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Thailand like any other countries across Asia and other parts of the world is suffering from the influx of cheap Chinese products that have started to make a dent in the revenues of the local Thai players in the same industry and the solution that Thailand undertakes should be one that is measured and appropriate.
Thailand’s small & medium sized industries have been feeling the pain of the rise in imported goods from China as they grapple with the rising production cost at home and the influx of cheap and low-quality goods from China.
Leaving online sales aside, a walk down the once ‘Samphaeng’ market would showcase the growing shadowing of the Chinese products into the Thai market. The pain of the Thai entrepreneurs was seen even at the very basic product such as pottery, which was the basic bread and butter of people in Lampang.
Ceramic manufacturers in Lampang, are now struggling as cheap Chinese ceramics flood the market, particularly knockoffs of traditional designs like the “rooster” bowl, which sells for as low as 5 Baht compared to locally made bowls priced at 20–30 Baht.
Concerns about the future of the industry are being raised, noting that the number of ceramic factories in the province has plummeted from 328 before COVID-19 to just 89 today. The low-cost imports threaten the survival of Lampang’s ceramic industry, as local producers can’t compete on price, says Preecha Srimala, president of the Lampang Ceramic Association.
The e-commerce platforms have not been kind to Thai businesses as various Chinese based e-commerce platforms have come out to set up shop in Thailand and are setting up warehouses to have a distribution center around the country.
Watcharaporn Kantaphayao, economist at Bualuang Securities said in a recent note to client that in the post-COVID era, Thai manufacturers are facing increased competition from cheap Chinese imports, particularly in steel and consumer goods like clothing and footwear.
He said that China, the world’s largest exporter, has been aggressively exporting due to overcapacity and unfavorable domestic conditions. This has led to a significant influx of Chinese goods into Thailand, impacting local manufacturers’ competitiveness.
Meanwhile Thai imports from China have grown annually by 13.4% on average from 2021-23. The impact varies across different product categories, with some facing high risks due to high import value growth and significant import share relative to local sales.
Another research from Kiatnakin Phatra Securities stated that Thailand’s e-commerce has seen a growth of about 10.5% annually over the past 5-years, thanks to the rise in internet penetration, access to smartphones and rise of online payment.
Kiatnakin Phatra Securities Research said that Thailand’s trade deficit with China is growing due to increased imports of electronics, machinery, vehicles, metals, and chemicals, driven by both re-exports to the U.S. and domestic use. While cheaper Chinese goods from e-commerce benefit Thai consumers, they pose a threat to Thai manufacturers by increasing competition, reducing domestic income, expanding debt, widening the trade deficit, and lowering tax revenue.
Kiatnakin Phatra Securities Research suggests that instead of broad trade barriers, Thailand should focus on fair competition, enforcing product quality standards, and supporting key industries vital to its economy. The influx of Chinese products—spanning consumer goods, fashion, appliances, electric cars, and industrial materials—is part of a larger trend tied to China’s role as a manufacturing superpower. Since the COVID-19 crisis, factors like China’s booming e-commerce and a slowdown in its domestic economy have accelerated exports. China’s strategy of offloading surplus goods, aided by cross-border e-commerce, has intensified competition for Thai businesses, prompting calls for targeted government interventions to manage the economic impact.
Pichai Naripthaphan, Thailand’s Commerce Ministry, has pledged to address the surge of low-cost Chinese imports, some of which fail to meet safety standards. The ministry plans to strictly enforce tax laws, including value-added tax, corporate income tax, and customs fees. Additionally, imported products will undergo quality checks to ensure certification by organizations like the Thai Industrial Standards Institute (TISI) and the FDA. To promote fair competition and protect consumers, the ministry will also require foreign e-commerce companies to register and establish legal entities within Thailand.
The Chinese Embassy in Thailand has come out to defend the influx of the Chinese products into the country as it has reportedly said that this import of goods accounted for a mere 20% of all imports into Thailand from China.
