Thai factory closures, a victim of Chinese imports surge

[snoop1130]

 

Chinese electric vehicle (EV) manufacturer BYD recently opened its inaugural Southeast Asian factory in Thailand, garnering considerable attention and praise for the country’s industrial foresight. However, this development also adversely affected long-established Japanese automakers, leading to a ripple effect across numerous Thai factories.

 

A crucial development went relatively unnoticed as Suzuki Motor announced the closure of its Thai factory, with a capacity an annual output capacity of up to 60,000 cars.

 

This decision by the Japanese automaker reflects a broader trend affecting Southeast Asia’s second-largest economy. Thailand is grappling with an influx of inexpensive Chinese imports and a decline in industrial competitiveness, exacerbated by rising energy costs and an ageing workforce.

 

Over the past year, nearly 2,000 factories have shut down in Thailand, severely impacting the manufacturing sector, which contributes almost 25% of the nation’s gross domestic product (GDP). This downturn is weighing heavily on the 18 trillion baht economy and affecting workers.

 

A loyal employee of nearly 20 years at the VMC Safety Glass factory in Samut Prakan province, 54 year old Chanpen inspected automotive and building products. In April, she was unexpectedly informed about the factory’s closure, leaving her jobless. As the sole breadwinner for the family, this closure marked a dark period of uncertainty for her future.

 

“I don’t have any savings. I have hundreds of thousands of baht of debt… I’m old, where will I go to work? Who will hire me?”

 

 

Declined to comment

 

A director at VMC Safety Glass, Monchai Praepriwngam, declined to comment on the reasons behind the factory’s closure.

 

The struggles within the manufacturing sector pose a significant challenge to Prime Minister Srettha Thavisin, who took office last year. He pledged to boost average annual GDP growth to 5% over his four-year term, up from 1.73% over the past decade. The Bangkok-born PM highlighted the issues surrounding the industrial sector in a Parliament meeting last week.

 

“The industrial sector has slumped and capacity utilisation has fallen below 60%… It is clear that the industry needs to adapt.”

 

Chairman of the National Economic and Social Development Council, Supavud Saicheua echoed these concerns, stating that Thailand’s long-standing manufacturing-driven economic model is failing, before highlighting the need for a shift to focus on products not exported by China, instead to strengthen its agricultural sector.

 

“The Chinese are now trying to export left, right and centre. Those cheap imports are causing trouble… You have to change…no ifs or buts.”

 

The Thai Department of Industrial Works reported a 40% increase in factory closures between July 2023 and June 2024 compared to the previous year. Consequently, job losses surged by 80%, leaving over 51,500 workers unemployed.

 

Giants falling

 

Kiatnakin Phatra Bank’s research division noted a slowdown in new factory openings, with large factories closing and smaller ones taking their place. This trend has impacted key economic sectors, including the automobile industry.

 

Smaller manufacturers are also struggling with rising production costs due to increased energy prices and relatively high wages, according to Sangchai Theerakulwanich, chairman of the Federation of Thai SMEs.

 

“We compete with multinational businesses…Manufacturers unable to adapt quickly had to close business or change to make something else.”

 

Starting this month, Thailand began collecting a 7% value-added tax on inexpensive imported goods priced below 1,500 Thai baht, primarily from China. However, these products remain exempt from customs duties.

 

The Vice Chairman of the Federation of Thai Industries, Nava Chantanasurakon, urged the government to implement measures to prevent tariff evasion amid the US-China trade war and high barriers for some Chinese goods in other regions.

 

Currently, Thailand’s economy is projected to grow by only about 2.5% this year, contributing to widespread dissatisfaction with Prime Minister Srettha’s performance.

 

Cash handout scheme

 

The Thai premier defended his party’s controversial and delayed 500 billion-baht handout scheme, which has faced substantial criticism, including from the central bank. He labelled it as a “strong medicine to revive the economy.”

 

Without a steady income, Chanpen is awaiting the 10,000 baht handout that 50 million Thais are eligible to receive under the plan, reported Bangkok Post.

 

“The economy was bad during the previous government…But even after the new government has come, the economy is still as bad as before.”

 

By Ryan Turner

Lingerie factory closure in 2021, Image courtesy of Bangkok Post

 

Source: The Thaiger 2024-07-15

 

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[norbra]

Welcome to the real world,Australia had many auto makers for decades now finished due to cheaper imports undermining local manufactures.

Chrysler gone

Ford gone

Gmh gone

Mazda gone

Nissan gone

Toyota gone

And others, together with suppliers,services and spares.

Edited July 15 by norbra

[ozz1]

China unfortunately will take over by stealth this is just the start and meanwhile the thai elites let it happen it's a sad situation for the thai people  and here we have a government bending the knee to china Thailand has to be competitive or they will go under keeping the baht high is one way to loose

[0ffshore360]

It is depressing to see the  fingers of blame being pointed at the entity originally so lauded as the pinnacle of corporate success in the scheme of capitalistic superiority so cleverly and strategically embedded in the very heart of the insidious Communist territory of Mainland China.

