Although China is expanding economically, with growth exceeding 8 per cent a year, there are both advantages and dangers which Thai exporters should consider before entering the market.

To judge by the 14th Kunming, China, Import and Export Commodities Fair 2006, held in the capital of Yunnan province from last Tuesday until today, many Thai goods are selling well, but others are not.

Among more than 30 countries taking part in one of the largest commodity fairs in China, Thailand was represented by 16 companies selling rice, food and beverages, cosmetics and herbs, garments, home decorations, and tobacco.

The Export Promotion Department predicted the fair would generate more than US$1.5 million (Bt57.6 million) in orders this year, compared to $1.24 million last year.

Thai tropical fruit, especially durian at 15 yuan (Bt45) a kilogram, mangosteen, and longan, drew thousands of visitors, and cosmetics and herbs and home decorations were also popular.

Jessdda Jirapantawee, managing director of the Baan Benjawan Handicraft Centre, said there was great appreciation of Thai handicrafts and good prospects of further trade, despite the variety and low cost of Chinese products. He cited Baan Benjawan's fine candles as having no local rival.

This is the first time the company has attended the fair. Normally it exports to the United States and Europe but is focusing more on the Asian market to reduce transport costs, and China is its initial target.

In sharp contrast to the excellent prospects for Thai handicrafts and foods, tobacco is a sure-fire loser.

The Thailand Tobacco Monopoly's booth may have been crowded - more than 40 per cent of Chinese are smokers - but tobacco is one of Yunnan's chief products, and as the province supplies the national demand, even the Thailand Tobacco Monopoly sees no chance of penetrating this market.

Most cigarette brands are owned outright by the Chinese government or joint ventures with foreign companies, a Thailand Tobacco Monopoly source said, adding that there was 180-per-cent import duty on tobacco and a packet of cigarettes cost only eight yuan.

Garments also face stiff competition.

Leading Thai manufacturer Saha Group has attended the fair every year but sold almost nothing.

Saha's local manager, Woravee Anansaringkan, noted China's profusion of raw materials and low labour cost and the necessity of distinct seasonal wardrobes. "We shall need to focus on the quality factor and tailor merchandise to the market," she said.

Petchanet Pratruangkrai

The Nation

KUNMING, CHINA