Holley Group’s Chinatown in Thailand has green ambitions
Industrial zone near Bangkok contributes to the local economy by boosting tax coffers and job opportunities
When you talks about Chinatowns, the first thing that comes to your mind is a place with high archways, picturesque shops, red lanterns, and streets full of Chinese people going about their daily lives.
But 114 kilometers outside of Bangkok, the capital of Thailand, lies another Chinatown that is looking to establish China’s green credentials in the global marketplace. At the Rayong Industrial Zone, there are no red lanterns or archways on display. Instead what greets visitors are expansive green lawns and sprawling factory buildings of several Chinese companies that make new-energy materials, automobile accessories and electronic gadgets.
Unlike most of the industrial parks in China that are initiated by local governments, the Rayong Industrial Zone has been constructed by Holley Group, a private company from China, and its Thai partner Amata Group. Launched in July 2005, the industrial zone is now the main revenue generator for the Rayong region.
Of the 66 companies that are slated to operate in the Rayong Industrial Zone, more than 40 have already started production. Collectively these firms have invested about $1.5 billion and created more than 10,000 jobs for local people.
The output value of the zone has already reached $4.3 billion, while the amount paid as taxes has topped $70 million.
Wang Licheng, chairman of Holley Group, said that the Rayong Industrial Zone is an ideal foreign platform for Chinese companies planning overseas expansion.
“My understanding of going global is not dumping our products in overseas markets or using other countries’ natural resources at very low costs,” he said. “The right way is to encourage our manufacturers to invest in other countries, creating employment and tax income for local governments.”
Located in Hangzhou, capital city of Zhejiang province, Holley Group established its ammeter factory in Thailand in 2000, one of the first Chinese manufacturers to invest in the country.
It took the firm two years to establish its presence in Thailand’s mainstream market. Xu Genluo, president of the Rayong Industrial Zone, who was then in charge of the company’s Thailand business, said the troubles and anxieties back then were beyond description.
“We had taken a lot of detours during our overseas exploration. That gave us the idea of being a service provider for Chinese companies, especially private ones, who are also keen on tapping global markets,” said Xu.
In 2005, Holley Group signed agreements with Thailand’s top industrial estate developer Amata Group to jointly construct the industrial zone.
Only industry leaders and environmentally friendly companies were allowed to be a part of the industrial zone and it was christened as “green industrial Chinatown” by the local people, said Xu.
“I enjoyed working with the Chinese partners and we are planning more such tie-ups in the future,” said Vikrom Kromadit, chairman of Amata Group.
The industrial zone plans to attract 200 more Chinese companies to invest in Thailand in the next two years.
Xu said that Chinese companies, especially private ones, are keen on going abroad. The enthusiasm has surged after President Xi Jinping put forward the Belt and Road Initiative in 2013.
“We had 40 companies in the industrial zone before 2013. After the initiative, more than 20 firms expressed keenness to join us,” he said.
According to a survey conducted by All-China Federation of Industry and Commerce, private companies from China have speeded up activities in overseas markets since 2010.
Last year, overseas investment, and merger and acquisition activities from Chinese private companies reached $23 billion, three times that of 2010.
“It is difficult for private companies to survive alone in overseas markets. We are offering them an industrial zone where they can work together,” said Xu.
Hangzhou Zhongce Rubber Co Ltd, China’s largest tire producer in terms of annual production, started operating its plant in the industrial zone in June.
The company invested 1.8 billion yuan ($285 million) this year for the construction of its Thai plant. It plans to invest about 4.5 billion yuan in the whole project.
Shen Jinrong, chairman of Hangzhou Zhongce Rubber, said that Thailand is a key element of the company’s internationalization strategy, while the industrial zone offers great convenience.
“There are several investment incentives like exemption from corporate income tax for eight years, andChinese language services,” he said.
Shen said that the biggest advantage is that tires manufactured in Thailand can help the company avoid trade barriers imposed by Western countries.
“We need to diversify our products’ countries of origin, so that we can deal with trade protectionism by other nations,” he said.
While Shen remains confident about the future, Futong Group has already achieved its initial target in Thailand.
As China’s largest fiber-optic cable producer in terms of market share, Futong Group entered the industrial zone in 2010. Currently it accounts for about 40 percent of the Thai market.
Wei Guoqing, general manager of Futong’s Thailand branch, said that the company has established a complete industrial chain in Thailand that can cover the entire market in the Association of Southeast Asian Nations.
Xu said that the industrial zone has already established its own brand that Chinese companies can tap.
“I think we have built a model for Chinese overseas industrial zones,” he said.
Wang, Holley Group’s chairman, said that with the success of the Rayong Industrial Zone, the company is planning to construct two more overseas industrial zones to further provide platforms for Chinese manufacturers across the world.
The company is setting up an industrial zone in the north of Monterrey, Mexico. The site is 200 km from the US border and construction will start at the beginning of next year.
Once construction is complete, the 8.5-square-kilometer industrial zone will host about 60 to 80 Chinese manufacturers of automobile accessories, photovoltaic and wind power equipment.
“TheMexican zone will be a stepping stone for Chinese companies to tap the US market with lower taxes and fewer trade barriers,” he said.
In addition to the Mexican project, North Africa is also onWang’s plan. The company will open an industrial zone in that area, most likely in Tunisia.
“The North African industrial zone will cover African, European and Middle East markets, which, together with the previous two, makes us capable of reaching the whole world,” he said.
We had taken a lot of detours during our overseas exploration. That gave us the idea of being a service provider for Chinese companies, especially private ones, who are also keen on tapping global markets.”
Located 114 kilometers outside of Bangkok, Rayong Industrial Zone houses 66 Chinese companies that make new-energy materials, automobile accessories and electronic gadgets.
A Thai worker in Holley Group’s Thailand factory. Collectively, Chinese firms in the Rayong Industrial Zone have created more than 10,000 jobs for local people.