Thai and Chinese corporations rival in the global market for coconut water exports
Business
Coconut Water Production: Chinese Firms Take Over Thai Market
Thai coconut water manufacturers are facing challenges as Chinese companies set up their own factories in Thailand, displacing local producers from the export market and dominating the supply chain.
A Ratchaburi-based coconut water processing plant operator has alleged that Chinese investors are investing in their own production facilities instead of purchasing products from Thai plants for export.
In the past, Chinese businesses used to buy bottled coconut water from Thai plants for export; however, they have transitioned to independently operating factories in the region, overtaking a good portion of the market share.
Thai manufacturers had traditionally had robust access to the Chinese market. However, as demand increased in China, some Chinese investors began purchasing from Thai factories before setting up independent operations within the country.
"Recently, they no longer buy bottled coconut water from us. They have established their own factories—many of which are in Ratchaburi," the source said.
Chinese investors hold a significant financial advantage, allowing them to undercut Thai producers by offering lower prices due to direct control of production costs. Moreover, they rent land and transport coconuts using their own trucks, solidifying their control over the supply chain.
Most of the coconut water produced by the Chinese-operated facilities is exported directly to China, with the remaining portion distributed to other countries. The shift has created a self-contained circle as Chinese investors control production, processing, and export.
The source also alleged that some Chinese-owned factories may be engaging in tax avoidance by utilizing temporary off-site offices and easy relocations, making it difficult to identify and regulate their practices.
In 2024, Thailand exported 257,428 tonnes of coconut products, with 82.7% of exports headed to China. The United States, Hong Kong, Singapore, and the Netherlands followed as the remaining top export destinations.
In a broader context, while Chinese investments can bring economic benefits, they also pose challenges for local manufacturers who must adapt to evolving market dynamics and potentially heightened competition.
- The stock market might see fluctuations due to the increasing influence of Chinese firms in the business sector, particularly in industries like transport and agriculture, as they expand their operations in export markets.
- The economy could be significantly impacted as Chinese investors continue to buy up businesses, potentially leading to job losses in sectors like manufacturing and finance.
- Investing in stocks of local coconut water producers may not yield the expected returns as Chinese firms dominate the industry, both in terms of production and export.
- The sport and leisure industry may experience changes as well, with Chinese corporations possibly investing in local sports teams or venues, altering the competitive landscape.
