China’s BYD opens its first electric vehicle (EV) factory in Southeast Asia, in Rayong

 When Chinese electric vehicle maker BYD opened its first Southeast Asian factory in Thailand earlier this month, the nation of 66 million people basked in the limelight and won praise for its industrial vision.

What, however, received less attention was an announcement by another big automobile manufacturer - Suzuki Motor - just a few weeks earlier that it will shutter a Thai factory that produced as many as 60,000 cars a year.

The Japanese automaker's move mirrors those by scores of other companies in Southeast Asia's second-biggest economy which is bearing the brunt of cheap imports from China and a slide in industrial competitiveness due to factors including rising energy prices and an ageing workforce.

Thailand has witnessed nearly 2,000 factory closures in the last year, upending its manufacturing sector that contributes nearly a quarter of its gross domestic product (GDP).

It is weighing on the $500 billion economy and on workers such as Chanpen Suetrong.

The 54-year-old spent nearly two decades at the V.M.C. Safety Glass factory in central Samut Prakan province, checking the automotive and building products that rolled off the production line.

Chanpen said she was unexpectedly told in April that the factory was shutting down, leaving her without a job.

"I don't have any savings. I have hundreds of thousands of baht of debt," said the sole breadwinner in a family of three that includes an ailing husband and a teenage daughter. "I'm old, where will I go to work? Who will hire me?"

Monchai Praepriwngam, a director at V.M.C. Safety Glass, declined to comment on why the factory closed.

The manufacturing sector's woes have left Prime Minister Srettha Thavisin, who took power last year, struggling to fulfil his promise of bringing average annual GDP growth to 5% over his four-year term, up from 1.73% in the past decade.

"The industrial sector has slumped and capacity utilisation has fallen below 60%," Srettha told parliament last week. "It is clear that the industry needs to adapt."

Supavud Saicheua, chairman of the state planning agency National Economic and Social Development Council, said Thailand's decades-long manufacturing-driven economic model is broken.

"The Chinese are now trying to export left, right and centre. Those cheap imports are really causing trouble," Supavud told Reuters.

"You have to change," Supavud said, arguing that Thailand should refocus on making products that China wasn't exporting while strengthening its agriculture sector. "No ifs or buts."

ADAPT, OR CLOSE

The factory closures between July 2023 and June 2024 increased 40% from the preceding 12 months, according to the latest Department of Industrial Works data that has not been previously reported.

As a result, job losses jumped by 80% during the same period, with more than 51,500 workers left without work, the data shows.

The number of new factory openings has also slowed down, with large factories closing and small factories opening instead, Kiatnakin Phatra Bank's research division said in a June note.

The impact has spread to industries that are the main driving force of the economy, including the automobile industry, it said.

Meanwhile, smaller manufacturers are grappling with a rise in production costs on the back of steepening energy prices and relatively high wages, said Sangchai Theerakulwanich, chairman of the Federation of Thai SME.

"We compete with multinational businesses," he said. "Manufacturers unable to adapt quickly had to close business or change to make something else."

Starting this month, Thailand is collecting a 7% value-added tax on cheap imported goods priced less than 1,500 Thai baht ($41), mostly from China, but such products are still exempted from customs duties.

Nava Chantanasurakon, vice chairman of the Federation of Thai Industries, said his group has asked the government to look at measures to prevent tariff evasion amid the U.S.-China trade war and high barriers for some Chinese goods in other regions.

For now, Thailand's economy is projected to grow only about 2.5% this year - among the factors that have left a majority of Thais dissatisfied with Prime Minister Srettha's performance.

Srettha has argued that his party's controversial and delayed 500 billion-baht handout scheme that has met a barrage of criticism - including from the central bank - is essential: "It will be strong medicine to revive the economy."

Without a steady income, Chanpen said she was waiting for the 10,000 baht ($276) handout that 50 million Thais will be eligible to receive under the plan.

"The economy was bad during the previous government," she said, "but even after the new government has come, the economy is still as bad as before."

AfriPrime App link:  FREE to download...

https://www.amazon.com/Africircle-AfriPrime/dp/B0D2M3F2JT

Chinese auto exports surge, partly offsetting a sales slump at home

New cars for export wait for transportation on a vehicles carrier vessel at a dockyard in Yantai in east China's Shandong province.

Chinese auto sales slumped in June as the domestic economy remained sluggish, but buoyant exports offset the decline at home, an industry association said Wednesday.

Sales in China dropped 7.4% compared to a year earlier to 1.8 million cars, while exports rose 29% to 400,000 units, the China Association of Automobile Manufacturers said in a monthly report.

In the first six months of the year, exports rose 31.5% while domestic sales edged up 1.6%. The surge in exports comes at a time of growing concern in Europe and the United States that inexpensive China-made cars could overwhelm established automakers in the West.

While much of the concern has been focused on China's flashy and moderately priced electric cars, export growth has been concentrated mainly in gasoline-powered vehicles. They climbed 36% in the first half of the year and accounted for 78% of vehicle exports. Chinese EV exports were down 2.3%, while hybrids jumped 180% from a smaller base.

The exports have helped make up for weaker sales of gasoline vehicles in China as the overall market has stagnated and buyers have shifted to electric vehicles and hybrids.

Russia is by far the largest and a still rapidly growing export market, where Chinese makers have filled a void left by the departure of other automakers after the Russian invasion of Ukraine. Other sizeable markets include Brazil and Mexico in Latin America, the United Arab Emirates and Saudi Arabia in the Mideast and Belgium and the U.K. in Europe.

The European Union imposed provisional duties on Chinese electric vehicles last week, alleging that government subsidies give automakers in China an unfair advantage.

Chinese makers are moving production overseas. BYD, the country's largest EV maker, opened a plant in Thailand last week and plans to build factories in Brazil, Hungary and Turkey.

The sales drop in China was the second monthly decline in a row. Separate figures tabulated by the China Passenger Car Association show three straight months of falling sales. A severe real estate slump has dampened economic growth and depressed consumer confidence.

AfriPrime App link:  FREE to download...

https://www.amazon.com/Africircle-AfriPrime/dp/B0D2M3F2JT