During the last months, the economies of the Southeast Asian (SEA) regions have been negatively impacted by the low prices of imported products from China, leading to increased competition and reduced demand for locally produced goods, putting pressure on the economies of these SEA countries.
These products often have low prices, allowing them to be sold massively, quickly outcompeting local competitors. Faced with this situation, companies from countries like Thailand, Vietnam, and Indonesia, among others, have no choice but to reduce their production costs, leading to layoffs of thousands of workers.
Due to the reduction in domestic demand and the real estate sector crisis that China faces, the country has registered a surplus of goods. Given the complex economic context, several local companies have opted to seek consumers outside the country.
Recently, tensions have escalated between China and Southeast Asian countries due to the emergence of e-commerce platforms such as Singapore’s Shopee, Alibaba’s Lazada, and particularly China’s Temu and ByteDance’s TikTok Shop. These platforms have opened new direct sales channels for Chinese exporters, allowing them to reach thousands of consumers in the SEA region.
How are the governments of Southeast Asian countries addressing the situation?
SEAs country’s governments are taking measures to address the situation. One Recent example of governmental action has been the call made by the Prime Minister of Thailand, Srettha, who requested an investigation into the operations of the Chinese e-commerce platform Temu in Thailand. He expressed concerns that Temu might be repatriating profits to China without paying taxes in Thailand.
The Thai government is increasing its supervision of foreign e-commerce platforms, particularly Temu, to ensure compliance with Thai laws and tax regulations, prompted by concerns from local businesses about potential market disruption caused by low-priced Chinese goods, especially those offered by Temu with discounts up to 90%.
To address this, he has instructed the Revenue Department and the Ministry of Digital Economy and Society to investigate the matter. Srettha emphasized the importance of ensuring that foreign businesses operating in Thailand comply with local tax laws to protect small and medium-sized enterprises
In response to the increase in imported products from China, several countries in the SEA region have considered taking various measures to protect their internal economies.
Countries like Indonesia have reported that they will evaluate the possibility of increasing tariffs by up to 200% for imported fabrics. In January, Malaysia created a sales tax on imported goods for online products for less than 500 ringgit (108 dollars).
Similarly, Thailand advanced with a consumption tax or VAT of 7% for incoming purchases valued at less than 1,500 baht (42 dollars).
The issue between the SEA region and China has worsened in recent months due to various factors, such as the expansion of new sales channels, thanks to the rise of e-commerce, among other factors. Last year, Southeast Asia received approximately one-third of China’s exports.
Growing concern in Thailand over the situation with China
In recent months, the concern shown by Thais regarding the growth of Chinese culture in the country has been increasing.
A clear example has been the emergence of the idea on social media that Thailand is becoming a colony or State of China.
One of the main concerns for Thai nationals is that corrupt Thai politicians are allowing thousands of Chinese to grow within various Thai markets illegally.
Thais have strongly criticized the expansion of new waves of immigration from China in various aspects.
One of the main points they have criticized is that the new waves of immigration from China come with money and education, and are ready to expand in the country, positioning themselves as fierce competition for thousands of Thai merchants.
On the other hand, Thais have criticized the new waves from China, which have shown no interest in adapting to the local Thai culture and instead only use their language and culture, showing great disinterest in Thai cultures and traditions.
Finally, Thai merchants have expressed concern about the expansion of Chinese businesses in various industries such as EVs and new technologies, and how this could negatively affect the growth and competitiveness of the Thai economy.
