Night Scene of Bangkok Photo: IC

Experts on Monday noted that a plan by the Thai government to entice manufacturing could drive more Chinese enterprises to move to the country due to China's industrial upgrading, which has been accelerated by trade friction with the US, even though there are challenges such as Thailand's weak infrastructure and political risks.

Thailand reportedly approved a manufacturing transfer plan recently to attract foreign companies looking to relocate production bases as the China-US trade war keeps escalating.

The measures include tax incentives, special investment zones for individual countries and plans to change the foreign business law to facilitate foreign investment, the Bangkok Post reported on Friday.

Thailand's feeble economic growth is a major reason behind the move, a Bangkok-based source familiar with the matter, who wished to remain anonymous, told the Global Times on Monday.

"The Thailand authorities have been striving to reach 3 percent growth in GDP, but industrial and commercial players are not that optimistic about it," the source said, adding that more economic stimulus plans are needed.

He noted that the newly approved manufacturing relocation plan would be mutually beneficial for Thailand's economic growth and Chinese manufacturers. 

"There have been a number of Chinese manufacturers moving to Thailand since the China-US trade war broke out, and the number will be growing after Thailand's measures are implemented," he said.

However, Thailand is more suitable for large-scale manufacturers, unlike Vietnam which has lower costs and easier access regulations that can draw rapid growth of small-scale foreign investment, the source noted.

Jinan Star Fastener Co, a manufacturer located in Jinan, East China's Shandong Province, has been investigating potential investment in Thailand, and a furniture producer located in Qingdao, Shandong, has decided to invest 90 million yuan ($12.6 million) and rent a 30,000 square meter plant in Thailand, according to the website of the Trade & Investment Service Center of the China Council for the Promotion of International Trade Shandong Sub-council.

Manufacturing relocation is in line with the process of China's industrial upgrading, Zhang Jianping, director general with the Center for Regional Economic Cooperation under the Ministry of Commerce, told the Global Times on Monday.

Currently, there are about 300 Chinese enterprises, registered in Chinese-Thai Enterprises Association, investing in Thailand, he said.

In comparison to Vietnam, Thailand, as a senior member of the Association of Southeast Asian Nations, has a more open investment environment, and has a higher income level, Zhang said.

"However, challenges remain for Chinese enterprises operating in Thailand, such as weak transportation infrastructure, a lack of highly educated human resources and possible political risks," Zhang said.

China has applied for 38 preferential investment projects in the first three months of 2019, worth 9.072 billion baht ($296 million), data from the Chinese Embassy in Thailand showed.