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Thai investors urged to focus on six high-speed rail provinces in China


2012-05-14 From:China Business Minister    [Large Medium small]
Thai enterprises should seek to penetrate six promising Chinese provinces, especially Henan and Anhui, as high-speed trains will bring increased business opportunities to the areas, while provinces along the eastern seaboard of China offer opportunities for trading businesses.

These views were expressed yesterday by Thai businessmen who are already operating successfully in China.

Thanakorn Seriburi, vice chairman of CP Group, who has led the company in its business in China for more than 30 years, said the group had conducted its own study into areas of China where companies could successfully conduct business, besides hiring an external consultancy firm to do similar research.

The studies identified six provinces in the world's second-largest economy, including Henan, Anhui, Shanxi and Yunnan, on which companies should place emphasis if they want to expand into the country.

He was speaking at the "China's 12th Five Year Plan: New Business Opportunities and Economic Collaboration in Pan-Beibu Gulf" seminar, organised by The Nation, Kasikornbank and China Daily.

He suggested that companies, particularly small and medium-sized enterprises, should keep an eye on the high-speed rail track the Chinese government is constructing, as it will pass through the six provinces identified in the research. Next year, China will have 13,000 kilometres of high-speed track.

The provinces highlighted in the studies are located in the middle of China, where many industries are now relocating in order to benefit from low labour costs.

Anhui is seen as particularly promising as it is only two hours from Shanghai by high-speed train, while Henan is interesting given its population of more than 100 million and its being China's second-largest agricultural producer.

"Some people may say that Thai companies should go to Western China, but I have a different view. The disadvantage of the western part of China is its low purchasing power. The six areas [highlighted in the research] have plenty of opportunity for Thai enterprises, even property developers. We should not miss this opportunity," Thanakorn said.

He said the construction of condominiums and office buildings in the six provinces meant there was room for Thai developers. The Chinese government has restricted property investment in the heart of the country, but local governments elsewhere do not have such limitations, as it is a major revenue earner for them.

For condominiums, there is high demand for units measuring 60-80 square metres, he said, adding that the key to success in the property business in China is good location.

He suggested that SMEs wanting to enter the Chinese market should focus on a limited number of provinces and not the whole of the vast country. They should know their strengths and focus on those that Chinese companies do not possess.

Besides, companies should focus on technology-oriented products in order to avoid the problem of copying. Sufficient investment capital is another important factor for success in China, he said.

"Although China is the largest market, competition in the country is also fierce. So, we should study the market carefully. Now, there are a lot of retired civil servants in China that are turning to business. These new entrepreneurs have a deep understanding of what consumers want, as well as regulations, and this makes for serious competition in the Chinese market. This is a time for those fish that swim faster eating those that swim slower," the CP Group executive said.

Pipit Aneaknithi, executive vice president for Kasikornbank's China business division, told the seminar the bank had tracked export and import information for Thai-Chinese trade and found that the highest number of transactions occurred in the eastern part of the country. This therefore presents an opportunity for Thai trading businesses, he said.

He emphasised that China had announced in its 12th five-year plan that it would double trade volume with Asean within four years. Last year, Thai-Chinese trade volume grew by 35 per cent, while trade in the first quarter of this year rose by 26 per cent year on year.

"Will we lose this opportunity to Indonesia or other Asean countries, or grab it ourselves?" he said.

Pipit advised companies to ascertain their advantages so that they could compete with Chinese enterprises. There are many opportunities, but Thai businesses first have to know their strengths, he added.

Kraisin Vongsurakrai, executive director of Cho Heng Rice Vermicelli Factory and operator of a food business in China for many years, said there were opportunities for Thai entrepreneurs in service businesses like horticulture, Thai restaurants, healthcare, hotels and international schools.

"China has grown very rapidly since becoming a member of the World Trade Organisation. Chinese companies can now make many of the same products as Thai enterprises. Therefore, we have to shift to focusing on making high-quality products, which Chinese people are willing to pay for, and to service business, for which Thailand has gained strong recognition," he said.
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