be traded here at reasonable prices to keep the lower price ranges available to the masses, consumers are not really missing out on anything, they like cheap & cheerful !

I frequently use Lazada, Shopee, and ShopAt24 to get around Thailand's heinous Monopoly Distribution System that 'rewards' buyers with limited choice and double-priced consumer goods.  I'm sure that as online shopping becomes more mainstream here that the vertical Tsunami of brown envelopes will guarantee more restrictive anti-competitive laws, just like the current laws banning used car and motorcycle imports... for emissions, no less! ????

 

Get ready for T. I. T. 2020 folks... or should I say T. I. T. 2563. ????????????

Edited December 26, 20196 yr by Jimbo in Thailand

Unlike Russia in the Crimea, China does not have to invade anyone. An E invasion is

more effective. Way to go China, Thailand is just another pawn..

Geezer

With the Thai economy reeling from the strong Baht—western products get the cold shoulder, while ChiCom products get a warm embrace.  And when you consider China’s Belt & Road initiatives—you begin to see how ChiComs seek total domination over SE Asia.

2 hours ago, fruitman said:

Wrong! The ones that suffer is the environment since the crappy low quality products will end up in the bin soon and get burned or buried into thai soil/air.

Agreed, there is that. Although I would observe there is quite a market of the western country refuse also being sent to the third world.

8 minutes ago, Stargrazer9889 said:

Unlike Russia in the Crimea, China does not have to invade anyone. An E invasion is

more effective. Way to go China, Thailand is just another pawn..

Geezer

The Chinese have been well taught about this from the western countries to be sure. Stationing troops? Na, a good deal of dominance can be controlled by economic imperialism ... thus the belt and road.

8 hours ago, webfact said:

“I collected data from Lazada website on October 11, divided by category and origin of the product, and found that there were 41.77 trillion products on Lazada,

 

Trillions on Lazada??? Really???  

Mainland Chinese always finds a way to “cheat” the system. They’re very clever to break the rules or ignore the “rules”. 

All the Chinese made products I have bought didn't last 5 minutes because the quality is <deleted>.

I always look now to see if anything I buy has made in china on it.

If so I pass unless it is something no one else is offering and it is absolutely essential. 

Well red flag should be raised for sure, in less than a year time my wife her shop margins went down from 20-30% average gross to less than 7% due to Chinese selling so cheap as wholesalers in China.

 

How this covers any staff, middle person or shipping costs is a question but it surely ruined the market for many local sellers. They are also forced to work with dodgy cargo companies to avoid paying tax, as they would not stand a chance to make profits at all otherwise.

For most products, it is not even worth the afford selling them anymore. 
Now use millions in baht, to run her 'SME' shop profitable with generic products and worth the time to get the same prices and most Thais will not have that money (or interest would be equal to profits).

Not to forget that all the money goes back into China and doesn't get spent again in local economy.

Edited December 26, 20196 yr by tabarin

Free trade is not Fair, as long as China has all the advantages, like for instance Free international postal shipping!

 

Any Thai shipper will have to pay Expensive postage to ship to China and all other countries, while all Chinese shippers enjoys the benefit of Free internal postage to any country in the whole wide world, including Thailand.

 

Exactly how much will it cost Thailand to charge and receive 7% VAT on a $1 product from China?? 

Edited December 26, 20196 yr by Xonax

3 minutes ago, Xonax said:

Free trade is not Fair, as long as China has all the advantages, like for instance Free international postal shipping!

Same in Europe yet it takes them forever to do something about it. In Netherlands they already own over 30% of the market due to this and taken out most small shop owners.

Interesting in Thailand is, it is worse, as the products are already in Thailand too but at the similar price levels. So then people buy from them even more as waiting is just a day longer or same speed.

Edited December 26, 20196 yr by tabarin

1 minute ago, Xonax said:

Free trade is not Fair, as long as China has all the advantages, like for instance Free international postal shipping!

 

7 minutes ago, tabarin said:

Well red flag should be raised for sure, in less than a year time my wife her shop margins went down from 20-30% average gross to less than 7% due to Chinese selling so cheap as wholesalers in China.

 

How this covers any staff, middle person or shipping costs is a question but it surely ruined the market for many local sellers. They are also forced to work with dodgy cargo companies to avoid paying tax, as they would not stand a chance to make profits at all otherwise.

For most products, it is not even worth the afford selling them anymore. 
Now use millions in baht, to run her 'SME' shop profitable with generic products and worth the time to get the same prices and most Thais will not have that money (or interest would be equal to profits).

 

What was your wife selling? Imported Chinese things?

 

Lazada and Co will decimate online shopping for Thai's...if it hasn't already. Buyers want good selection, good pricing, fast shipping and free shipping. Lazada make it very easy.

 

People don't need to leave their house anymore for anything - even food.

 

One interesting thing I notice is my wife buying clothes from Facebook live sites - thats something only Thai's can do for Thai's...

 

I hope your wife can transition into something more profitable.

10 minutes ago, DLock said:

 

 

What was your wife selling? Imported Chinese things?

 

Lazada and Co will decimate online shopping for Thai's...if it hasn't already. Buyers want good selection, good pricing, fast shipping and free shipping. Lazada make it very easy.

 

People don't need to leave their house anymore for anything - even food.

