Bangkok--8 Jun--EXIM Thailand
EXIM Thailand highlights three factors needed to be considered in order to penetrate new markets, namely, national wealth, trade policy and trade practice of the import countries. Asia is the highest potential market for Thai export of agricultural, industrial and food products. Since new markets cannot substitute traditional ones, Thai exporters have to adjust their export production strategy in response to foreign consumers’ changing behavior and decreased purchasing power. Thai exporters must also emphasize innovation to add more value to their merchandise.
Dr. Narongchai Akrasanee, Chairman of the Board of Directors, Export-Import Bank of Thailand (EXIM Thailand), Dr. Apichai Boontherawara, President of EXIM Thailand and Mrs. Kwanjai Tachasanskul, Vice President of EXIM Thailand’s Business Research Department, shared their viewpoints on the Thai export sector’s problems, their solutions and the role of EXIM Thailand in the 4th EXIM Forum titled “New Dimension of Thai Export and Global Competition” at EXIM Thailand’s Head Office on June 8, 2009.
EXIM Thailand’s research findings reveal that both the public and private sectors are striving to acquire new export markets. However, new market penetration is not easy. There are three factors, namely, national wealth, trade policy and trade practice which Thai entrepreneurs should consider before initiating trade or expanding their products in new markets.
National Wealth is a fundamental aspect which indicates overall purchasing power and potential of the new markets. In terms of Gross Domestic Product (GDP) per capita, many new export destinations such as South Korea, Hong Kong, Taiwan, Saudi Arabia and Libya have purchasing power on par with the existing main markets. Meanwhile, the current GDP per capita in some countries such as China and India is not high but has continually increased following the frog-leap economic expansion for many years. Such high purchasing power of the new markets which continues to rise is the opportunity for Thai exporters.
International Trade policy, particularly on tariff, is the first indicator of market entrance hurdle or opportunity. The new markets which maintain trade policy beneficial to Thai exports are those signing FTAs with Thailand such as China, India and the ASEAN countries. Import duty imposed by these countries on many Thai products are reduced to zero percent. Other countries which do not have FTAs with Thailand but charge low import duty include Saudi Arabia, United Arab Emirates (UAE), Taiwan and Libya.
Trade Regulation and Practice is another element which needs to be considered when finding new markets. Despite their economic strength and low import duty, some countries have adopted non-tariff measures such as product standard inspection and import quotas. However, many countries such as China, Taiwan and the ASEAN countries continually improve their trade regulation and practice. This can be seen as signaling a green light for Thai exports to enter their markets with greater convenience and speed.
When considering the three factors above, it is evident that Asian markets, particularly China, Hong Kong, Taiwan, and the ASEAN countries such as Malaysia, Indonesia and the Philippines, are high potential markets for Thai businesses. These markets are located close to Thailand and there is high demand for a number of Thai products such as rubber, tapioca products, chemicals, plastic pellets, electronic components, auto parts and food products which have more export potential than those produced by Thailand’s competitors.
The Middle East is another market which welcomes Thai exports. UAE and Saudi Arabia are among the world’s richest countries. Thai import products are in high demand, particularly, automobiles and electrical appliances (such as air conditioners, radios, televisions, washing machines), construction materials especially steel products, and food products, particularly canned and processed seafood products. Although the real estate sector in the Middle East is affected by the global financial crisis, the scope of damage is somewhat restricted. As the majority of large-scale investment projects are supported by the public sector of each country, the Middle East is still able to maintain its growth momentum.
Another interesting region is Africa, which Thai entrepreneurs tend to overlook as it is far from Thailand and consumer purchasing power is generally limited. However, many countries in Africa are potential markets for Thai exports. For example, South Africa is an important distribution center of the region. Meanwhile, Libya is the richest country in North Africa (Libya’s GDP per capita is 2.5 times that of Thailand’s) and has a favorable tax regime which facilitates international trade as well as substantial need to import foreign goods. Thai products which are in high demand in Africa include rice, canned and processed food and construction materials especially steel products for use in public utilities development and daily life products such as automobiles and electrical appliances (radios, televisions, washing machines).
Since export opportunities in the new markets cannot entirely replace those in the existing ones, Thai exporters should swiftly adjust their business strategy with regard to the main markets by modifying product specification to suit changing consumer behavior, which is subject to social changes. Emphasis should be placed, for example, on products that cater for a growing number of aged population in many countries, products relating to health, environment, social well-being promotion, products with lower costs in line with the dwindling wealth in major markets as well as products with lower technology but higher value for money.
In addition, Thai exporters should focus more on applying creativity to their product offerings. Knowledge on culture, design, technology, R&D and marketing techniques should be assimilated to yield products and services with special and unique features. This includes innovative packaging using natural materials and furniture manufacturing featuring trendy design with a hint of Thai charm. Such innovations should enhance Thailand’s competitive advantage and help the overall export sector to survive the global economic downturn and continue to grow sustainably.
To help Thai exporters to withstand the global financial turmoil, EXIM Thailand is fully prepared to support those wishing to enter into new markets in the form of financial and non-financial services, whether by becoming their joint venture partner or extending working capital loan. Besides, EXIM Thailand is ready to serve exporters by combining the body of knowledge belonging to different agencies which specialize in export promotion, innovation management or service providers for export such as accounting, IT, marketing and designing services. This endeavor is aimed at promoting the integration of Thai exporters’ manufacturing skills with export management capabilities in a professional and sustainable manner.
For further information, please contact Public Relations Division, Office of Top Management
Tel. 0 2271 3700, 0 2278 0047, 0 2617 2111 ext. 1140-8