Yiwu Model Penetrate the Market through Complexity: Part 4
In term of logistic, Thailand is viewd as regional hub of ASEAN, plus the benefits from the ASEAN Economic Community (AEC) will allow Thailand to be main distribution channel of importing and exporting. Most of products are from China that be exported through Thailand, then to ASEAN, European and American markets. Thailand advantage is the readiness of land logistic system that allows products from Kunming distribution center to import via Chiang Kong and finally to China City Complex, where located 15,000 retail stores, within 3 days. Moreover, on the sea transportation, Thailand also receives benefits from Free Trade Area as well as the China City Complex agreements where Thailand is able to provide the better Free Zone and Cold Storage warehouses than other countries in the region.
However, land transportation and logistics providers of Thailand might gain only the short-term benefits because China will use services from Thai’s wholesalers and retailers in the first stage. Because of the nature of Chinese that would like to do integrated business will eventually set up their own transportation and logistic services which will provide service to other traders and become our competitors.
In term of customers, the major benefit they received is the cheaper products, which however, comes with the low quality and short life usage. Then, those products will become garbage, especially electronic ones. Moreover, there are problems about residue in food products which should be controlled by government agencies, such as, Thai Industrial Standards Institute from Ministry of Industry, Food and Drug Administration from Ministry of Public Health, Office of the Consumer Protection and National Commodity and Food Standards Agency from Ministry of Agriculture and Cooperatives. On the other hand, consumers need to use their own judgments when consume any products, not just make decisions based on price only.
With all negative effects from Yuwi Model, the government needs to be more concern in developing effective regulations to cover any possible and happened gaps. The regulations should cover consumer’s rights, product quality controls, and product standards. For example, EU issued the regulation called ‘REACH’ (Registration, Evolution, Authorization and Restriction of Chemicals) in order to certify products and protect consumers, as well as resist imitation products from China. Furthermore, Thai government should identify Non-Tariff Barrier (NTB) as well as strong punishments in order to protect other stakeholders in Thailand as well, such as any logistic companies who would like to operate in Thailand need to be certified by professional association/institute, use at least 70 percent of local materials, hire at least 50 percent of local labor, or be inspected merchandises after imported (use post-market measures).
From the past 4 articles of “Yiwu Model Penetrate the Market through Complexity”, Thai entreprenuers are obviously facing unavoidable effects from foriegn investments, particularly from China. And plus the effects from free trade area agreement under World Trade Organization, ASEAN free trade area, or ASEAN Economic Community will cause freely movements of all production materials. China City Complex is another result from those agreements and impacts both production and service industries in Thailand, especially the small and meduim businesses which are already lack of management, marketing, and financing. Thus, Thai entreprenuers should keep up with the news, and be concerned about the mentioned impacts, as well as prepare strategies for future changes in order to keep themselves completing in the market
Reference: Exporter Review, Second Half of September 2011