Cheap Chinese goods are flooding the markets in Southeast Asia, affecting local businesses and industries, creating joblessness, reports the South China Morning Post.
Thousands of textile workers have lost their jobs in Indonesia, it says.
A ceramics factory owner in Thailand who sells hand-painted soup bowls for 18 baht (53 cents) wonders how his Chinese competitors can sell them for eight baht. “I don’t understand how it’s possible to drop the costs that low,” he said.
The same problem confronts businesses throughout the region.
They can’t compete with the Chinese on prices as the latter’s highly automated supply chains and economies of scale translate into lower costs.
Western protectionism has made matters worse.
“As Western markets become less accessible to Chinese goods, Southeast Asia has increasingly become a focal point for Chinese exports,” said Muhammad Zulfikar Rakhmat, director of the China-Indinesia desk of the Jakarta-based Centre of Economic and Law Studies.
Price of openness
Southeast Asian businesses are paying the price for openness.
The large e-commerce market, new railways, and upgraded ports ensure the easy flow of goods. A raft of free trade agreements — from the Asean Free Trade Area to the Regional Comprehensive Economic Partnership—ensure open access to Chinese imports.
Now with cheap imports devastating local business and industry, not only workers and businessmen but governments, too, are beginning to realize the need for protection.
Thailand’s commerce minister pledged to tackle the influx of illegally imported goods and support local businesses.
‘Small steps of protectionism’
Thailand’s former prime minister Thaksin Shinawatra called for “small steps of protectionism” to tackle the surge of cheap Chinese goods.
“They’re not here to trade with us … they’re here to kill our business,” said Thongyu Khongkan, president of the Land Transport Federation of Thailand.
The Chinese embassy in Bangkok responded with a social media post pointing out that over the past few years China has imported more than 40 per cent of all Thai agriculture exports.
But some Thai consumers have begun supporting “buy local” campaigns, shunning Chinese goods.
‘Zero-dollar transport’
However, the damage is already done, according to Thongyu. He warns that some sectors of the Thai economy, such as logistics, have already slipped into Chinese hands as a result of “zero dollar transport”. This term describes a circular economy where Chinese companies pay Chinese suppliers to move goods in Chinese-owned trucks.
“I used to run truckloads of durians to Laos charging 80,000 baht (US$2,330), but Chinese companies are undercutting our price at 30,000 baht per load, which is impossible for Thai businesses to match,” Thongyu said.
In a bid to curb the influx of cheap Chinese products, Malaysia’s government imposed a 10 per cent levy on imported goods valued at 500 ringgit (US$115) or less back in January.
Malaysian objections
But retailers object this is inadequate, claiming they are losing up to 30 per cent of sales to online businesses shipping goods directly from China.
Malaysia has become a dumping ground for Chinese goods, said Ameer Ali Mydin, vice-president of the Malaysia Retailers Association.
He wants a flat tax of up to 20 per cent on all overseas online purchases to level the playing field.
Physical retail outlets benefit other businesses, too, as shoppers patronize cinemas and restaurants, he said.
“When people go online to shop, it not only affects Malaysian retailers selling the same item but also affects local manufacturers, transporters … it affects everything,” Ameer said.
“I have nothing against people buying things online, but I think people should buy … from companies that are established or operating in Malaysia,” he added.
Textile workers protest in Jakarta
Textile workers took to the streets of Jakarta in July, demanding support against competition from Chinese garments and textiles flourishing on e-commerce platforms like Shopee, Lazada, and TikTok Shop.
At least 12 factories closed from January to July this year, according to the Nusantara Trade Union Confederation, resulting in more than 13,000 job losses.
The protests led the government to introduce new import tariffs ranging from 100 to 200 per cent on certain goods from China, including textiles, clothing, footwear, ceramics and electronics.
Indonesia’s Trade Minister Zulkifli Hasan warned that small and medium enterprises could collapse if the country was “flooded with imported goods”.
Indonesia wants the Chinese to invest in local enterprises.