Chinese companies have been accused of dumping products in Thailand, flooding the market with cheap goods. This practice has had serious implications for local businesses, which are struggle to compete with the low prices.
The Industry Ministry says that many Thai companies that made electronics, steel, and plastics have shut down this year because there are fewer orders and more cheap imports coming into the country.
The companies were ranked by how much money they were worth as investments.
“The closed printed circuit board and electronic parts factories had the most valuable investments at 2.29 billion baht,” said Pimphattra Wichaikul, the minister of industry.
Steel and iron factories came in second with an investment of 1.45 billion baht. Plastic companies came in third with an investment of 930 million baht.
The Department of Industrial Work says that from January to May of this year, 488 companies in all kinds of industries shut down. Ms. Pimphattra said this based on the numbers.
Factory Layoffs in Thailand
The total cost of building these companies is 14 billion baht. During these five months, several companies chose to let go of a total of 12,551 workers.
Ms. Pimphattra said that one of the main reasons the companies had to lay off workers and shut down factories was that they were not as competitive as companies from other countries that sell goods in Thailand.
Competitors who sell goods at lower prices make it impossible for local companies to stay in business. She said that some companies chose to solve the problem by moving their factories to nearby countries that have free-trade agreements.
The EAF Long Product Steel Producers Association said earlier that a lot of local steel companies are likely to go out of business this year because of the huge amount of steel that comes from China.
The group said that Chinese steel imports have made Thailand’s steel industry less productive. Between January and February, the rate dropped to 28%, which was a new low.
There were earlier predictions that Thailand’s Manufacturing Production Index would grow by 2 to 3 percent, but the Office of Industrial Economics now thinks it will stay flat or grow by only 1% year-over-year in 2024.
Tariffs on Chinese Goods
The Industry Ministry says that business owners have moved forward with new spending plans in some areas, such as food, animal feed, and fertilizer. From January to May, the money they spent on building 848 companies was worth 149.8 billion baht.
To protect its businesses, the Thai government has already started to look into the matter and put tariffs on some Chinese goods that come into the country.
A lot of local makers are angry because they think that the cheap goods will hurt their growth and cause people to lose their jobs. It hurts small businesses the most because they can’t compete with the prices of foreign goods.
In the short term, lower prices may be good for consumers, according to Ms. Pimphattra. But in the long term, there may be less innovation and fewer local choices. This is something that both countries need to deal with if they want to trade fairly and have good business relations.