Chinese Enterprises Join Together in Thailand’s Machine Tool Market
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.