China is stepping forward to be the world’s economic superpower and holds a major role in driving the world economy as both manufacturer and large consumers of the world. Another role is being an investor who has invested a massive amount of money in many countries. Khun Manop Sangiambut, First Executive Vice President, and Chief Financial Officer at SCB has analyzed the investment trend of China in Thailand and believes that China views Thailand as a high potential country for being a trade center for the ASEAN market. 

China applied for the No.1 investment in Thailand in 2019 

According to the report of The Board of Investment of Thailand (BOI), China applied for receiving the BOI Investment Promotion in 2018 for the first time with the highest cost in history. And then in 2019, China’s rank was 4 times away from the second country and became the first country that applied for receiving the BOI Investment Promotion at 2.9 hundred billion baht covering 270 projects; an average of 1 billion baht per project. Even though China faced a COVID-19 crisis over the first half of 2020, they invested 120 projects in Thailand. However, the Chinese government has managed to control the pandemic effectively, so China could recover rapidly and before another country. Presumably, the investment value from Chinese investors will be resumed highly to normal for the rest of 2020.

More Chinese investors want to visit Thailand 

China Business Development, SCB incorporated with Economic Intelligence Center: EIC conducted a survey on the investment direction of Chinese investors in Thailand after COVID-19. The interview was arranged with Top executives of 170 large and medium Chinese enterprises located in both China and Thailand. The finding is more than 2/3 of Chinese investors are interested in extending investment to Thailand within 1-2 years. Surprisingly, 60% represent those who have never invested or run a business in Thailand before. They consider Thailand a potential market with the readiness and capability to become the ASEAN center to connect the market to neighboring countries. Unlike in the past, Thailand was viewed as only the manufacturing base for export. Besides, 66% of the interviewees have planned to increase their investment in Thailand. Chinese investors are likely to adjust their investment structure in Thailand from high investment industry to lower and focus on service industry and technology. This new trend is quite challenging for Thai entrepreneurs who will face competitors who own lower cost and more advanced technology including experience in the highly competitive market in China.

“From this survey, investment is likely increasing exponentially and significantly spreading more than expected. The investment won’t be clustered in old business anymore such as large investment to build manufacturing base for export. The structure has changed to smaller investments in various businesses like a service business, logistics, technology, IT including industrial supply chains of emerging business. Even though investment value putting in each project won’t be as much as before but there’ll be lots more projects and connections with the business sector and Thai economy coming in. I believe that after 2-3 years of the post-pandemic, travel will be back to normal and the huge amount of financial investment from China in Thailand will be much rising”, said Khun Manop. 

Khun Manop stated 3 main reasons that the Chinese investment structure in Thailand has been adjusted from clustering to spreading investment. 1) Chinese economy was adjusted over 10 years ago spreading from large industry to service and consumption so the economic structure has greatly changed and has an impact on Chinese investment overseas. 2) China has launched lots of new consumer good brands with world quality at affordable prices and they have become world renowned products. As a result, those brands foresee an opportunity to invest and open their market in Thailand and other ASEAN countries. 3) China has invested in technology development in both AI and new industries such as substitute energy, electric car, etc. That’s why Chinese investors are more confident to develop those technologies and then export them to foreign markets. 

Factors that attract Chinese to invest in Thailand 

Khun Manop mentioned about 2 factors that draw interest to Chinese investors to Thailand. 1) Market potential and location of Thailand are suitable for being the center connecting to ASEAN countries, the readiness of infrastructure, supportive investment policy, and efficient public health. Most importantly, a strong relationship between Thailand and China from a higher level to general people, and the Chinese feel warm by Thai’s friendliness and good hospitality. 2) There is a conflict situation between China and western countries, especially trade war and technology war between China and the U.S. that has driven Chinese investors to invest more in the ASEAN region and Thailand. 

Opportunity and challenge of Thai business

The entering of Chinese investors has created job hiring, the transition of knowledge, and technology that enhance value-driven to the country economy. In addition, it’s challenging for Thai entrepreneurs to face competitors who have more advantages in lower cost and advanced technology. “I believe that Thai entrepreneurs must be well-prepared to understand the nature of Chinese business like its pattern and model which Chinese entrepreneurs have conducted in China as they may follow those principles when they come to Thailand so that we can find strategies and are ready to cope with Chinese business. In fact, more coming of Chinese entrepreneurs is a business opportunity but not challenge or risk for Thai entrepreneurs”, said Khun Manop. 

Thai entrepreneurs should get ready to handle more aggressive competition by leveraging the manufacturing process with technology and innovation, including partnering with Chinese investors to extend a new business opportunity. Fortunately, we have more advantage in understanding the Thai consumer market, local law, and regulations, and are capable of finding raw materials. More, Thai entrepreneurs should learn the Chinese language and understand the Chinese culture as that would support Thai workers and other entrepreneurs to find an opportunity from the investors at their full potential.

SCB is pleased to be part of your supporter to drive the business of two countries forward and stay strong. We have SCB international affiliates throughout Chinese regions specifically in Shanghai, Hong Kong, and Beijing Representative Office, including expertise teams who know the Chinese and Thai context thoroughly. Our team will provide consultation and full financial services to make your investment plan for business expansion successful. Please follow the full survey report on the investment direction of Chinese investors in Thailand after COVID-19 at 

https://www.scb.co.th/cn/investment-knowledge.html