The result? The gutting of most of the industrial backbones of Europe and the North American Continent by way of the fundamental core of that Corporatist philosophy....greed and more greed.

Thailand and others in SEA found marginal advantage in the economic  rise of the shiny balloon that now is struggling to stay afloat.

Now the peak of consumerism has been reached and desperation to maintain dividends derived from a shrinking capacity to service ridiculous levels of State  and personal debt the deliberate social focus on WAR as an attributable solution is yet again being  foisted on the sheeple !

 

[BangkokReady]

4 hours ago, snoop1130 said:

A loyal employee of nearly 20 years at the VMC Safety Glass factory in Samut Prakan province, 54 year old Chanpen inspected automotive and building products. In April, she was unexpectedly informed about the factory’s closure, leaving her jobless. As the sole breadwinner for the family, this closure marked a dark period of uncertainty for her future.

 

“I don’t have any savings. I have hundreds of thousands of baht of debt… I’m old, where will I go to work? Who will hire me?”

 

20 years of working the same stable job and 100,000s baht in debt?  I wonder how much of that is garbage like iPhones and pick-up trucks...

[CallumWK]

23 minutes ago, BangkokReady said:

 

20 years of working the same stable job and 100,000s baht in debt?  I wonder how much of that is garbage like iPhones and pick-up trucks...

 

Yeah, people with a job tend to buy a car or some land/house, and finance it. I'm sure you never did that

[BangkokReady]

39 minutes ago, CallumWK said:

Yeah, people with a job tend to buy a car or some land/house, and finance it. I'm sure you never did that

 

She's been in steady employment for 20 years.  That's a long time to be still paying off a reasonable family car.  Chances are she got into debt buying things she didn't need.

[Tropicalevo]

2 hours ago, ozz1 said:

China unfortunately will take over by stealth this is just the start and meanwhile the thai elites let it happen

I understand that the majority of Thai elites, senior government officials and the uber-rich are ethnic Chinese from way back.

You can take the man out of China, but you...............

[CallumWK]

3 minutes ago, BangkokReady said:

 

She's been in steady employment for 20 years.  That's a long time to be still paying off a reasonable family car.  Chances are she got into debt buying things she didn't need.

 

So you bought only 1 car in your entire life, and you assume that if she bought property she did in the first year of her working career?

 

Thai bashing at its best is what you are trying

 

 

Edited July 15 by CallumWK

[BangkokReady]

3 minutes ago, CallumWK said:

you assume that if she bought property she did in the first year of her working career?

 

Property isn't "debt".  The loan is secured against the property.  People don't talk about mortgages like they do debt.

 

5 minutes ago, CallumWK said:

Thai bashing at its best is what you are trying

 

Ridiculous.  How is anything I said "Thai bashing"?

[hotchilli]

China is winning the game, it's producing what the world wants at affordable prices.. subsidised by the CCP to take over the EV market and blow-out the other producers.

Thailand is largely a sub-contract nation in the auto manufacturing business.

The switch from combustible cars to EV's is going to have a knock-on affect with not only assembly plants closing but the whole supply chain geared to the old models.

The downside is when China becomes your main source of work they own your economy.. and when they achieve that they own your country.

[Geoffggi]

15 hours ago, snoop1130 said:

Thailand is grappling with an influx of inexpensive Chinese imports and a decline in industrial competitiveness

Well the government cannot blame the farangs for this one .....................LOL

[Classic Ray]

The US has taken the first step to restricting Chinese imports by imposing a tariff on Chinese EVs of 100%.

 

Meanwhile Thailand lets them flood in as the Thai manufacturing facilities close as a result.

 

The consequences are no surprise. The Government should be promoting alternative manufacturing industries instead of sending everyone back to the fields.

[JimHuaHin]

What can one say about Thai business elites - loyalty to their country of birth, or loyalty to the country of their ancestors?  Rama VI was right in fear of the then new immigrants.  How many Thai business elites have very close relationships with senior CCP figures?

[MalcolmB]

1 hour ago, Classic Ray said:

The US has taken the first step to restricting Chinese imports by imposing a tariff on Chinese EVs of 100%.

 

Meanwhile Thailand lets them flood in as the Thai manufacturing facilities close as a result.

 

The consequences are no surprise. The Government should be promoting alternative manufacturing industries instead of sending everyone back to the fields.

The USA only believes in capitalism and free trade when it suits them. Japanese car companies going broke, who cares.

They both had a good run, now it is Chinas turn.

[mfd101]

14 hours ago, norbra said:

Welcome to the real world,Australia had many auto makers for decades now finished due to cheaper imports undermining local manufactures.

Chrysler gone

Ford gone

Gmh gone

Mazda gone

Nissan gone

Toyota gone

And others, together with suppliers,services and spares.

