Chinese low-price goods are sweeping Southeast Asia. Schematic diagram. (European News Agency)
[Financial Channel/Comprehensive Report] Chinese low-priced goods have swept across Southeast Asia, and local merchants who originally purchased goods from Chinese factories have been placed in the front row of the tsunami. The South China Morning Post disclosed on the 18th that a Chinese-Indonesian entrepreneur discovered that Chinese suppliers were directly attacking the local market through e-commerce platforms, and the product prices were sometimes lower than the purchasing quotations he had obtained from Chinese factories. From Indonesia to Thailand, China's overcapacity and low-price exports are intensifying competitive pressure on local companies, and the relationship between suppliers and customers has also quietly reversed.
Chinese low-price goods continue to attack the Southeast Asian market. Local businesses that originally relied on Chinese factories for supplies now find that their suppliers have become competitors. The South China Morning Post reported that from Indonesia to the Philippines, local small and medium-sized enterprises are facing pressure from Chinese companies to enter the market directly and compress their profit margins. Some businesses even found that the purchase quotations they obtained from Chinese factories were actually higher than the sales prices of Chinese companies on local e-commerce platforms.
The report took Kevin Stewart, a Chinese-Indonesian entrepreneur, as an example. He travels to China almost every year to purchase goods and runs a home furnishing and pet supplies business. His customers include enterprises and general consumers, and his sales channels also include e-commerce platforms. However, more and more Chinese companies are selling goods directly on Indonesian e-commerce platforms, causing merchants who originally purchased goods from Chinese factories to face price competition.
Stewart pointed out that sometimes the purchase quotations he obtained from China were even higher than the prices that Chinese companies sold directly in the Indonesian market. In order to prevent Chinese manufacturers from supplying large quantities of goods to the market at lower prices, he must continue to track competitors and promptly stop selling goods that are difficult to maintain profits.
Siwage Dharma Negara, co-coordinator of the Indonesian research project of the Institute of Southeast Asian Studies in Singapore (ISEAS-Yusof Isa Institute), analyzed that the competitive advantages of Indonesian Chinese businessmen in the past mainly came from local distribution networks, political connections, and familiarity with market culture and regulations. However, in direct-to-consumer industries, Chinese companies can rely on their strong financing capabilities to establish their own supply chains and sales networks, reducing their dependence on local middlemen.
Chinese SMEs in Malaysia are also facing similar difficulties. The report pointed out that many Malaysian Chinese businessmen reported that Chinese companies are not only important suppliers, but also gradually becoming direct competitors. In the past, local businesses relied on their advantages in purchasing, distribution and familiarity with the market to maintain business. Now, Chinese businesses sell directly to consumers, squeezing the profit margins of middlemen and retailers.
Similar pressures are occurring in Thailand. The Chinese Chamber of Commerce in Thailand raised concerns about the increase in China's imports of goods on September 2. 27.4% of the respondents in the chamber's survey attributed the increase in imports to China's overcapacity, making commodity prices more competitive. The Chairman of the Federation of Thai Industries also previously warned that China's weak domestic demand has prompted companies to increase exports, further increasing competitive pressure on the local manufacturing industry.
In the Philippines, some Chinese businessmen are unwilling to publicly comment on the impact of Chinese companies entering the market due to local political differences and sensitive relations with China. However, in 2024, Philippine Congressman Robert Ace Barbers alleged that some Chinese nationals were suspected of using investment residence visas to operate shops selling smuggled Chinese goods, and claimed that local retailers suffered losses as a result; the relevant losses have not been independently confirmed.
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