Chinese companies look to SE Asian markets

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China may be dubbed the "workshop of the world" - but today many of its companies are looking to re-locate production. Increasing demands for higher wages in the country are leading many labour-intensive manufacturing industries to shift their focus to South East Asia. One company, Guangken Rubber based in south China’s Guangdong Province, has just opened a production plant in Thailand.

This factory in northern Thailand helps to supply China’s insatiable demand for rubber.

Its Chinese owners built the plant at a cost of almost 12 million US dollars and began production in May - as part of a policy to expand across South East Asia.

Availability of labour and low production costs were both factors in choosing the plant’s location.

Other important factors were the close proximity of rubber plantations for a supply of raw material - and the support of the Thai Board of Investment, created to attract overseas investment.

This is the company’s third plant in Thailand. It also has factories in Malaysia and Indonesia.

China uses around three million tonnes of rubber each year. It can only produce between 500,000 and 700,000 tonnes itself.

This factory, near the north-eastern city of Udon Thani, will buy in 90,000 tonnes of raw rubber from neighbouring growers, and turn it into 50,000 tonnes of processed product.

These black bales of processed rubber are then exported back to China to be used in the making of vehicle tyres.

The plant provides work for seven senior Chinese managers and 150 Thai workers.

Lin Shengrong, Guangken Rubber (Mekogn River) Ltd., said, "It’s comfortable to invest in Thailand, its politics are stable and Thai people are nice. Thais are friendly to Chinese. BOI, Ministry of Agriculture and Thai government is pleased to have us invest here."

Over the last 25 years, rubber has become increasingly important in the Udon Thani region. There are now around 30,000 rubber growers.

This organization says the arrival of foreign companies is good for the area.

Vichan Pangchutti, Rubber Replanting and Fund, said, "This year Japanese and Chinese companies have come and opened in Thailand and that provides more options for Thai growers to sell the rubber. So it’s a good opportunity for Udon Thani growers to sell for a good price."

The Board of Investment offers tax incentives, no import duties, relaxed rules on exports and access to a wide range of official agencies. Thailand now has seven international airports, extensive 3G, wifi and broadband, six deep sea ports and modern mass transit in its cities.

It’s also expanding its highways system, linking every province and the neighbouring countries of Laos, Cambodia and Vietnam.

And it has a 10-year plan for a high-speed rail network connecting Thailand to southern China. In Thailand, ownership of the rubber plantations must remain in Thai hands.

But overseas companies can own plantations in Malaysia - and Guangken Rubber will soon open its own plantation in Cambodia.

But there are good relations between the governments of Thailand and China, and this company says Thailand is the easiest of the South East Asian nations in which to operate because of its good communications and transport.

The United Nations ranks Thailand as the 10th most attractive country in the world, in which to do business.