Thailand earning ag investment at the expense of China
China is losing some of its competitive edge as a low-cost manufacturing and processing base, recently collected data suggests, as makers and processors relocate to cheaper locales in Southeast Asia. Also, confidence in food being safely produced in China seems to be shaken to a degree.
Countries like Thailand are jumping at the chance to have what are classified as agricultural processors locate in the country, and U.S. food companies are taking the steps with the encouragement and assistance of the Thailand Board of Investment (BOI).
I’ve been to Thailand twice on media trips associated with Vance Publishing/AgProfessional and recognize that the country is not about to turn loose of its land assets for foreign investment, but it is establishing the infrastructure and developing industry parks for companies to efficiently operate.
Foreign direct investment into Thailand of all types of businesses surged by about 63 percent in 2012, and Indonesia’s outside investment was up 27 percent in the first nine months of last year, which the Thailand BOI contends shows weakened foreign investment in China.
Total foreign direct investment flowing into China fell 3.7 percent in 2012 to $111.72 billion, the Ministry of Commerce is reported as saying, the first annual decline since the fallout from the global financial crisis in 2009. This percentage doesn’t sound like a lot, but when the economy is the number two economy in the world and is as large as China then it is a big deal.
Economists say the drop in 2012 is also partly cyclical, driven by slowing overall growth in China and the prolonged debt crisis in Europe. But it also is the result of a long-term trend of rising wages and other costs that have made China less attractive, especially for basic manufacturing.
Thailand is proud to have so many “agriculture” investments in the country with the big ones highlighted being processors. The BOI notes Thailand-based operations such as Cargill Meats, which exports 80 percent of its production to Japan, Europe, Canada and Hong Kong; Mars Petcare, which exports to more than 20 countries including Japan, U.S., Canada and Russia; Del Monte having its Asian production base in the country; and Dole exporting canned pineapples to 127 countries, with the U.S. as the largest market. Other brands known in the U.S. are also into production and sales in Thailand, including Nestle, Kellogg’s, Kraft Foods, McCormick, Yum brand restaurant operations, McDonald’s, Coca-Cola, Pepsi-Cola and brands less known but available in the U.S. There also are ingredient companies not familiar to consumers.
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