Thailand’s Board of Investment said that they have received a threefold increase in the number of applications from Chinese businesses looking to relocate their supply chain to other Asian countries.
While some of this can be chalked up as a relatively new phenomenon in China due to rising costs and regulations there, others are looking to set up shop in Thailand to avoid current tariffs, or future ones.
“Part of those investment projects are the result of trade disputes. These are investment plans only so some of them may never see the light of day, or take a few more years to complete,” says Khun Chokedee, deputy secretary general of the Thailand Board of Investment. “More Chinese companies and Chinese investors are visiting our offices in China to inquire about moving,” he says, adding that in the first quarter of 2019, the number of Chinese companies that have visited all three of their offices in mainland China rose by 40% from last year. “That’s an indicator of interest. I’d say most of that is due to the trade war.”
For much of the past year, China has seen companies speed up relocation efforts. For some industries, especially apparel, companies have already moved. China’s environmental and labor laws are getting more strict, a long overdue effort on the part of Beijing to get the country up to par with World Trade Organization rules on such things. Now that the trade war is in full swing, companies have gotten a shot in the arm and are moving faster abroad.
Others are using Hong Kong ports to export to the U.S. in order to avoid tariffs. Some are shifting sources of origin from Vietnam. On commodities, mainly soybeans, Chinese companies have avoided paying Beijing’s tariffs by buying from Brazil or having the government buy the beans for them in order to absorb port duties imposed by Beijing.