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Chinese E-Commerce Giant’s Investment Blitz in Thailand Draws Concerns

Nontarat Phaicharoen and Wilawan Watcharasakwet
Bangkok
2018-05-23
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Alibaba co-founder Jack Ma (right), shakes hands with Thai Minister of Commerce Sontirat Sontijirawong after a signing ceremony for an e-commerce deal, April 19, 2018.
Alibaba co-founder Jack Ma (right), shakes hands with Thai Minister of Commerce Sontirat Sontijirawong after a signing ceremony for an e-commerce deal, April 19, 2018.
Nontarat Phaicharoen/BenarNews

When Chinese tycoon and Alibaba co-founder Jack Ma launched a marketing campaign for Thailand’s durians on his company’s massive online retailing website, the e-commerce billionaire and Thai retailers were impressed by the instant success – 80,000 of the large thorny fruits were snapped up within a minute.

But there were concerns too.

The Thai retailers were worried they would eventually be overwhelmed by the marketing blitz of Tmall.com, China’s largest online retailing website, which has access to more than 1.4 billion Chinese consumers hungry for farm products such as fragrant rice, durians and other tropical fruits.

Ma, on the other hand, was concerned over the Thai uneasiness at a time when his giant e-commerce group was moving to pump in more than U.S. $330 million worth of investments into Thailand in a bid to tap Chinese consumer demands for the Southeast nation’s agricultural goods and tourism market.

“We don’t have the capability to monopolize trade, and it is impossible to monopolize a digital market,” Ma said in assuring Thais present at a business reception in Bangkok last month

“People worry about Alibaba (as it) comes to Thailand: Are we going to occupy Thailand? Are we going to take out the jobs?,” Jack Ma told the gathering after inking four MOUs with the Thai government covering trade, investment, support for e-commerce and tourism. “We are not interested in that.

“We are interested in and focusing on enabling entrepreneurs and partners in Thailand (to handle digital trade), making sure they are successful because we believe only (if) they are successful, we will be successful.”

Aside from Thai investments already in the pipeline, Alibaba announced a couple of months ago that it would double its investment to $4 billion in its subsidiary Lazada, a leading online shopping firm in Southeast Asia, demonstrating its desire to beef up its 560 million regional consumer base.

Some Thais are concerned that Alibaba’s aggressive investment stance would not only affect the local retail market but also cause reverberations in key local sectors such as banking and transportation.

“We are concerned that the existing Thai e-commerce, retailers and department stores will be impacted” by Alibaba’s expansion in Thailand, Pawoot Pongvitayapanu, president of the Thai E-commerce Association, told BenarNews.

“The market could be monopolized by Alibaba because they are a big player,” he said. “And the banking, transportation sector as well as many other industries would surely [have a] domino-like effect.

Pachiraya Vorapongpichet, a Thai online trader of garments and wood products, said while Thailand’s strong agricultural sector may have an edge over China, the Southeast Asian nation may lose out on other products in which China is more competitive.

A growing number of Thai businesses are becoming proxies of Chinese companies in the tourism and property markets, such as in the Phuket resort south of Thailand.

Thai Deputy Prime Minister Somkid Jatusripitak defended the Alibaba investments, saying the Chinese company would be a vital marketing platform for the local agricultural sector.

“The government wants this (investment) because the majority of Thais are famers. Every year, we have product oversupplies and this investment could help them a lot. We believe these people want changes,” Somkid said following a meeting with Jack Ma last month.

“To be a middle-income country, we need to improve the livelihood of farmers and younger generations to be able to live in digital era,” he said.

A pick up in exports and tourism backed by rebounding farm output pushed Thailand’s economic growth to a five-year high in the first quarter of 2018.

Gross domestic product rose 4.8 percent during the January-March period from a year ago, the National Economic and Social Development Board said this week.

Tourists from China are the top visitors to Thailand, accounting for nearly one-third of arrivals.

The Tourism Authority of Thailand (TAT) is also moving to expand cooperation with Fliggy, Alibaba’s online travel business and China’s leading online travel service provider, to boost tourism, reports have said.

“In any case, like it or not, we cannot bar Alibaba from entering Thailand. So the best approach is to ensure local tour operators are well prepared for increased competition,” said former TAT governor Pradech Phayakvichien, a local newspaper The Nation reported.

“They should adjust their approach and work out how they could get the most benefits out of the collaboration,” he said. “In the digital era, we need technology to help connect us to the world and potential customers.”

China is the fourth largest investor after Japan, Singapore and the European Union.

Thailand’s Chinese-made VT-4 battle tank fires a round during a demonstration at Adisorn Cavalry Center in Saraburi province, Jan. 26, 2018. [Pimuk Rakkanam/BenarNews]
Thailand’s Chinese-made VT-4 battle tank fires a round during a demonstration at Adisorn Cavalry Center in Saraburi province, Jan. 26, 2018. [Pimuk Rakkanam/BenarNews]

 

Growing military ties

Thailand’s military is also increasing its partnership with China.

Thailand recently signed a contract to purchase three submarines valued at $1.1 billion (36 billion baht) from China, expecting the first delivery in the next five to six years. China also assisted in developing a multiple rocket launcher system DTI-1.

The Royal Thai Army recently showcased its new Chinese-built VT-4 main battle tanks to refute public doubts about the quality of Chinese-made weapons. Thailand plans to purchase at least 48 Chinese tanks to replace 1950s-era U.S. M-41 tanks.

As the number of Chinese-made weapons in its arsenal increases, the Defense Ministry has been working on joint ventures to establish repair center and spare part warehouse in Thailand, according to spokesman Lt. Gen. Kongcheep Tantrawanich, who did not estimate the value of the projects.

China has been getting closer since the Thai military seized power four years ago, but ties with the United States, Thailand’s traditional ally, are not affected, one analyst said.

“Since the junta took power, Thailand’s armed forces received more and more assistance from the Chinese People’s Liberation Army... [but] that doesn’t mean the U.S. influence is reduced because Thailand and the U.S. are long-standing allies,” said Dulyapak Preecharush, an assistant professor of Southeast Asian Studies program at Thammasat University.

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