Since the U.S.-China trade war began, 20 Chinese automobile brands have entered Thailand, and related Chinese auto parts manufacturers have followed suit by establishing factories in Thailand, increasing by 3.4 times. They are building an independent electric vehicle supply chain with technical and price advantages, significantly impacting local Japanese car manufacturers and Thai businesses.
Nikkei Chinese Online reported on the 20th that Chinese automobile-related companies are expanding their supply chain in Thailand. As major electric vehicle manufacturers like BYD enter, large component companies such as car batteries are also setting up factories. Chinese companies are using Thailand as a base to target the demand in the Asian market.
The report pointed out that in Thailand, more than 20 Chinese automobile brands, including BYD and Great Wall Motors, have established themselves, focusing on the Eastern Economic Corridor. Some manufacturers have already initiated localized production of electric vehicles. The BYD factory, which started production in July last year, has become a core, with its surrounding supply chain continuously being improved.
Many Chinese companies began accelerating their pace of relocating factories to Thailand since the U.S.-China trade friction intensified around 2018. According to statistics from the research firm MarkLines and the Thai government data, as of this March, the number of locally incorporated automotive-related parts companies funded by Chinese enterprises has reached 165, 3.4 times that at the end of 2017.
Japanese automotive manufacturers have been setting up production bases in Thailand since the 1960s, forming approximately 1400 related suppliers. Additionally, there are many joint ventures between Japanese car companies and groups with local businesses, constructing a vertically integrated industrial pyramid. On the other hand, Chinese firms almost never use the supply chains established by Japanese car companies and are trying to create a new industrial structure.
The report noted that the supply price of parts ordered by large Chinese car manufacturers from suppliers is nearly 30% lower than that of Japanese car manufacturers. Furthermore, Chinese companies show a clear tendency to produce key components like batteries independently or procure them from related Chinese suppliers.
Somboon, President of the Thai Auto Parts Manufacturing Association, stated that the further entry of Chinese companies would disrupt the existing supply chain, preventing local businesses from fully benefiting.
Executives from Thai Summit Group, a major Thai auto parts manufacturer, also pointed out that the parts provided by Chinese suppliers are cost-competitive, and Japanese car companies might also turn to use these parts.
The report said that although Japanese car companies like Toyota and Honda retain over 70% market share in the new car market in Thailand, it is continuously declining under the aggressive advancement of Chinese companies. If Chinese companies continuously expand their supply chain locally, their competitiveness will be further enhanced, and the dominant position of Japanese car companies might be shaken.