The Yin and Yang of Chinese E-commerce

BY VENESA DASWANI

Chinese e-commerce platforms have revolutionised global trade, offering unparalleled access to vast markets and driving economic growth in various countries, including Thailand. The rise of giants like SHEIN, Alibaba and Temu, which has recently launched in Thailand, plus many more, has opened up new opportunities for Thai businesses to reach a broader audience and tap into China’s booming consumer base. However, this expansion also brings challenges, as local companies face fierce competition, pricing pressures, and concerns over intellectual property rights. 

THE YANG: THE ‘LIGHT’ SIDE

Expanded Market Access

Chinese e-commerce platforms have brought several benefits to Thailand, significantly enhancing market access and transforming the country’s digital economy. Thai consumers now enjoy a wider variety of products at competitive prices, thanks to the expansive reach and diversity of offerings on platforms like Temu. This accessibility extends beyond just consumers; Thai companies also have unprecedented opportunities to tap into the vast Chinese market, boosting exports by selling directly on these platforms.

A Catalyst for Technological and Economic Growth

Moreover, the entry of Chinese e-commerce giants into Thailand has accelerated technological advancements across the board. Advanced logistics networks, innovative payment systems, and AI-driven marketing strategies have raised the bar for digital commerce in Thailand. This influx of technology has not only improved the efficiency and reliability of Thailand’s e-commerce infrastructure but has also spurred local companies to innovate and adopt cutting-edge practices to remain competitive. The positive ripple effects of these platforms are also evident in the broader e-commerce ecosystem in Thailand. The growth of the sector has led to a boom in related industries such as logistics, warehousing, and digital payments, creating a host of new job opportunities and fostering skill development in these areas.

THE YIN: THE ‘DARK’ SIDE

Untenable Competition for Local Businesses

The rapid rise of Chinese e-commerce platforms in Thailand has brought significant challenges to the local economy, particularly for small and medium-sized enterprises (SMEs). Thai businesses, especially those operating in the traditional retail sector, struggle to compete with Chinese sellers who offer products at significantly lower prices, often due to economies of scale and cheaper production methods. This intense competition has led to the dominance of Chinese products in online marketplaces, making it difficult for local brands to maintain visibility and market share. Additionally, there are concerns that the growing market share of Chinese platforms could lead to monopolistic behaviours. If local competitors are driven out, Thai consumers might face reduced choices and higher prices in the long run. This scenario not only threatens the economic diversity of Thailand but also risks creating an over-reliance on Chinese technology and platforms, further embedding Thailand into China’s economic orbit.

Quality and Ethical Concerns

The prevalence of inexpensive, mass-produced Chinese products can undermine the market for Thai-made goods, which are often crafted with higher-quality materials and traditional techniques. Moreover, this flood of cheap goods is detrimental to the environment, as many of these products are made with low-quality materials that contribute to environmental degradation, and are often made with cheap, underpaid labour. The increase in transportation for deliveries and returns, coupled with excessive packaging, further exacerbates environmental concerns.

Geopolitical Impact

The expansion of Chinese e-commerce can be seen as part of a broader strategy by China to assert its influence in Southeast Asia. By dominating regional markets and undermining local industries, China could be advancing its policy of economic hegemony, potentially leading neighbouring countries like Thailand into a position of economic dependence. This dynamic, often described as a “beggar thy neighbour” approach, poses a long-term threat to the sovereignty and economic independence of Thailand.

THAILAND’S RESPONSE

Thai companies are responding to the influx of Chinese e-commerce platforms with a mix of adaptation and innovation. Some businesses have successfully embraced the new landscape by expanding their online presence, leveraging the advanced logistics and marketing tools provided by these platforms, and even partnering with Chinese firms to enhance their competitiveness. For example Alibaba has now opened doors to millions of new consumers.

However, looking ahead, the Thai e-commerce market faces several potential scenarios. Over the next 5-10 years, Chinese platforms are likely to deepen their integration into the Thai economy, which could either bolster or stifle local competition depending on how the market evolves. To navigate these challenges, Thai companies must focus on innovation, not only in products and services but also in their approach to e-commerce. Building strong partnerships, understanding the nuances of the Chinese market, and developing a unique value proposition will be critical for Thai businesses to thrive.

For better or worse, here is a list of Chinese e-commerce platforms that are available in Thailand:

• Shopee
• TikTok Shop
• Lazada
• Wish: Known for its flash sales and affordable prices
• JD Central: A joint venture between JD.com and Central Group
• AliExpress
• TaoBao: A popular Chinese platform
• Temu: Offers ultra-low prices and a wide product range
• Pinduoduo: A group buying platform that offers discounts on bulk-purchased products