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High Demand for Chinese Production Bases in Thailand

High Demand for Chinese Production Bases in Thailand
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High Demand for Chinese Production Bases in Thailand
High Demand for Chinese Production Bases in Thailand
High Demand for Chinese Production Bases in Thailand
Save on your hotel - hotelscombined.com

More Chinese manufacturers are looking to Thailand as a production base to avoid US tariffs, based on trends in demand for industrial estates.

WHA Corp, the top Thai provider of such estates, said it expects Chinese companies to account for as much as half of its land sale contracts both this year and next, up from about 12% in 2018. The firm also develops industrial parks in Vietnam.

“People are moving some production,” David Nardone, the group executive for the firm’s industrial-development unit, said in an interview. “It will be a significant impact for Thailand and Vietnam. A drop of water for China can be a flood for us, because of the different size of the economies.”

Thailand has rolled out incentives including tax breaks to woo manufacturers seeking to skirt the tariffs the US and China have imposed on each other. Recent evidence suggests rival Vietnam has pulled ahead in the race to lure producers.

For instance, more than three times as many companies are planning to relocate or divert production from China to Vietnam than to Thailand, according to research by Nomura Holdings Inc.

At the same time, the value of net foreign-direct investment applications to Thailand from Chinese firms is surging. It rose five-fold in the first half of 2019 compared with a year earlier, Board of Investment data shows.

Chinese and Hong Kong applications combined were worth about $1 billion, second in value only to Japan, whose firms have long manufactured in Thailand.

WHA expects to add six industrial parks to its current roster of 10 in Thailand and has begun selling space in its estate in Vietnam.

Mr Nardone doesn’t see Thailand and Vietnam as competitors, saying each has strengths and weaknesses. It takes a long time to set up plants in Vietnam, while Thailand has a labor shortage, he said.

Manufacturers appear to be moving only a slice of production out of China given the size of its market, he added in the Sept 19 interview in Bangkok.

WHA’s shares have climbed about 8% this year, exceeding the 4.6% rise in Thailand’s benchmark SET index of equities.

Thai officials have said companies including Sony Corp, Sharp Corp and Harley-Davidson Inc are moving some manufacturing to the country.

They are hopeful foreign-direct investment will help revive the export-led economy, whose growth has slowed due to currency strength, the impact of the trade war and domestic political flux.

High Demand for Chinese Production Bases in Thailand
High Demand for Chinese Production Bases in Thailand
High Demand for Chinese Production Bases in Thailand
Save on your hotel - hotelscombined.com
High Demand for Chinese Production Bases in Thailand
Save on your hotel - hotelscombined.com
High Demand for Chinese Production Bases in Thailand
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