The embassy said that Chinese goods flooding the Thai market, stating that nearly 80% of China’s exports to Thailand are capital and intermediate goods essential for Thai manufacturing and exports. The “cheap Chinese goods” that have raised public concern—like daily chemical products, food, health items, and clothing—constitute less than 10% of total exports to Thailand.
On product quality and certifications, the embassy affirmed that Chinese companies must comply with international laws and voiced support for Thailand’s efforts to enforce standards. The embassy acknowledged the global challenges of regulating cross-border e-commerce, which brings both benefits, like lower transaction costs, and regulatory difficulties, such as product quality and consumer protection.
China also expressed its willingness to help Thailand leverage e-commerce to access the Chinese market and strengthen collaboration on digital skills, e-commerce oversight, and mutual economic opportunities in the Internet age.
Kiatnakin Phatra Securities Research identifies several factors within Thailand that make it particularly receptive to Chinese imports. These include low import taxes on Chinese goods, especially electric vehicles (EVs), rapid adoption of Chinese-led technology (e.g., electric cars), the rise of e-commerce driving demand for Chinese household goods, and the ease with which Chinese nationals can enter Thailand on tourist visas to conduct business.
As a result, Thailand’s trade deficit with China has accelerated more quickly than in many other countries. Though Thailand’s deficit is partly due to goods imported for re-export to the U.S., direct competition between Chinese and Thai businesses has also increased. China’s shift toward an industrial-export-driven economy has intensified Thailand’s trade deficit, which has grown from 1% of GDP in the early 2000s to 6–7% in recent years, especially in electronics, machinery, and steel. The only major Thai export with a trade surplus to China remains agricultural products, such as durian.
Thailand’s trade relationship with China has evolved through three distinct phases:
- 1999-2010: A small trade deficit mainly in electronics and steel, with a surplus in plastics and chemicals.
- 2011-2018: A larger deficit in electronics, with new deficits in machinery during China’s “factory of the world” phase.
- 2018-present: Widened deficits in electronics, machinery, and steel, alongside a return to deficits in plastics and chemicals due to China’s overproduction.
Thailand’s growing deficit reflects both reliance on Chinese goods for re-export and increasing imports for domestic consumption, raising concerns about competitive pressures on Thai industries.
KKP Research identifies five key product groups driving Thailand’s trade deficit with China:
- Electronics: Thailand’s largest trade deficit is in electronics, especially smartphones, which are popular on e-commerce platforms. This deficit is growing as Chinese products dominate this market segment.
- Machinery, Computers, and Electrical Appliances: Thailand once had a trade surplus with China in this category, largely due to exports of hard drives in the 2000s. However, as imports of computers, laptops, and household appliances from China grew, Thailand’s deficit widened. These items are also increasingly sold online, further intensifying competition for Thai manufacturers.
- Automotive Products: Thailand’s deficit in automotive goods is mainly in parts (e.g., doors, wheels, brakes), while finished vehicles remain a surplus area. However, in 2022, imports of Chinese electric vehicles (EVs) created a notable deficit, overtaking automotive parts. This trend poses a growing risk to Thailand’s automotive sector as finished car exports decline.
- Steel and Aluminum: China’s oversupply of steel and aluminum, sold at low prices, has created a steady trade deficit for Thailand. Chinese steel manufacturers, facing reduced domestic demand, export excess supply to countries like Thailand, making it challenging for Thai producers to compete.
- Chemicals and Plastics: Once a surplus area, chemicals and plastics shifted to a trade deficit in recent years as China’s petrochemical industry expanded significantly. With excess production and slowing domestic demand, China now exports surplus supply to other countries, including Thailand.
These trends highlight structural challenges for Thailand’s economy, with each category facing unique pressures from China’s industrial growth and e-commerce expansion, which are reshaping trade dynamics and increasing Thailand’s trade deficit.
