RAYONG: Everywhere you look on Thailand’s Amata industrial estate in Rayong you see signs in Chinese. It’s a similar story just along the coast in the tourist resort of Pattaya, where Mandarin is increasingly visible alongside English and Russian.
As China’s economy slows, its investors are looking abroad for growth and Thailand, home to one of the world’s largest ethnic Chinese minorities and a gateway to Southeast Asia’s 600 million consumers, is a hot investment destination in everything from industry to condominiums. “Thailand is usually the first stop for Chinese tourists and investors,” said Xu Gen Luo, who runs the Thai-Chinese Rayong Industrial Zone, about 200 km (120 miles) south east of Bangkok. Dozens of new Chinese-owned solar, rubber and industrial manufacturing plants have opened in the zone since 2012.
“Thailand’s investment environment, especially its investment promotion policies, are among the best worldwide,” he said, adding that labor costs were higher in China. Since a May 2014 coup, Thailand and China have drawn closer diplomatically and militarily as the ruling generals seek to counterbalance the country’s cooling ties with Washington.
Chinese investors have found a warm welcome in an economy that has seen investment crimped by a decade of political turmoil, and where the junta has struggled to revive exports and domestic demand in the two years since seizing power. Investment pledges from China jumped fivefold in the first quarter from a year earlier to 5.7 billion baht ($163 million), from just 1.1 billion baht, giving China the third largest investment slate during the period as Chinese firms raced to meet a tax break deadline and US investors held back.
That was still some way behind Japan, which pledged 15.6 billion baht. Japan and China jostle for influence in Southeast Asia and Tokyo has long been Thailand’s largest investor, with several large car plants accounting for much of the investment. But Chinese investment is growing strongly, in part due to Beijing’s policy of encouraging manufacturers to shift production abroad to deal with industrial overcapacity at home.
“What we’ve seen so far in Chinese investment into Thailand is small compared to what’s coming,” said Joe Horn-Phathanothai, chief executive of Strategy613, a strategic advisor focused on Chinese and Thai corporate investments.
“Hand-in-hand with the slowdown in China we’ll see an increase in the number of deals the Chinese do abroad.”
Last year China was the fourth biggest foreign investor in Thailand, behind Japan, the United States and Singapore.
Tourist numbers have also jumped, helped by the huge success in China of the 2012 slapstick comedy “Lost in Thailand”. About 7.9 million Chinese visited the “Land of Smiles” last year, up 71 percent from 2014, when unrest in Bangkok that preceded the coup scared tourists away, and Thailand expects more this year.
There has been no slowdown in the number of tourists due to the economic deceleration in China, helped by the growth of budget airlines, tour operators say.
“Our products are relatively cheap. We have good food and culture and no political problems with their government, unlike Japan and Taiwan,” Ronnarong Chewinsiriamnuai, president of the Thai-Chinese Tourism Alliance Association.
Thailand is expecting a record 33 million tourists in 2016, with China providing the bulk of the increase from the record set in 2015 of just below 30 million.
Xu expects the number of Chinese firms at his park – jointly developed by China’s Holley Group and Thai industrial estate developer Amata Corp – to increase to about 100 this year, from 75 currently, and to 500 in the next five years.
In March, China’s Trina Solar, the world’s No. 1 solar panel maker, opened a manufacturing facility there.
Moving to Thailand can also help companies in industries such as solar and chemicals sidestep anti-dumping measures, industry experts said.
“China is facing trade barriers from many countries, particularly on solar, so many Chinese firms are coming to invest in Thailand,” said Visnu Limwibul, chairman of a Thai electronics and telecommunications industry group.
State-owned Gang Yan Diamond Tools (Thailand), which makes precision manufacturing blades, followed Beijing’s “One Belt, One Road” policy to rebuild ancient Silk Road trade links with Asia and Europe and set up in Thailand in 2014.
“When we first came, we were concerned about the political situation and social instability. We are still concerned now,” said board chairman Zhao Gang, but added the strength of the Chinese business community in Thailand helped overcome those concerns.
China and Thailand are discussing cooperation on the Thai section of a rail project under the “One Belt, One Road” plan that would eventually connect Kunming in southwest China with Singapore, but have to date failed to agree on terms.
As the expatriate Chinese community grows and more Chinese look for holiday homes in Thailand, real estate investment is on the rise.
Bundit Sirithunyhong runs the Suttangrak Group, which has just joined with Chinese firms to develop housing projects worth 5 billion baht ($140 million) to sell as time-shares to Chinese buyers.
“I think they are not just investing in real estate, but starting to use Thailand as a base for business in Southeast Asia,” he said. “Here they can stay and work as their second homes. It’s a step further in business expansion.”