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NEWS UPDATES Asean Affairs        20  January 2011

Thais skeptical of China City mall

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The arrival pf a Chinese mega-mall has raised huge concerns that cheaper goods and strong financial support from China will hurt small Thai businesses throughout the supply chain from manufacturing to wholesale centers and community shops.

China City Complex, a 45-billion-baht investment by the Yunnan-based state enterprise Ashima Yunnan Cultural Industry Group, was launched on Tuesday. It will include Thai-China International Products City, Thailand's biggest wholesale centre for consumer and lifestyle goods, with 2 million square metres of retail space on Bang Na-Trat Road. Its first phase will open in October 2011.

A huge influx of cheaper Chinese goods could defeat local producers, especially Thai SMEs with weak financial status, said Manapol Poosomboon, a vice-chairman of the Federation of Thai Industries.

"Chinese manufacturers have large economies of scale of their production and thus lower production costs (less) per unit than Thai small enterprises," he said. As well, he said, the Thai government lacked effective measures to control the quality of imported goods.

Thailand has no permanent distribution centre for local SME products on the scale of the Thai-China International Products City.

"I am afraid that cheaper Chinese products will be legally imported to Thailand once the Bang Na centre is opened, together with Chinese sellers. Currently, Chinese imports are brought in by Thai traders," he said. "This will definitely allow them to gain a higher market share in domestic market."

There is also no guarantee that the Chinese developer would offer cheaper space for Thai enterprises as it promised on Tuesday, and conditions for selecting Thai vendors were not clear, said Mr Manapol.

"This is definitely going to be another disaster for Thai retailers which have suffered from a large invasion of western retail giants like Tesco Lotus," he said.

Suchai Pornsirikul, chairman of the Thai Textile Merchants Association, added: "We don't mind foreign investment, but more study is needed to measure its actual benefits to local businesses, consumers and the country.

"Worse prospects are anticipated if [Chinese traders] are allowed to import products and use Thailand as a distribution center without proper inspection. Thailand's image could be hurt."

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