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

China Daily (Canada) - - BUSINESS - By YANY­IQI in Hangzhou yany­iqi@chi­nadaily.com.cn

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.”

PRO­VIDED TO CHINA DAILY

Lo­cated 114 kilo­me­ters out­side of Bangkok, Ray­ong In­dus­trial Zone houses 66 Chi­nese com­pa­nies that make new-energy ma­te­ri­als, au­to­mo­bile ac­ces­sories and elec­tronic gad­gets.

PRO­VIDED TO CHINA DAILY

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.

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