The difference between the Oz past and the Thai present is in the wages paid to the factory workers.

 

China's GDP per capita is twice Thailand's and its GDP per capita in PPP is about the same as Thailand's. Yet Thailand still can't compete ...

[jcmj]

I highly doubt that the pay that the Thais made have anything to do with this. They are paid barely enough to get by. It’s the government letting China come in and take control and don’t impose taxes as they should. They are trying to get every penny out of the foreigners but give the Chinese a pass. Greed will be there own demise. 

[lordgrinz]

China, the gift that keeps on giving.

[John Drake]

1 hour ago, JimHuaHin said:

What can one say about Thai business elites - loyalty to their country of birth, or loyalty to the country of their ancestors?  Rama VI was right in fear of the then new immigrants.  How many Thai business elites have very close relationships with senior CCP figures?

 

 

Here is an interesting biographical sketch. Don't know if it confirms your posting. It is what it is.

Quote

Our Chinese business alone accounts for close to 40% of group sales. How has a Thai company been able to penetrate so deeply into China? My father, Chia Ek Chor (Xie Yichu in Mandarin) was a Chinese merchant born in Guangdong Province. He traveled frequently between Thailand and other parts of Southeast Asia and China, building up both his professional and his personal connections. CP Group has benefited enormously from these links.  https://asia.nikkei.com/Spotlight/My-Personal-History/Dhanin-Chearavanont/Dhanin-Chearavanont-1-The-Thai-company-with-Chinese-roots-and-a-global-vision2

 

More here: https://www.nationthailand.com/thailand/general/40030483

Edited July 16 by John Drake

[worgeordie]

I think the economy might be worse than the Government says , a Florist ,in local market providing

flowers for funerals ,weddings and  other events ,just layed off his one Thai and 2 Burmese staff.

said business is very bad ,cannot afford to pay them ...so not just Chinese imports to blame ,and

they still have not collected VAT on imports yet ....

 

regards Worgeordie

[norfolkandchance]

We live in a government housing village just outside a large town in the NE. Hundreds of young men and woman from Myanmar have been shipped in to replace the Thai workers at the Garment factory at reduced wages. Agents have snapped up all the available small housing units and filled them up with multiple workers.

Who owns the factory. Chinese.

[Aussie999]

It's not only Chinese imports, the goverments own policies are scaring off international investors/companies... some have already left, others are planning to, as we have seen reports, on this forum.

[KhunLA]

Economics 101 ...

 

Best product for the best price wins.  Nothing has changed, and the way it always was, and will be.

 

I'll chose products from TH & CH first, and don't even look at USA/UK/EU products.   Corporate & union greed has priced themselves out of the market.

[JonnyF]

Flood the market with cheap products to eliminate the opposition.

 

Once the opposition is gone and you have a monopoly, you can raise prices.

 

Snap up those cheap EV's while you can (if you can stand to own one). Once the Japanese manufacturers have gone, they won't be so cheap. 

 

Thailand is well on it's way to becoming another manufacturing zone of China.  

[BangkokReady]

4 hours ago, Geoffggi said:

Well the government cannot blame the farangs for this one .....................LOL

 

No, but they can continue the hate campaign to stop people from focusing on the real problems.

[BangkokReady]

2 hours ago, Aussie999 said:

It's not only Chinese imports, the goverments own policies are scaring off international investors/companies... some have already left, others are planning to, as we have seen reports, on this forum.

 

Thailand is used to being in demand with foreign tourists and businesses. They view it in a "they need us more than we need them" kind of way, and don't seem to understand that it is possible to drive people away. One of the drawbacks to the "Thai supremacy" ideology.

 

If their economy is 20% tourism and 25% foreign manufacturing, you would think they would be looking for ways to attract foreign people and make them want to stay, rather than blaming them for everything pushing them away.

[Gecko]

3 hours ago, MalcolmB said:

The USA only believes in capitalism and free trade when it suits them. Japanese car companies going broke, who cares.

They both had a good run, now it is Chinas turn.

So explain please why they can produce cheaper than anyone else.

[Will B Good]

Well at least the Thai PM will be happy to see this......it's a free market ......as he says....Thais will have to get their act together if they want to compete.

[KhunLA]

34 minutes ago, JonnyF said:

Thailand is well on it's way to becoming another manufacturing zone of China.  

I consider that a good thing, for the Thai economy and workers.   Look at the countries that outsource most of their manufacturing now (to CH ), and they seemed to simply become a service oriented workforce for the elite.

 

What to citizens of those countries complain about ... 'we don't manufacture anything any more'.   Along with the loss of employment opportunities, for those that depend on employers for income.

[MalcolmB]

5 minutes ago, Gecko said:

So explain please why they can produce cheaper than anyone else.

Better workers, less taxes and red tape, scale of production, smarter, less profit per unit.