Thailand News: Thai Businesses Struggle to Compete as Cheap Foreign Goods Flood Markets

Thailand News: The Thai Retailers Association has called on the government to intervene as an unprecedented influx of cheap foreign goods is putting immense pressure on small and medium-sized enterprises (SMEs). Local businesses, especially in the retail and service sectors, are struggling to compete against products being sold at artificially low prices, often below cost. This has led to widespread concerns about unfair competition and the economic sustainability of Thai businesses.


Cheap goods from China flooding the local market via online platforms
 
According to the Thai Retailers Association, legal loopholes and nominee structures are being exploited by foreign entities, allowing them to dominate the market without adhering to the same regulations as local businesses. The association warns that without immediate intervention, Thailand risks losing thousands of domestic businesses, which will have a lasting impact on the economy.
 
This Thailand News report highlights that cross-border e-commerce platforms are playing a significant role in the issue. Many of these platforms allow foreign sellers to bypass regulations, undercutting local merchants and making it nearly impossible for them to compete. Additionally, the influx of low-cost goods is raising concerns about consumer safety, as many imported products, including electrical appliances and cosmetics, fail to meet Thai quality standards or lack proper labeling.
 
Proposed Measures to Protect Local Businesses
To counter these challenges, the Thai Retailers Association has put forward three key measures:
 
Stricter Import Quality Control: The association is advocating for 100% inspections of imported goods by the Customs Department instead of random checks. They also propose using advanced technology to improve accuracy and enforcing minimum price controls to prevent dumping.
 
Tax Restructuring for E-Commerce Platforms: A fair taxation system for foreign and domestic businesses is necessary to create a level playing field and sustain long-term economic benefits.
 
Addressing Nominee Business Structures: The government is urged to implement stricter verification processes for company registrations and licensing requirements to prevent foreign businesses from exploiting legal loopholes.
 
“We believe that if these measures are enforced, Thai businesses will have a fair chance to compete, consumers will be better protected, and the economy will remain stable,” a representative from the association stated.
 
Government Struggles to Control the Influx of Cheap Imports
Government agencies are actively seeking ways to stem the surge of foreign products, particularly from China, which are being sold through e-commerce platforms at prices local businesses cannot match. Officials have flagged concerns about customs declarations, with many importers deliberately undervaluing their goods to benefit from tax and tariff waivers.
 
A key issue is the existing tax exemption on imported goods priced below 1,500 baht, which allows foreign sellers to avoid paying duties and VAT, further deepening the price gap between local and imported products. Statistics indicate that over 30 million parcels enter Thailand each year, with half of them being declared under the tax-free threshold.
 
Impact on Thai Manufacturers and Industries
The Federation of Thai Industries (FTI) reports that over 20 industrial sectors, including steel, plastics, ceramics, petrochemicals, and medicine, are struggling due to increased competition from cheap imports. Some Thai manufacturers have had to cut production by up to 50%, while others have ceased operations entirely, opting instead to import foreign products themselves.
 
Major Thai companies, such as Tata Steel Thailand, have highlighted the adverse effects of this trend. The capacity utilization rate in the Thai steel industry fell to 28% in 2023, down from 33% in 2022, largely due to the flood of cheap steel from China. The situation has prompted the Joint Standing Committee on Commerce, Industry, and Banking (JSCCIB) to call for stronger regulations to support local manufacturers.
 
Proposed Government Solutions
In response, the Finance Ministry is considering imposing a 7% VAT on all imported goods, regardless of their price, while maintaining the current import tariff exemptions. The goal is to reduce the tax advantage enjoyed by foreign sellers over Thai businesses. Additional proposals include:
 
Strengthening customs inspections to prevent under-declared shipments
 
Enforcing anti-dumping measures
 
Setting minimum safety standards for imported goods
 
The Commerce Ministry has also suggested that businesses affected by low-cost imports file complaints with the Foreign Trade Department for investigations into potential violations of trade laws.
 
Regional Responses and Future Outlook
Other Southeast Asian countries have already taken steps to address similar challenges. Indonesia, for example, has introduced stricter regulations on foreign e-commerce operators to prevent the market from being overrun with substandard products. Thailand is now considering adopting similar measures to protect its domestic economy.
 
Despite these efforts, the rapid expansion of e-commerce and global supply chains means that foreign products will continue to flood Thai markets. Many Chinese companies have established direct logistics networks in Thailand, making it easier for them to import and distribute products at competitive prices.
 
Conclusion
The situation poses a serious threat to Thai SMEs and local industries, as unchecked imports from foreign markets, particularly China, continue to drive many businesses to closure. While the government is exploring solutions, including revised tax policies and stricter import controls, the challenge remains substantial. The need for immediate, concrete measures to protect Thai businesses has never been greater. If left unchecked, the current trend could permanently alter Thailand’s economic landscape, with SMEs bearing the brunt of the damage. By implementing fair trade policies, ensuring quality control, and leveling the taxation system, the government can help local businesses survive and thrive in an increasingly competitive global market.
 
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