Thailand to lose share of China market under FTA, survey suggests

The Nation/Asia News Network | 27 Nov 2014

Thailand to lose share of China market under AFTA, survey suggests

Petchanet Pratruangkrai

Thailand could lose 118 billion baht (S$4.6 billion) worth of export opportunities under the ASEAN-China Free Trade Agreement over the next five years (2015-2019) because of tougher competition from Cambodia, Laos, Myanmar and Vietnam, according to a study by the University of the Thai Chamber of Commerce (UTCC).

The study found that Thailand would lose market share and trade opportunities in rice, aquaculture products, paper, wood and products, electronics and electrical appliances, textiles, clothing, footwear, and jewellery. Products that will enjoy higher export growth are tapioca, fruits, and processed food.

"Overall trade from ASEAN to China will increase over the next five years, as well as exports from Thailand to China. However, Thailand’s share of the China market will increase by only 0.02 percentage point, from 1.95 per cent to 1.97 per cent [by 2019], while ASEAN’s will rise by 1 percentage point, from 10 to 11," said Aat Pisanwanich, director of the UTCC’s International Trade Studies Centre.

According to the study, of China’s trading market value of US$250 billion (S$325 billion) this year, ASEAN has a share of about 10 per cent. The value of the total China market is expected to increase significantly by 2019, of which ASEAN’s share will be 11 per cent.

ASEAN is expected to face higher trade deficits with China as the value of its imports from that country grows faster that that of exports. It is projected that ASEAN could face an annual trade deficit as high as US$30 billion within five years.

Currently, Malaysia is the largest exporter to China in ASEAN, followed by Thailand, Indonesia, Singapore and Vietnam. However, between 2015 to 2019, Malaysia’s share of ASEAN’s total export to China will drop from 31.2 per cent to 26.3 per cent, Thailand’s from 20.2 per cent to 18.2 per cent, Indonesia’s from 15.5 per cent to 14.9 per cent, Singapore’s from 15 per cent to 14.4 per cent.

Vietnam’s share, however, will grow from 6.8 per cent to 10.1 per cent, while Myanmar’s will increase from 0.9 to 4.6 per cent, Laos’ from 0.4 to 1.3 per cent, and Cambodia’s from 0.1 to 0.2 per cent. The Philippines and Brunei will remain unchanged at 9.8 and 0.1 per cent respectively.

Aat said Thailand would face lose a lot of China’s rice market because of tougher competition from Vietnam, Cambodia and Myanmar. Thailand’s share of China’s rice market will drop from 45.4 per cent this year to 27.4 per cent in 2019. For aquaculture products, its market share will drop from 32.4 per cent this year to 24.3 per cent.

Its share of China’s import market for electrical appliances and electronics will drop from 18.3 per cent to 12 per cent.

Aat suggested that Thai enterprises carefully study Chinese consumers’ behaviour and demand in each city, establish Thai distribution centres in each major city, focus on quality products, and target export promotions directly at Chinese consumers.

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source: The Nation