Thailand seeks Foxconn investment as trade tensions rise between US and China
Thailand is seeking the investments as it tries to develop its hi-tech sectors
A group of senior Thai politicians and businessmen are meeting in China with Foxconn, the world’s largest contract electronics maker, and other companies to seek investment in Thailand, as Southeast Asia’s second-largest economy moves to speed up digital transformation and upgrade its technology sector.
“Yes, I heard he (the deputy prime minister) is in Shenzhen, China. He will visit three companies in that area (Guangdong province) including Foxconn,” said a Thai government spokesman on Wednesday.
Somkid Jatusripitak, deputy prime minister of Thailand, and others visited the Foxconn Longhua factory on Wednesday to talk with Dai Zheng Wu, President of Foxconn’s Japanese subsidiary Sharp and Chen Zhenguo, vice-president of Hon Hai Precision Industry, better known as Foxconn Technology Group. Company chairman Terry Gou was not in the meeting, according to a person familiar with the matter who asked not to be identified because the information is private.
Foxconn did not immediately respond to a request for comment.
Thailand is seeking the investment at a time when Foxconn, Apple’s main iPhone assembler, is caught in the middle of growing trade tensions between the US and China. Foxconn is China’s largest private employer with about a million on its payroll while US-headquartered Apple is the source of more than half of the company’s revenue. Billionaire Gou said Foxconn has a number of response plans to a trade war, without elaborating, at the annual shareholder meeting of Hon Hai Precision Industry, according to a Bloomberg report earlier this month.
“The biggest challenge facing Foxconn is a US-China trade war,” Gou said. “The trade war is not about trade, but it is a tech war, and it is a manufacturing war.”
Although Japan has been Thailand’s biggest foreign direct investor for many years, the Southeast nation has been seeking more investment from China as the latter looks outwards with its Belt and Road Initiative. While Thailand has developed into one of the leading manufacturing hubs in Southeast Asia, with the largest automotive industry in the region, it wants to shift away from labour-intensive industries and build its hi-tech and value-added sectors.
At a Thailand Board of Investment seminar held in Bangkok in March, Somkid led economic ministers in announcing the government's commitment to transform Thailand into an engine of Southeast Asia's economic growth through three strategies – investments in megaprojects, development of the Eastern Economic Corridor (which spans the three eastern provinces of Chonburi, Rayong, and Chachoengsao) and promotion of digital technological advances.
Under its Thailand 4.0 development plan the country is investing in village-level broadband internet, and a submarine cable network connecting Thailand, Hong Kong and mainland China. The government is also supporting digital trading and digital transformation in the manufacturing and service sectors, while e-government has been introduced to increase efficiency in public services.
Jatusripitak will be in Hong Kong on Thursday to deliver the keynote speech at the third Belt and Road Summit organised by Hong Kong’s government and Trade Development Council. Carrie Lam, Hong Kong’s Chief Executive and Xiao Yaqing, Chairman of China’s State-owned Assets Supervision and Administration Commission of the State Council, will be in attendance along with other senior government figures. Jatusripitak is expected to address how the Belt and Road Initiative is driving steady growth of the global economy and how Thailand and other Asean countries can get involved.
Meanwhile, China’s rising economic and technological prowess is at the heart of a dispute with the US that, while waged through retaliatory trade tariffs, is also aimed at prying open the Asian nation to US businesses and restricting the use of government aid to advance strategically important industries.
Foxconn has extensive operations in China and has just finished celebrating its thirty-year anniversary there. Several of Foxconn’s largest contract assembly plants are in mainland China, where its people put together personal computers, laptops, Apple’s iPads, iPhones and consumer electronics of all sizes and specifications.
Last year, it pledged to invest 37.5 billion yuan (US$5.74 billion) to expand its facilities in Nanjing city and also invest US$8.8 billion in a new LCD plant in Guangzhou.
“Neither the US nor China should be neglected,” Gou said at the anniversary party on June 6. “The investments between the two countries have to be balanced.”
Last year Foxconn also announced two separate multibillion dollar investment deals to build factories and R&D operations in the US states of Wisconsin and Michigan.