Electronics and Electrical Appliances: The State of Thai Industryadmin
Thailand has long been accelerating into the pack of world leaders in high-technology industries. Although world leaders like Japan and South Korea currently enjoy advantages in the tech sector, their growth has created space for other countries to move ahead, and Thailand has been pivoting to take advantage of this opportunity. Being able to provide a highly skilled workforce at a competitive price level, and further occupying a strategic location for global imports and exports, Thailand enjoys several fundamental advantages in tech.
Recently, the Thai government and the Board of Investment have been able to move the Kingdom of Thailand into the lead in several areas, notably within the sector of electrical appliances and electronics, which together accounted for USD 55 billion in total exports for 2014. That attention will continue in the future, as the government continues to emphasise the importance of the electrical and electronics sector to Thailand’s economic security and to promote Thailand as a regional and global centre for production and export.
Because of these developments, the international business community, particularly in the electrical and electronics sector, should take a renewed look at Thailand when considering investment opportunities or potential partnerships.
Residents and visitors to Thailand certainly understand the importance of air conditioning to life the Kingdom, so it will not surprise that Thailand has become one of the global leaders in refrigeration and cooling technology. The consumer technology built in the country is exported and purchased in other ASEAN countries and around the world: Thailand’s leading export markets outside of Southeast Asia include the U.S., Japan, China, and India. Thailand is already the world’s 2nd-largest producer of air conditioning units. Recently, Thailand has received an investment from global manufacturer Arcelik to build a plant to manufacture refrigerators, promising to boost the Thai presence in that market, as well. Thailand’s international trade in electrical appliances is robust, with total trade in 2014 exceeding USD 40 billion and exports totalling USD 23.5 billion.
Thailand’s strategic advantages stretch deeper into the world of technology. In the area of computer components and computer-based electronics, Thailand has become a crucial part of global supply chains and occupies an enviable position to move into the future. In 2014, Thailand’s total import/export trade in the electronics industry was nearly USD 60 billion, with export revenues exceeding USD 32 billion. The international market is thriving, with many reasons to be excited for future prospects.
Thailand’s importance to the computer electronics sector is such that the floods here in 2011 immediately stirred fears of price spikes for external hard drives. Thailand is the world’s 2nd-largest exporter of data storage technology, with two of the largest manufacturers here.
Local manufacturers enjoy competitive advantages broader than simply one market, however. Another crucial computing component, integrated circuits amounted to USD 8 billion in Thai exports during 2014—second only to data storage. Thailand is also a significant importer, with integrated circuits ranking first of the nation’s electronics imports. The demand for integrated circuits from producers of portable electronics—ranging from smartphones and wearable tech to the next generation of miniature personal tech—has contributed to strong regional demand for Thai exports, with Hong Kong, Taiwan, Singapore, and China the top markets for Thai exports.
Thailand continues to be an active participant in the electronics segment, with 2014 exports totalling USD32 billion and imports another 27 billion. Crucially for Thailand’s future, the country’s strong competitive footing is likely to become more crucial as this segment grows with the development of new consumer technologies.
Thailand’s manufacturers are well-poised to continue executing on their strengths. Thailand is already the world’s second-largest exporter of air conditioners, which account for 17% of the country’s electrical appliance exports; in refrigerators, exports are strong but still have significant room for growth, presently accounting for only 6%. This position promises to be strengthened by a new production plant built by household appliance manufacturer Arcelik. The plant will be geared toward refrigerators, and Arcelik has announced a goal of producing and exporting one million units per year.
Electronics production in Thailand also is well-positioned to expand further in the global market. Thailand’s competitive advantage in integrated circuits and data storage is critical to producers of already-familiar products such as computers and smartphones, and this advantage will grow as the market continues to evolve and grow towards wearable technology, Internet-connected devices, and other “smart” consumer products.
Local industry is also developing potential future markets for Thai-produced electronics. One promising market, where government and industry are working together to expand Thailand’s presence, is in the field of automotive electronics. As cars become increasingly more automated, the demand from manufacturers for electronic components should continue to grow, and Thailand is positioned to continue to lead in that sector. Present technology already involves hundreds or thousands of electronic components; as the industry continues to move toward increasingly automated “smart” cars, the need for automotive electronics could grow rapidly.
Thailand has taken many crucial steps to make Thailand a competitive destination for international investment and partnerships. The government has promoted tech-ready infrastructure and business-friendly regulations. Natural logistical factors, like Thailand’s access to two oceans and the Asian mainland, also contribute to Thailand’s general attractiveness for foreign business. Within the electrical and electronics sector, several specific factors invite further consideration from overseas businesses seeking opportunities in Southeast Asia:
- A competitive workforce of highly skilled and educated workers, over 600,000 of whom work in Thailand’s electrical and electronics sector, with high educational levels and international accreditations;
- Electronics clusters that facilitate manufacturing and the efficient import/export of components and finished products;
- Numerous private-public partnerships such as the EEI and NECTEC that promote new technologies, product development, and support for electrical and electronics firms, with the support or coordination of the Thai government and other stakeholders; and
- Trade access and free trade agreements with regional and international economies.
Electrical products and electronics may have been a recent arrival to Thailand, relatively speaking. However, as with many other transplants, the sector has set down deep roots and now contributes as a vital participant in the Thai economy. In the coming years, this sector is poised to help Thailand continue its role as a regional leader within Southeast Asia, and also an emerging global player worldwide.