Chinese firms ramp up presence in Thailand

Investors view the Southeast Asian nation as a springboard into the rest of the region.

In the second act of Siam Niramit, a historical cultural performance about ancient Thailand, popular among foreign tourists in Bangkok, a 16th-century Chinese trading boat docks at a port on stage.

Fully loaded with delicate silks, porcelain and other treasures from China, the arriving outsider quickly wins over the hearts and minds of local residents.

Today, the humble trading vessel has been replaced by thousands of planes and cargo ships transporting goods between the two countries worth billions, ensuring ties between the two nations are strong and deep-rooted, both socially and economically.

According to the latest statistics from the Thailand Board of Investment (BOI), for instance, China was the country's second-largest source of foreign direct investment in 2011.

Chinese companies have applied to take part in more than 180 investment projects in the last five years, worth a total investment of $4.15 billion.

Data from Thailand's travel bureau show China has become the largest source of visitors to its famous southern seaside resort of Phuket.

The importance given to links with China is clearly illustrated at the newly built multimillion dollar Bangkok Suvarnabhumi International Airport, where noticeboards and signs are in Thai, English and Chinese.

Liang Wanshan is among the new generation of Chinese coming to Thailand.

As general manager of COFCO (China National Cereals, Oils and Foodstuffs Corp) Biochemical (Thailand) Co Ltd, Liang was sent to establish a local team after China's largest food processor, manufacturer and trader spend 100 million yuan ($15.8 million) to buy a local citrate factory last year.

Eight months after Liang first arrived in Thailand, a modern factory is taking shape in the east of the country's Rayong Province.

But its redevelopment wasn't easy.

"At first, I was shocked by how simple and crude the factory was," Liang said.

Apart from investing in the site, the company spent another 100 million yuan on upgrading and overhauling the equipment on site, 20 percent of which was in the necessary environmental protection systems

."Maintaining a good relationship with local residents is vital for foreign investors in Thailand, and environmental protection was always a sensitive issue," he said, adding that the previous owner had issues with local residents over the factory's environmental record.

COFCO decided right from the start it needed to play a key role in the local community.

Having already hired 80 employees locally, Liang said he expects to have a full capacity of 300 people when fully operational next year.

"We are keen to employ as many local people as possible in senior management positions," he said.

According to a recent report from global management consulting company McKinney & Co, one of the biggest issues facing Chinese companies looking for international expansion remains being able to find enough managers with overseas experience.

It said creating the perfect balance between local people and incoming Chinese has to be carefully planned, and success can often depend on whether that balance is right.

Liang said that he insists his Chinese managers employed to work in Thailand have been fully trained, not only in the local language and laws, but also in local culture and customs.

"We also provide Chinese lessons for our local staff," he added.

Within his workforce there are also Chinese managers hired locally, such as Jing Jing, a Chinese graduate who has been working and living in Thailand for more than five years.

"It's actually been quite easy to knit myself into the local community," said Jing, a graduate from Guangxi Zhuang autonomous region who speaks fluent Thai, "because we don't actually look that different, which helps too".

After generations of immigration, the Chinese are the second-largest ethnic group in Thailand, accounting for 14 percent of the country's total population.

"I also like the fact that most things are cheaper here, the lifestyle is very easy going, plus flight tickets from Nanning (the capital city of Guangxi Zhuang autonomous region) to here are actually cheaper than to many Chinese cities, making Bangkok closer to home than Beijing or Shanghai," added the 30-year-old office worker.

"I know many like me who have married local people, and others who have bought property or become successful entrepreneurs.

"Many are now being hired by Chinese companies who have established an office or factory in Thailand," she said, adding that she knows of around 100 of her college friends working for Chinese companies in Bangkok, including for some big names such as Huawei and Haier.

Since 2007, nearly 30 Chinese companies have established a presence in the Rayong Industrial Zone, involved in industries ranging from electronics and auto parts, to rubber and metal.

COFCO Biochemical said that one of the reasons for its acquisition of a local factory was to secure a better supply of raw materials, particularly cassava, a crop grown for its edible starchy root which is a major source of carbohydrates, of which Thailand is a main producing area.

"The acquisition will help diversify our raw material supply, and contribute to the expansion of our citrate business, further improving regional distribution and enhancing economic benefits," the company said.