 

One interesting thing I notice is my wife buying clothes from Facebook live sites - thats something only Thai's can do for Thai's...

 

I hope your wife can transition into something more profitable.

Anything that you nowadays sell comes from China lol, also only Chinese are allowed to do cross border selling. So you can not sell to Malaysia or Vietnam from Thailand, as example. 

She has been selling any category of products, brand and non brand products of low and high quality.

The only thing that still offers reasonable margins are low quality products we prefer not to sell.

 

What does still work well is Facebook though (most Thais are still clueless and pay the offline shop prices so she is reasonable priced on there, question is how long it takes).

Edited December 26, 20196 yr by tabarin

5 minutes ago, tabarin said:

Anything that you nowadays sell comes from China lol, also only Chinese are allowed to do cross border selling. So you can not sell to Malaysia or Vietnam from Thailand, as example. 

She has been selling any category of products, brand and non brand products of low and high quality.

The only thing that still offers reasonable margins are low quality products we prefer not to sell.

 

What does still work well is Facebook though (most Thais are still clueless and pay the offline shop prices so she is reasonable priced on there, question is how long it takes).

 

Yeah, kind of what I expected. China are just so dominant in low-cost manufacturing of everything, that I guess you are competing with the Mother Ship that can offer lower-prices and free shipping on a scale that no one can compete against.

 

Tough business indeed.

 

20 minutes ago, DLock said:

Yeah, kind of what I expected. China are just so dominant in low-cost manufacturing of everything, that I guess you are competing with the Mother Ship that can offer lower-prices and free shipping on a scale that no one can compete against.

Worst is, when you know to have the honest best wholesale prices, and Lazada / mothership factories Fk everyone over by decreasing the prices with 10-15% and no prior notice.

Think about that on a million baht in stock.

Edited December 26, 20196 yr by tabarin

56 minutes ago, Xonax said:

Free trade is not Fair, as long as China has all the advantages, like for instance Free international postal shipping!

 

Any Thai shipper will have to pay Expensive postage to ship to China and all other countries, while all Chinese shippers enjoys the benefit of Free internal postage to any country in the whole wide world, including Thailand.

 

Exactly how much will it cost Thailand to charge and receive 7% VAT on a $1 product from China?? 

And Amazon isn't allowed in China...

6 hours ago, DLock said:

The EEC Trojan horse is finally understood.

 

Lazada and Shopee own Thailand eCommerce and will completely dominate eCommerce in Thailand funded and supported by Alibaba money and access to products.

 

2020 will be a really interesting year for Thailand...on many levels.

 

 

 

It is my understanding ( right or wrong ) , that lazada is owned by a Chinese Company who bought out lazada last year.

That is why there has been a rapid increase on the Items for Sale that are " Imported ", and the Quality of the products leaves much to be desired.

 

11 minutes ago, Cake Monster said:

It is my understanding ( right or wrong ) , that lazada is owned by a Chinese Company who bought out lazada last year.

That is why there has been a rapid increase on the Items for Sale that are " Imported ", and the Quality of the products leaves much to be desired.

 

Last year thailand was very happy to have Jack Maa ? (owner of alibaba) here to start ebusiness....because the Thai were too dumb to do it themselves.

 

And now they regret it, what a surprise...

 

Get Amazon, Aldi, Lidl and all the rest here as well and prices will drop! Thailand needs more competition to keep prices low and affordable.

3 hours ago, TallGuyJohninBKK said:

 

Trillions on Lazada??? Really???  

Yes, very suspect.

From http://aec.utcc.ac.th/thailand-lazada-shopee-lead-the-pack-in-e-commerce-race/

• Thanawat Malabuppha, president of Thailand e-Commerce Association, and CEO & co-founder at Priceza, said there were more than 20 million online shoppers in Thailand in the first six months of this year with more than 50 million products on sales on online platforms. It will increase to about 62 million products by the end of this year [2019].

Maybe trillions refers to the total number of product units available? For example one product like a particular chair might have 500 chairs available for sale. I counted about 2.8 million different products covering 12 categories on Lazada.com. It does not show number of units per product available. But to arrive at one trillion units, the average number of units would be about 400,000 per product - seems unreal.

But what is notable about Lazada:

• The company also posted accumulated losses of more than Bt2.6 billion in the first quarter of 2018.

12 hours ago, webfact said:

“I collected data from Lazada website on October 11, divided by category and origin of the product, and found that there were 41.77 trillion products on Lazada, comprising 21.99 trillion of domestic products or 52.65 per cent, and 18.65 trillion of Chinese products or 44.65 per cent, which was a significant share while not many products from other countries were available,” said Pawoot.

41.77 trillion products on Lazada? I don't think so.

12 hours ago, webfact said:

 the EEC office is planning to send more Thai products to the Chinese market which will benefit Thai manufacturers. 

China can’t wait to get their hands on the wooden frogs beer can tuk tuks that are sold in every market here. 

7 hours ago, DLock said:

The EEC Trojan horse is finally understood.

 

Lazada and Shopee own Thailand eCommerce and will completely dominate eCommerce in Thailand funded and supported by Alibaba money and access to products.

 

2020 will be a really interesting year for Thailand...on many levels.

 

 

 

Amazon will do more than it does  now in the UK.

Same same but different?

It’s too late-Thailand can’t compete with China on almost anything.  They will suck it dry, and Thailand will be more dependent