China, Japan could collaborate on development projects in Thailand: experts

Experts have said that for the China-proposed Belt and Road (B&R) Initiative to succeed in Thailand, different countries must work together to achieve common growth. In particular, China could cooperate with Japan on a number of projects such as high-speed railways and the Thailand 4.0 industrial plan. As such, "classy projects at the top and grassy projects down below together would form the B&R Initiative," said an expert.

A view of the work site of the China-Thailand high-speed railway near the town of Muak Lek, Saraburi Province of Thailand. (GT/Chu Daye)

While Chinese companies enlarge their market shares in Thailand, experts have said they will unavoidably run into Japanese companies, which have deep roots in the local market. Chinese companies could compete, learn and even cooperate with Japanese ones.

Wichai Kinchong Choi, senior vice president of Thailand's Kasikornbank, a major bank in Thailand, told the Global Times that China and Japan have huge potential to collaborate on development projects, such as Thailand's plan for the Eastern Economic Corridor (EEC), if the two sides are able to put political differences aside.

EEC is a massive project that integrates Thailand's southeastern provinces of Chachoengsao, Chonburi and Rayong with infrastructure development including a 200-kilometer-long high-speed railway, airports and ports.

COUNTRY COOPERATION

"The corridor is immense and can accommodate Chinese and Japanese companies according to their competitive advantages. With plans such as developing smart cities, the Thai government hopes to attract the best firms from not only China and Japan, but also European countries such as Germany and neighboring countries such as Singapore," Kinchong Choi said.

"At the company level, competition cannot be avoided, but at a macro level, complementarity from countries could converge in Thailand," he remarked.

Originally engaging in fierce competition, China and Japan are now inclined to cooperate in countries such as Thailand, where there is a strong Japanese business presence.

From May 30 to June 1, in order to implement a consensus reached between Chinese Premier Li Keqiang and Japanese Prime Minister Shinzo Abe on China-Japan joint cooperation in the third market, Ning Jizhe, vice chairman of China's National Development and Reform Commission, led a delegation to Thailand to participate in the International Seminar on Sino-Japanese Third-Party Market Cooperation in the EEC.

Chai Thanichanun, chairman of the Thai-Beijing Chamber of Commerce, said that Chinese companies could learn from their Japanese counterparts in terms of how to operate effectively in Thailand.

"The Japanese Chamber of Commerce in Thailand has played a key role in serving Japanese companies operating in Thailand. It gathers business intelligence, cultivates ties with the Thai government and commercial circles, and uses its years-long connections to provide soft services and support to Japanese companies," Chai told the Global Times on June 23.

"Chinese companies often pay great attention when facilitating dialogue with Thai government officials, especially high-level officials. But Thailand has a constitutional monarchy, in which local financial groups, vested interests and military are all very powerful. Just relying on high-level government talks cannot help evade all the risks," Chai said.

Even in the high-speed railway sphere, there are voices supporting China-Japan cooperation.

Thai billionaire and Senior Chairman of Charoen Pokphand Group Dhanin Chearavanont recently told the Global Times that his company, a mega Thai conglomerate, is currently encouraging Chinese and Japanese firms to jointly participate in the high-speed railway project under the EEC and build it into a model project for the joint development of third markets.

"Thailand stands to benefit the most from the cooperation between China and Japan, not the two sides' competition. As the project's owner, Thailand would roll out its intended standards and Chinese and Japanese companies would co-exist and prosper in subcontracting," said Kinchong Choi.

"For instance, Chinese companies could make the rolling stocks and Japan could focus on technologies."

RAILWAY PROGRESS

Although progress is slow and the China-Thailand high-speed railway project is behind schedule - according to a report published by the China Media Group on May 1 - experts have said its development should not be underestimated.

"Whenever an engineering project got started, its costs would surmount greatly if it was not worked on according to the schedule, especially since labor costs and renting equipment are high," said Kinchong Choi.

"Cooperation under the railway project is not easy. In addition to economic concerns, political factors also affect the progress of the project," Kinchong Choi said.

China and Thailand have agreed to speed up the construction pace of the 253-kilometer-long high-speed railway between Bangkok and Nakhon Ratchasima in northeastern Thailand, according to an exclusive email interview the Global Times had with the Chinese Embassy in Bangkok.

In the future, when the railway is eventually linked with the China-Laos railway, there will be a dual track for both trains and cars linking Thailand and China. And that will play a major role in promoting regional connectivity and act as a model project, the Chinese Embassy said.

SUCCESS STORY

"When the China-Thailand railway cooperation becomes a key part of the B&R Initiative in Thailand, its impact will be long-term, and the realization of B&R in Thailand in other sectors should not be overlooked," Kinchong Choi said, arguing that "classy projects at the top and grassy projects down below together form the B&R Initiative."

Citing one of his bank's successful investments, Kinchong Choi explained how a formerly lesser-known company rose in status by investing in Thailand and cooperating with local firms.

In 2012, when Shandong Linglong Tyre Co decided to establish an overseas tire production plant to bank on Thailand's rubber sources, the company chose to work with Kasikornbank. At that time, Linglong Tyre was barely considered one of China's top 10 tire-makers. But today, the bank is the company's largest creditor and the company has become the third best Chinese tire firm.

Kinchong Choi said that the B&R Initiative must synergize with the Thailand 4.0 industrial plan to ensure the biggest impact, as the latter project has created huge opportunities for foreign companies to invest in high-value added areas, the digital sector, infrastructure, logistics and connectivity businesses.

A number of companies including Alibaba, JD.com Inc, Huawei and other e-commerce and high-tech companies are actively participating in the digital construction of the EEC.

Plans include setting up regional data centers, e-commerce platforms and smart logistics systems, and training e-commerce talent in Thailand, according to the Chinese Embassy.

Therer are technical training courses at vocational schools in the fields of railway, aviation, electro mechanics and logistics as well as 38 vocational schools from both countries are helping to train mass transit talent for Thailand.

CHALLENGES AHEAD

Chai said that Chinese companies should be cautious, however, in order to avoid a vicious price war with other domestic firms and companies from other nations, as "such competition disrupts normal market order and hurts all Chinese companies eventually."

Kinchong Choi said that while there are many areas that the B&R Initiative and Thailand 4.0 can complement each other on, concerns mainly exist in investment costs, cost performance, debt burdens and environmental impact. In particular, there are concerns over the potential impact of Chinese investment, especially its impact on small and medium-sized Thai companies.