Challenges for Thailand in trade with China

[photopress:Mekong.jpg,full,alignright]A new research report prepared by the International Institute for Trade and Development (ITD) gives a new overseas perspective on trade with China. It states that penetrating the mainland China market requires a thorough understanding of each province’s different stage of development and culture.

China’s liberalization under the World Trade Organization framework has changed the spending patterns of its consumers, but most of them remain cautious and focused on savings. This according to Aksornsri Phanishsarn, a lecturer at Thammasat University’s Faculty of Economics and the author of China: One Country, Many Provinces and Different Regulations.

The report says that although China ranks fourth in the world in terms of gross domestic product, its per-capita income has remained low because of poor income distribution. It states, ‘Some 70% of China’s population is in the rural areas, and about 200-300 million well-heeled and middle-income people live in key cities in the country’s east coast.’

The research, which focuses on 18 out of the 31 provinces in mainland China, said 70% of Thailand’s trade with China in 2005 was in just three provinces: Guangdong, Jiangsu and Shanghai.

The main mode of transport to China was ship, thanks to China’s modern deep sea ports. Exporters can also utilize the Mekong River for shipments to China’s inner provinces.

China’s National People’s Congress in 2006 approved the 11th national economic and social development plan for the five-year period between 2006 to 2010.

The plan spells out the development framework as follows:

Beijing: to achieve 6% economic growth per year.
Shanghai: to achieve 9% growth; and develop as the world’s financial, trade and shipping hub.
Tianjin: to achieve 12% growth; and develop seaports as a hub of the northern region.
Chongchin: to boost growth to 10%; and become an economic centre of the upper Yangtze River region.
Guangdong: to slow economic growth to 9% from 13%; and focus on innovation, fundamental reforms and energy conservation.
Fujian: to be the economic center of the Taiwan Strait’s western region; promote relations with Hong Kong, Macao and Taiwan; and achieve 9% economic growth.
Liaoning: to upgrade its industrial sector; and achieve 11% economic growth.

The report says that Thailand’s trade activities with mainland China are impeded by poor transport networks among provinces, non-tariff barriers and protectionism.

The report said, ‘In the past, many Thai firms failed to operate in the Chinese market because of the lack of personal connections with the government and civil servants.’

A full copy of the research report can be downloaded from ITD.
Source: Bangkok Post