VERYWHERE you look on Thailand’s Amata industrial estate in Rayong you see signs in Chinese. It’s a similar story just along the coast in the tourist resort of Pattaya, where Mandarin is increasingly visible alongside English and Russian.
As China’s economy slows, its investors are looking abroad for growth and Thailand, home to one of the world’s largest ethnic Chinese minorities and a gateway to Southeast Asia’s 600 million consumers, is a hot investment destination in everything from industry to condos.
“Thailand is the first stop for Chinese tourists and investors,” said Xu Gen Luo, who runs the Thai-Chinese Rayong Industrial Zone, 200 kilometers southeast of Bangkok. Dozens of Chinese-owned solar, rubber and manufacturing plants have opened there since 2012.
“Thailand’s investment environment, especially its investment promotion policies, are among the best worldwide,” he said, adding that labor costs are higher in China.
Since a May 2014 coup, Thailand and China have drawn closer diplomatically and militarily as the ruling generals seek to counterbalance the country’s cooling ties with Washington.
Chinese investors have found a warm welcome in an economy that has seen investment crimped by a decade of political turmoil, and where the junta has struggled to revive exports and domestic demand in the two years since seizing power.
Investment pledges from China jumped fivefold in the first quarter to 5.7 billion baht (US$163 million) from just 1.1 billion baht a year earlier, giving China the third-largest investment slate during the period as Chinese firms raced to meet a tax break deadline and US investors held back.
That was still some way behind Japan, which pledged 15.6 billion baht. Japan has long been Thailand’s largest investor, with several large car plants accounting for much of the money.
Chinese investment is growing strongly, however, partly due to Beijing’s policy of encouraging manufacturers to shift production abroad to deal with industrial overcapacity at home.
“What we’ve seen so far in Chinese investment into Thailand is small compared to what’s coming,” said Joe Horn-Phathanothai, chief executive of Strategy613, a strategic adviser focused on Chinese and Thai corporate investments.
“Hand-in-hand with the slowdown in China we’ll see an increase in the number of deals the Chinese do abroad.”
Movie draws crowds
Last year, China was the fourth-biggest foreign investor in Thailand, behind Japan, the United States and Singapore.
Tourist numbers have also jumped, helped by the success in China of the 2012 comedy “Lost in Thailand.”
About 7.9 million Chinese visited the “Land of Smiles” last year, up 71 percent from 2014, when unrest in Bangkok that preceded the coup scared tourists away, and Thailand expects more this year.
There has been no slowdown in the number of tourists due to the economic deceleration in China, helped by the growth of budget airlines.
Thailand is expecting a record 33 million tourists this year, with China providing the bulk of the increase from the record set last year of just below 30 million.
Xu expects the number of Chinese firms at his park — jointly developed by China’s Holley Group and Thai industrial estate developer Amata Corp — to increase to about 100 this year, from 75 currently, and to 500 in the next five years.
In March, China’s Trina Solar, the world’s No. 1 solar panel maker, opened a manufacturing facility there.
Moving to Thailand can also help companies in industries such as solar and chemicals sidestep anti-dumping measures, industry experts said.
“China is facing trade barriers from many countries, particularly on solar, so many Chinese firms are coming to invest in Thailand,” said Visnu Limwibul, chairman of a Thai electronics and telecommunications industry group.
State-owned Gang Yan Diamond Tools (Thailand), which makes precision manufacturing blades, followed Beijing’s Belt and Road initiative to rebuild ancient Silk Road trade links with Asia and Europe and set up in Thailand in 2014.
“When we first came, we were concerned about the political situation and social instability. We are still concerned now,” said Chairman Zhao Gang.
China and Thailand are discussing cooperation on the Thai section of a rail project under the Belt and Road plan that would eventually connect Kunming in southwest China with Singapore, but have to date failed to agree on terms.
Real estate investment is also on the rise.
Bundit Sirithunyhong runs the Suttangrak Group, which has joined with Chinese firms to develop projects worth 5 billion baht to sell as time-shares to Chinese buyers.
“They’re not just investing in real estate, but starting to use Thailand as a base for business in Southeast Asia,” he said.
“Here they can stay and work ... It’s a step further in business expansion.”