By Wang Jiping

‘Industrial Chinatown’Booms in Thailand

By Wang Jiping

Thai-Chinese Rayong Industrial Zone has become a top choice for Chinese companies investing in Thailand

All over the world, "Chinatowns” are places of both community and economic opportunity for overseas Chinese. However, there is a special “Chinatown”, dubbed“industrial Chinatown” in Thailand — the Thai-Chinese Rayong Industrial Zone.

The industrial zone, located 114 kilometers away from Bangkok and 27 kilometers away from the deep-water port at Laem Chabang, has developed not only into a community where Chinese live and work, but also an important platform for the promotion of Sino-Thai business cooperation within the framework of the Belt and Road Initiative, as well as a platform to help Chinese enterprises, especially private ones, in foreign investment and overseas cooperation.

With a planned area of 12 square kilometers, the site consists of an industrial area, a bonded area, a logistics and storage area and a residential area. It was developed by and is operated by China’s Holley Group, an important company in Belt and Road construction based in eastern China’s Zhejiang Province.

Platform Building

As one of the first firms in Zhejiang to invest in foreign countries, Holley first began engaging in international trade in 1987. After 30 years of exploration and practice, it has developed a “going global”strategy featuring intensive foreign trade and direct investment in key countries. Holley has set up branches and offices in more than 30 countries all over the world and established manufacturing bases in countries like India, Thailand, Uzbekistan and Russia.

Following the proposal and initial implementation of the Belt and Road Initiative, Holley Board Chairman Wang Licheng said he now has a new understanding of “going global”. Wang believes that more and more Chinese companies will go abroad in the future, and the implementation of the Initiative will offer them good opportunity to expand globally.

However, for Chinese firms,“going global” is not a simple task. Wang recalls a multitude of difficulties in Holley’s first few years of expansion outside China. Holley founded an ammeter factory on the outskirts of Bangkok in 2000 as its first attempt at foreign direct investment, which was also the first of its kind funded by a Chinese company abroad. Fewer than 200 workers were employed on the assembly line in a dilapidated building with an area of 1,000 square meters. This experience led Wang to realize that investing in foreign countries requires a suitable platform on which overseas Chinese enterprises could combine their advantages to improve their projects. Therefore, Wang came up with the idea of building an overseas industrial cluster for Chinese firms abroad.

“I learned from my experience that ‘going global’ doesn’t simply mean selling products, planning construction or mergers and acquisitions,”Wang explained. “In fact, it requires a systematic project that involves political, economic and cultural aspects. For example, we have to know how to use effective public diplomacy to facilitate risk management and market development. But in reality, due to their lack of knowledge of culture, laws and regulations in target countries, many Chinese companies, private ones in particular, either missed their opportunity to‘go global’, or suffered losses and lost confidence in foreign investment, which is a pity. For companies that aspire to achieve global operations, it is of great significance to participate in international competition by introducing products to overseas markets first and then enhancingtheir physical presence in specific countries.”

Wu Haisheng (left), manager of the technology department of Futong Group (Thailand), speaks to a Thai employee at the Rayong Industrial Zone.

After Wang decided to build an overseas industrial park, the next question he faced was the choice of its location. Considering his personal experience and national policies, he decided that Thailand was most suitable.

In March 2006, construction work 0n the Thai-Chinese Rayong Industrial Zone, also the first Chinese overseas industrial site in Thailand, officially began. After years of development, this industrial park is now home to nearly 90 Chinese-invested firms, mostly operating in manufacturing. It has attracted a total of over US$2.5 billion in Chinese investment in Thailand, and achieved a cumulative industrial value of US$8 billion.

Integrated Development Serving Locals

“Influenced by the Belt and Road Initiative’s emphasis on joint construction and sustainable development, we have made many adaptations to both our development concepts and measures in the construction of the Rayong Industrial Zone,”said Holley CEO Xiao Qijing.

For example, in an effort to promote green development, the Rayong Industrial Zone adopted a rule that all Chinese enterprises in the zone must build their facilities in accordance with ISO14001 environmental management standards and pass Thailand’s Environmental Impact Assessment. The industrial zone’s administration conducted a screening process when a new firm was introduced, with the aim of creating a healthy upstream and downstream industrial chain and maximizing agglomeration effects, while at the same time avoiding homogeneity competition among Chinesefunded enterprises. Also, in order to reduce Chinese firms’investment risk and costs in Thailand, a team comprised of both Chinese and Thai staff was assembled, providing Chinese firms with professional services like target market research and policy consulting.

Thanks to its advantages in geographical location, preferential policies and infrastructure, the Rayong Industrial Zone has helped many Chinese-invested enterprises achieve success. Meanwhile, it has given sufficient consideration to local needs when introducing new members, greatly benefiting Thailand in terms of local employment, personnel training and technology transfer.

At present, construction work on the third phase of the Thai-Chinese Rayong Industrial Zone is in full swing. With the expanded industrial park extending to the border of Thailand and Myanmar and the port of Dawei in southeastern Myanmar, Chinese companies will have access to a land route to the Indian Ocean. Riding the wave of the Belt and Road Initiative, Holley aspires to expand its overseas industrial real estate business by optimizing the development model of the Rayong Industrial Zone, so that a broader platform meeting the diverse needs of Chinese enterprises in global operation will be established.