China’s electric vehicles (EVs) have made serious inroads in Southeast Asia in recent years. Around 75 percent of the region’s EV market is made up of Chinese vehicles. The sales of China’s Wuling Air EV increased by 65.2 percent in 2023, becoming the second most purchased EV brand in Indonesia. Last year, China’s BYD remained the best-selling EV brand in Singapore. So far, however, China’s EV companies have had their greatest successes in Thailand, which accounts for the majority of EV sales in Southeast Asia.
Last year, Chinese automakers acquired a market share of around 80 percent of the country’s EV market. Moreover, the three most popular EV brands of the year in Thailand are all from China, namely BYD, Neta, and MG. In addition to the affordable price and many other selling points, such as cutting-edge technology, comfort and safety, innovative features, and efficient design and construction, two factors are key to the success of Chinese EV makers in Thailand.
Localization Strategies
Foremost, this success should be attributable to the localization efforts of Chinese EV manufacturers in Thailand, which have worked hard to form partnerships with established local companies. For instance, BYD cooperates with Rever Automotive, designating the company as the exclusive dealer of its cars in Thailand. Rever Automotive is backed by Thailand’s well-known Siam Motors Group, which has been called “Thailand’s automotive king.” Similarly, SAIC Motor has partnered with Charoen Pokphand Group (CP), Thailand’s largest private company and the largest privately held Royal Warrant holder of the Thai Royal Family, to market its MG brand EVs in the country.
By cooperating with local conglomerates, Chinese EV makers can make full use of local companies’ mature retail networks. In addition, they can also tap local professionals to design the marketing strategy that best fits Thailand’s conditions. Great Wall Motor (GWM) is a strategic partner of various Thai agencies and organizations, including the Tourism Authority of Thailand and the Electricity Generating Authority of Thailand. GWM has used these partnerships to promote its “GWM Initiative,” a way of demonstrating its commitment to social development, cultural diversity, and community building and development in Thailand.
At the same time, almost all of the Chinese EV makers who have entered Thailand’s market have already localized or have committed to localizing their production lines in the country. As the first Chinese original equipment manufacturer (OEM) that has mass-produced EVs outside of China, GWM has operated two full-production lines in Thailand since 2021. SAIC Motor has also localized parts of its production in Thailand, and recently announced that it has started the construction of the SAIC Motor-CP New Energy Industrial Park in Chonburi province. In addition to increasing its production capacity in Thailand, SAIC Motor’s Park will assist the country in establishing a more comprehensive EV supply chain by luring more key EV component manufacturers to establish production facilities there. Moreover, BYD is slated to start production in Thailand this year as well.
As of October 2023, Chinese EV manufacturers had invested more than 52.19 billion baht ($1.44 billion) in Thailand. Many Chinese EV suppliers from the upstream industry have also set up factories in cooperation with their local counterparts. CATL, a Chinese battery giant, will establish a factory in Thailand to assemble EV batteries in collaboration with Arun Plus, a subsidiary of PTT, Thailand’s state-owned oil company. To support SAIC’s production efforts in the country, an EV battery plant jointly built by China’s Huayu Automotive Systems and Thailand’s CP began construction in November. Establishing a production base in Thailand will not only reduce the production and distribution expenses of Chinese EV manufacturers in Southeast Asia, but will also be an effective way for the companies to increase their visibility and reputation in Thai society by creating employment opportunities for ordinary Thai citizens.
Domestic Consensus
The second key factor is that there is a broad political consensus in Thailand about the country’s EV ambition, and both the government and opposition parties have generally applauded the entry of China’s EV companies. GWM made its debut in the country in 2021 with the support of then-Prime Minister Prayut Chan-o-cha. Unlike China’s COVID-19 vaccines, which have prompted criticism from opposition parties and political polarization in the country, Prayut’s EV strategy and his welcoming attitude towards Chinese EVs have never been caught in the crossfire of any anti-government protests.
Since taking office in September, the new coalition government under Srettha Thavisin has continued to provide highly favorable policies to accelerate the country’s transition to EVs. The government has extended the government’s subsidy for domestic consumers who would like to purchase EVs until 2027 and has not only maintained but also increased supportive measures to attract more foreign investment in the EV industry. As a part of the newly elected government, the Board of Investment (BOI) for the first time announced that it would focus on attracting investment to five strategic industries for the 2023-2027 period, with EVs being identified as the priority. Narit Therdsteerasukdi, the secretary-general of the BOI, specified that Chinese EV makers are his agency’s top target for realizing this goal.
In October, during his first trip to China after assuming power, Srettha stated that his administration was looking to enhance EV supply chain cooperation with China. The same month, Srettha test-drove BYD’s Seal electric sedan. Then, in November, Srettha chose to visit SAIC Motor’s production base in Chonburi province. During the visit, he tried the company’s MG Cyberster sports car. With his words and deeds, the new Thai leader has unequivocally endorsed Chinese-made EVs.
It is quite intuitive that the degree of localization determines whether a foreign company will successfully enter a foreign market. For instance, research shows that Chinese telecom firms have successfully convinced the Indonesian government and the public that they are trusted cybersecurity providers in the country by effectively adopting localization strategies. Being able to localize the business is instrumental not only to optimizing the use of resources but also to best meet the needs of the local demands of hosting countries.
The benefits of localization are overwhelmingly economic. However, this can never be fully detached from politics. As shown by the Chinese EV makers’ success in Thailand, the hosting countries’ domestic politics can also affect the performance of foreign investment. Political consensus in the host countries is also a precondition for the success of foreign investment. To achieve success, foreign companies may need to avoid becoming drawn into the crossfire of domestic political rivalries and convince all the relevant politicians that their business serves the countries’ strategic and economic needs.
Nowadays, Chinese companies are rapidly expanding their operations around the globe. This has prompted heated debates among many countries about whether and to what extent Chinese investment benefits their societies. In some cases, especially in democratic countries, Chinese investment per se may not do anything wrong, but opposition parties may target it as a way of criticizing their own governments. Therefore, it has become increasingly critical for Chinese companies to approach all the relevant political parties in host countries and demonstrate to them that their operations in the countries fully prioritize the countries’ development needs and the welfare of local citizens.
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