Chi­nese En­ter­prises Join To­gether in Thai­land’s Ma­chine Tool Mar­ket

China's Foreign Trade (English) - - Exhibit On Observation - By Wang Lili

On Novem­ber 23, 2016, the largest an­nual in­ter­na­tional ma­chine tool and met­al­work­ing tech­nol­ogy trade ex­hi­bi­tion and con­fer­ence in ASEAN – METALEX 2016 was held. Once again, Chi­nese en­ter­prises jointly went to Thai­land and at­tended the event.

The METALEX is the most pro­fes­sional and im­por­tant gath­er­ing of the ASEAN ma­chine tool and metal pro­cess­ing ma­chin­ery com­mu­nity, which is held once a year. To at­tract those “Made-in- China” brands, the ex­hi­bi­tion has a spe­cial show for Chi­nese en­ter­prises, aim­ing at help­ing Chi­nese en­ter­prises to fur­ther de­velop the South­east Asian mar­ket, and im­prove the in­flu­ence and aware­ness of their brands.

An op­por­tu­nity for Chi­nese en­ter­prises

Up to now, the lo­cal ma­chine tool mar­ket in Thai­land has been highly de­pen­dent on im­ports, and dom­i­nated by agents. In Thai­land, Ja­panese and Tai­wanese brands are pop­u­lar, but it is rare to see prod­ucts of China main­land en­ter­prises, mean­ing that they will face with both op­por­tu­ni­ties and chal­lenges if they plan to en­ter Thai mar­ket.

It is learned from the or­ga­nizer that, METALEX 2016 ex­hib­ited nearly 4,000 new equip­ments and tech­nolo­gies, and hosted sev­eral meet­ings, fo­rums and other ac­tiv­i­ties, at­tract­ing more than 70,000 at­ten­dants. Many ma­chine tool en­ter­prises from main­land China par­tic­i­pated the ex­hi­bi­tion, im­prov­ing the tech­ni­cal ex­changes and co­op­er­a­tion with lead­ing man­u­fac­tur­ers around the world, while pro­mot­ing the un­der­stand­ing of global mar­ket, and gain­ing op­por­tu­ni­ties for futher de­vel­op­ment and an in­crease in ex­ports.

Chongqing WNC suc­cess­fully won the agent agree­ment for the newly de­vel­oped Ger­man min­i­mal quan­ti­ties of lubri­cant ( MQL). Ac­cord­ing to an of­fi­cial, the com­pany par­tic­i­pated METALEX as a “learner” and also a “Made- in- China” brand, since Chongqing WNC holds a num­ber of in­ven­tion patents, and ex­hibit­ing the lat­est prod­ucts can give new ideas to global man­u­fac­tur­ing en­ter­prises.

Taikan Pre­ci­sion Ma­chine is a ser­vice provider of high end in­tel­li­gent equip­ment in­te­grated so­lu­tions. At the ex­hi­bi­tion, Taikan ad­ver­tised its prod­ucts through on-site ed­u­ca­tion and brochure is­su­ing and so on, to im­prove the brand avare­ness among metal and glass pro­cess­ing in­dus­try in Thai­land, which re­ceived good re­sults as sev­eral

cus­tomers showed strong in­ter­ests in co­op­er­a­tion.

In­creas­ing South­east Asian de­mand for ma­chine tools

In re­cent years, Thai­land ac­tively par­tic­i­pates in re­gional eco­nomic co­op­er­a­tion, and takes part in the Asi­aPa­cific Eco­nomic Co­op­er­a­tion and the ASEAN Free Trade Area. With the de­vel­op­ment of man­u­fac­tur­ing and ser­vice in­dus­tries, the Thai eco­nomic struc­ture changes dramti­cally, trans­form­ing Thai­land from an agri­cul­tural prod­uct ex­porter into an emerg­ing in­dus­trial coun­try. In 2015, China and Thai­land had a bi­lat­eral trade value of USD 75.4 bil­lion, mark­ing a year on year in­crease of 3.9%. Thai im­ports from China to­taled USD 38.297 bil­lion in 2015, up by 11.7% from the same year. China has been be­come the largest trad­ing part­ner of Thai­land for two con­sec­u­tive years now, with me­chan­i­cal and elec­tri­cal prod­ucts contributed half of Thai­land’s to­tal im­ports from China.

