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Published on November 1, 2007

Fujian, Sichuan, Chongqing and Guangxi are the four provinces highlighted in a study jointly conducted by the Office of Small and Medium Enterprises Promotion (Osmep) and Thammasat University.

Osmep director-general Jhitraporn Techacharn said these provinces are interesting for SMEs who would like to penetrate the Chinese market because competition in these areas is not as tough as other strong economic provinces such as Beijing and Shanghai. They are also convenient for transport of goods because they are not far from Thailand, she said.

Fujian, in eastern China, has been one of China's four special economic zones. It has well-known ports and is one of the most significant export hubs in the region.

The study pointed out that the Chinese government had announced the Great Western Development Strategy in 2000 to encourage trade and investment with other countries, particularly from Asean. Therefore, the government had accelerated development in Sichuan, Chongqing and Guangxi.

It reported Sichuan is famous as an advanced industrial area and has the largest market in the west of China. The government had spent significantly to develop infrastructure in Chingqing. This province is known as a production base for automotive industries.

Guangxi is advantageous because of its location close to the Vietnam border. Operators in Asean could easily access the Chinese market through this province.

Meanwhile, Woraporn Fruit and Food Processing's executive director Chairat Sothornopabuit, who has already expanded business in China, suggested that SMEs differentiate their products and capture the medium-to-upper target group because it was hard to compete with cheap Chinese prices.

T Thai Snack Foods' managing director Thaworn Techakraisri said Chinese partners are necessary for Thai operators because the Chinese have more experience of consumer behaviour and the markets.

Osmep's project development expert in tourism and spas Thanan Apivantanaporn said operators in the service sector should pay attention to Fujian and Sichuan because of the people's modern lifestyle and high income.

To reduce their risk in running businesses in China, operators should allow their Chinese partners to invest in fixed assets while they invest in staff, equipment and software, he said.

He added that Thai operators should focus more on consistently managing and controlling their service standards if they want to position themselves in premium markets.

China is Thailand's third largest export destination. Trade between Thailand and China in 2006 was worth US$25.15 billion (Bt855 billion). Exports to China last year expanded 27.7 per cent year on year, while imports from the mainland were up 20.5 per cent.

Chalida Ekvitthayavechnukul, The Nation