Even among American allies like Thailand, the commercial benefits from closer ties to the world’s second-biggest economy are too juicy to ignore
Today Thailand is once again a waypoint for the international ambitions of carmakers—this time from China. Chinese companies have been announcing investments in Thai factories left and right. In March, which in the first quarter overtook Volkswagen as the best-selling car firm in China, broke ground on anfactory in Rayong, already a carmaking hub. In April Changan unveiled a $285m investment to make its first right-hand-drive vehicles outside China.
, carmakers’ cost of acquiring new Chinese customers is becoming “just so high”, says Tu Le of Sino Auto Insights, a consultancy in Detroit. In recent months a price war has broken out in China betweenmarques. Many carmakers see foreign expansion as the surer route to growth. China exported $21bn-worth of cars in the first quarter of 2023, 82% more than in the same period last year.
Given the rising geopolitical and commercial tensions between China and the West, Chinese manufacturers are seeking a neutral ground from which to stage their global expansion. Thailand, as an American ally and member of the Regional Comprehensive Economic Partnership, which loosens restrictions on trade in intermediate goods, looks particularly appealing.
Some of the Chinese companies’ Thai-made cars will be sold in South-East Asia, where the economy is helpfully growing at a fast clip. Car sales in the region rose by 23% last year, to 3.4m. But the carmakers also have designs on the lucrative Western markets. Research by Allianz, a German insurer, finds that Chinese firms accounted for about 4% of battery-sales in Germany between January and March, three times the share a year earlier.
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