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Chinese auto parts makers have tripled their presence in Thailand with the arrival of BYD and other car brands, transforming the country into a key supply base for Asian markets, according to Nikkei.

And we can't help but notice the timing - with tariffs on goods coming from China through the roof - seems to be...coincidentally beneficial for Chinese corporations.

In the Eastern Economic Corridor, about two hours from Bangkok, new factories are rapidly rising. Battery maker Sunwoda Electronic is investing over $1 billion to build a lithium-ion battery plant, with mass production set for 2025. Battery cells will be made locally, and a Thai official noted it’s likely to become Southeast Asia’s first plant producing batteries from cells.

More than 20 Chinese auto brands, including BYD and Great Wall Motor, have entered Thailand.

BYD’s factory, which began production in July 2024, is becoming the hub of a growing supply chain. Alongside Sunwoda, battery makers CALB, Gotion, and SVOLT have started local production, while CATL is building a joint venture plant with Thailand’s state-owned PTT.

However it may not all be tariff related. Nikkei writes that Chinese manufacturers began accelerating their investments in Thailand around 2018, amid rising U.S.-China trade tensions.

As of March, Chinese-invested auto parts companies in Thailand reached 165—over triple the number from the end of 2017. Across Southeast Asia, Chinese companies established more than 7,000 firms by 2023, with direct investment topping a record $25 billion that year.

This growth is expected to continue. In April, Ningbo Tuopu Group announced plans to invest up to $300 million in a Thai factory, saying the move would help it “win more orders and strengthen support for important foreign customers.”

Nikkei writes that Japanese automakers, dominant in Thailand since the 1960s, have built a network of about 1,400 local suppliers through joint ventures and vertically integrated operations. In contrast, Chinese carmakers are building independent supply chains, often excluding Japanese-linked suppliers.

Chinese parts are nearly 30% cheaper than those from Japanese firms, and Chinese companies typically produce core components like batteries in-house or source them from affiliated suppliers. “Thai suppliers will not be able to fully benefit from the Chinese push into the country,” Sompol said.

A Thai Summit Group executive noted that Japanese automakers may eventually switch to lower-cost Chinese parts, which could force Japanese suppliers in Thailand to downsize or exit the market. Although Toyota and Honda still hold over 70% of Thailand’s new car market, their lead is shrinking under Chinese pressure, the report concludes. 

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