Appliance sector to gain from tensions

The Federation of Thai Industries (FTI) is optimistic the country’s electronics and home appliance sectors can benefit from a prolonged US-China trade war in 2020 as supply chain sourcing will choose Thailand to avoid the dispute.

Gritsada Suptuaychone, vice-chairman of the FTI’s electrical, electronics, telecommunications and allied industry club, said the trade war has pushed many companies in electronics and home appliances to seek new business opportunities in Southeast Asia.

Some are moving manufacturing lines out of the two countries, seeking suppliers in other countries.

“Thailand, Vietnam and Cambodia are the three countries vying for relocations,” he said.

“The obstacles include infrastructure readiness and a lack of highly skilled labour.”

Mr Gritsada said both public and private sectors in Thailand should plan urgent strategies to attract those manufacturers seeking to move.

“Most manufacturers are wellknown companies from Japan, China, Taiwan and South Korea,” he said. “They may source new components from Thai suppliers or begin new investment projects in provinces here.”

Mr Gritsada said Thailand should not position itself as a labour-intensive country. It needs to develop as a highskill labour market for those sectors.

He cited a survey from the South China Morning Post that found 72% of companies with supply chain sourcing in China will move out from that country.

Some 77% of companies in the supply chain for electronics and home appliances in the US also plan to move out.

Two-thirds of companies in both countries are putting off investment projects in both countries to avoid the trade war.

For Thailand, Mr Gritsada said Panasonic, Toshiba Machine, Daikin Industries and Delta Electronics plan to expand their production lines locally.

According to the FTI, the export value of home appliances from Thailand totalled 576 billion baht during January to September, down by 2.15% from the same period last year.

The shipment of electronics for the period stood at 822 billion baht, down by 11.4%.

“But some products saw growth over the first nine months such as TV receivers (+8.6%), integrated circuits (+4.16%) and refrigerators (+2.2%),” he said.

“Shipments to Japan for the period grew 12.7%, while US exports increased 5.73%.”

Mr Gritsada expects shipments of electronics and home appliances from Thailand to drop by 3.24% this year.

He said shipments in 2020 are expected to see growth in the second half as each company normally spends roughly six months to source components or begin construction of factories in Thailand.

“2020 presents real opportunities for Thailand in the electronics and home appliance sectors,” said Mr Gritsada.