South­east Asia is the main tar­get re­gion for China to im­ple­ment the mar­ket di­ver­si­fi­ca­tion strat­egy and “go­ing out” strat­egy, but also an emerg­ing in­ter­na­tional mar­ket with great po­ten­tial. In par­tic­u­lar, with the re­cov­ery of Thai econ­omy, the rapidly de­vel­op­ing au­to­mo­bile in­dus­try, elec­tron­ics, elec­tri­cal equip­ment in­dus­try, metal pro­cess­ing in­dus­try and mold man­u­fac­tur­ing in­dus­try bring great de­mand for ma­chine tools, es­pe­cially for the spare parts and ac­ces­sories of ma­chine tools.

In ad­di­tion, the es­tab­lish­ment of CHINA-ASEAN Free Trade Area re­duces the trade tar­iff for more than 90% prod­ucts to zero, in or­der to boost the trade be­tween China and ASEAN. With the largest pop­u­la­tion and cov­er­ing area in the world, Chi­naASEAN free trade area is ex­pected to be­come “the third largest econ­omy around the world in the fu­ture”, fol­low­ing the EU and the North Amer­i­can Free Trade Area.

Wh i l e o t he r en g i ne e r i n g ma­chin­ery mar­kets are frozen like win­ter, the South­east Asian mar­ket is hot. For ex­am­ple, C&C Trucks en­tered the Philip­pine mar­ket, XCMG won a large or­der for non-road wide-body dump truck in South­east Asia mar­ket, Strong ex­ported ex­ca­va­tors in a large num­ber to South­east Asia, Sinotruk Chengdu Wang­pai won a large deal in South­east Asian mar­ket. We can learn from all th­ese trans­ac­tions that in the South­east Asian mar­ket there is a high de­mand for made-in-china en­gi­neer­ing ma­chin­ery prod­ucts.

Ma­chin­ery and parts rank the first among the top five im­ports into Thai­land. There are about 50,000 ma­chin­ery and metal pro­cess­ing en­ter­prises in Thai­land, most of which are state- owned small and medium com­pa­nies, pro­vid­ing ba­sic ma­chin­ery and spare parts and sim­ple metal pro­cess­ing ser­vices. Only a few for­eign­funded en­ter­prises in Thai­land can man­u­fac­ture high- end ma­chin­ery and parts. Among them, more than half are Ja­panese com­pa­nies, and most are en­joy­ing en­cour­ag­ing and fa­vored poli­cies by Thai­land Board of In­vest­ment.

The sta­tis­tics show that, the im­ports of ma­chine tool parts and ac­ces­sories into Thai­land were val­ued about 6.55 bil­lion Thai Baht (about USD 186 mil­lion), ac­count­ing for 28% of Thai ma­chine tool im­ports. Since those Thai ma­chine tool en­ter­prises lack ad­vanced tech­nolo­gies pro­fes­sion­als they need to meet the mar­ket de­mands. To en­cour­age for­eign in­vest­ment in ma­chine tool projects and ma­chine main­te­nance ser­vice cen­ters, Thai­land Board of In­vest­ment car­ried out fol­low­ing pref­er­en­tial poli­cies: in­vest­ment com­pa­nies can built up man­u­fac­tur­ing fa­cil­i­ties at the place they choose, deduct 25% of the net in­come to re­cover the in­fra­struc­ture in­stal­la­tion costs, dou­ble the de­duc­tion of trans­porta­tion costs and util­i­ties fee from from the in­come tax for 10 years, be ex­empt from cor­po­rate in­come tax for 8 years and im­port tar­iffs for equip­ments and molds, 100% own the com­pany, and in­tro­duce for­eign tech­ni­cal ex­perts to Thai­land.

The con­tin­u­ously de­vel­op­ing man­u­fac­tur­ing in­dus­try, along with the in­fra­struc­ture im­prove­ment pro­grams, is boost­ing the de­vel­op­ment of loca l me­chan­ica l and meta l pro­cess­ing in­dus­try in Thai­land, since such hard­ware is nec­es­sary to man­u­fac­ture prod­ucts that meet the qual­ity stan­dards of in­ter­na­tional com­pa­nies. At present, only a few in­dus­trial en­ter­prises in Thai­land are ca­pa­ble of pro­vid­ing qual­i­fied prod­ucts, while the other have to rely on im­ported equip­ments. How­ever, most Thai com­pa­nies tend to pre­fer lo­cal re­sources, which bring tremen­dous in­vest­ment op­por­tu­ni­ties in ma­chin­ery and metal pro­cess­ing in­dus­try in Thai­land.

In Thai­land, Ja­panese and Tai­wanese brands are pop­u­lar, but it is rare to see prod­ucts of China main­land en­ter­prises, mean­ing that they will face with both op­por­tu­ni­ties and chal­lenges if they plan to en­ter Thai mar­ket.

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