Thai SMEs apprehensive over Chinese mall in the country

22 Jan '11

2 min read

China's decision of setting up a mega-mall in Thailand has raised apprehensions that the low cost products and financial backing from China would lay an adverse effect on the entire supply chain of the small business enterprises in Thailand, ranging right from production to bulk traders and community shops.

The foundation laying ceremony of this China City Complex coming up with an investment of 45 billion baht by the Yunnan based Ashima Yunnan Cultural Industry Group, which is a state enterprise, was held at a grand level on January 18. Thai-China International Products City, Thailand's leading wholesale centre engaged in sale of consumer and lifestyle products will also find a retail space of two million square metres in the complex coming up on the Bang Na-Trat Road, the first phase of which is likely to commence in October 2012.

It is apprehended that, the low-cost China goods would flood the Thai markets and this may adversely affect the domestic producers and economically weaken SMEs in particular.

Chinese producers carry out production on a very large scale, and thus their per unit production cost is lower than that of the Thai SMEs. Also that, the Thai government falls short of effective steps to check the quality of the goods imported from other countries.

Also, there is no permanent centre for distribution of the domestic SME goods in Thailand, which can stand in competition with the Thai-China International Products City.

It is apprehended that, once the complex starts operation, low-cost Chinese goods would be illegally smuggled in Thailand. As of now, the Thai traders import Chinese goods in the country, and opening of this centre is seen to certainly help them gain a higher share in the local market.

Furthermore, there is no assurance that the Chinese developers will keep their promise of providing space to the Thai enterprises in the new complex at cheaper rates, while the terms of selection of the Thai vendors also seem to be ambiguous.

The establishment of the new mall is believed to prove disastrous for the Thai retailers who have already been hit by the incursion of big retailers like Tesco Lotus from the western countries.

The Thai Textile Industry Federation representing seven textile and garment industries are to meet shortly to discuss the effects of establishment of this mall.

Fibre2fashion News Desk - India

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