Thailand and China will invest Bt12 billion in a fifth distribution centre, in China's Yunnan province, to start supplying Thai goods to targeted markets next year.

The local Chinese government and Thailand's Snow Lotus Co have formed a 50:50 joint venture for the Yunfang Distribution Centre.

The first four centres are managed by the Export Promotion Department on land leased from the Chinese government.

The distribution network is expected to help the country's exports to China jump by 25 per cent to US$41.6 billion (Bt1.4 trillion) this year, Commerce Minister Krirk-krai Jirapaet said last week.

The other distribution centres are located in Shanghai, Guangdong's Zhongshan, Sichuan's Chengdu and Chengyulang's Xian.

The ministry plans to eventually have 1012 distribution centres, adding Shandong's Chingdao, Heilongjiang's Harbin, Wuan's Beishazhou, Guangxi's Nanning and other locations.

"The distribution-centre strategy has been designed to widen trade and investment opportunities for Thai goods in China," Krirk-krai said.

The soon-to-be completed road linking Thailand with Laos and Yunnan will facilitate transport of Thai merchandise to inner China.

Many goods including fresh fruits and vegetables, foods, consumer goods, jewellery and Thai handicraft products as well as service businesses such as restaurants have great export potential.

The Yunfang Distribution Centre will engage in both retail and wholesale business.

Pisanu Riengmahasan, deputy permanent secretary, said the distribution centre would help reduce the shipping costs of local traders while increasing trade volume and value of fresh fruits, handicrafts and One Tambon One Product items.

"The most important thing is the centre will save on costs for middlemen and transportation. And Thai goods will be delivered to consumers faster," he said, adding that the centre would also host a marketplace to match buyers and suppliers.

Many Chinese products are the same as those from Thailand but offer cheaper prices thanks to lower costs, particularly for labour. However, consumers should consider product quality before making a purchase.

The government plans to promote high-end Thai goods to differentiate them from the Chinese products, Pisanu said.

"Thai products are well known as high-quality goods, which we hope and expect will eventually tap the abundant purchasing power in China," he said, noting that this strategy will also be applied to other distribution centres.

The 23-storey Yunfang centre will be built on eight rai of land in Kunming city. Thai traders will occupy the first to fifth floors.

Ampa Chiarakittikul, president of Snow Lotus, said about 100 Thai companies were interested in opening outlets in the Yunfang centre. As a strategic link to other provinces in China, the Kunming centre will be one of the most popular places for both domestic and international traders, she said.

Petchanet Pratruangkrai

The Nation

Yunnan, China