Chinese Enterprises Becoming Main Residents of Industrial Parks in Southeast Asia | Overseas · Investment (AI Translation)

中资企业正成为东南亚产业园区入驻主体｜出海·投资

[para. 1] Qiu Weigong, Chairman of the Thai-Chinese Business Council and Amata Industrial Park, expects around 90 foreign-invested factories to join Amata in 2024, 75% being Chinese. Chinese companies are the largest investor group in the park, currently hosting 1,600 factories, mostly Japanese enterprises, with Chinese firms making up about 25%. The aim is to grow Chinese enterprises from 400 to 2,000 based on past development trends. Amata Corporation PCL focuses on industrial real estate development in Southeast Asia, starting in 1988. Over 36 years, park areas expanded significantly, with projects in Thailand, Vietnam, Laos, and Myanmar.[para. 2] China's trade deficit with the U.S. pressures it to move production bases, similar to Japan's strategy to circumvent sanctions. Some Chinese products are registered as exported from Southeast Asian countries like Thailand. Companies are targeting upstream and downstream enterprises in local industrial parks to enhance the industrial chain.[para. 3] China, the largest foreign direct investor in Thailand, shifted from labor-intensive to high-tech investments. Chinese firms excel in cost control and R&D, exporting their innovations regionally, similar to Japan's model of domestic R&D and overseas production. Chinese electric vehicles significantly impact Japanese automakers in Thailand, with Chinese products improving quality and cost continuously. 600 of 1,600 factories in Amata focus on automotive parts, with Thai automobile production being a regional leader but gradually shifting to Indonesia due to its vast market.[para. 4] As of 2024, Chinese investment in Thailand's home electronics sector increased prominently. High-tech industries, including chips, are moving from Taiwan to Southeast Asia. Southeast Asia offers a substantial market potential for Chinese companies, with Vietnam and Indonesia leading as preferred destinations due to large markets and favorable trade conditions. The Belt and Road Initiative attracts significant Chinese investment, with countries aiming for higher-quality investments for industrial upgrades.[para. 5] Amata Park offers cost-effective options, with Laos providing substantial tax incentives and infrastructure benefits. The China-Laos Railway enhances logistics, and Laos permits free import of technical personnel, vital given its small population. The ASEAN region's large population provides a robust labor force.[para. 6] Under the Belt and Road Initiative, Chinese firms face challenges repatriating profits due to time-consuming local approval processes. Most Chinese companies in Southeast Asia focus on expanding operations rather than immediate profit repatriation, favoring ongoing growth and development of their investments. Given domestic high costs and external tariffs, companies strategically position themselves to mitigate impacts on profitability.[para. 7] Instead of single entities, industry chains expand abroad, with significant overseas ventures making it challenging to quickly return profits without risk of local resentment. Hidden investment costs, including import/export expenses and labor costs, pose challenges. This impacts decisions on whether to pursue heavy investments or capital-light strategies like OEM, especially in the photovoltaic industry hit by U.S. tariffs.[para. 8] Southeast Asian countries often require substantial local shareholder participation in foreign firms, strengthening legal relationships. Equity investment enables enterprises to secure local entity status. Many Chinese firms opt for equity investments, with predictions for increased use of such methods. Political factors, such as U.S. elections, may influence Chinese firms' international strategies and investments, particularly if U.S. sanctions target perceived threats.