Another leap forward for the Thai e-commerce scene

Alibaba has signed four Memorandum of Understandings (MOUs) with Thailand. The nation expects more benefits to follow.

By Joelyn Chan

Sontirat Sonthijirawong, the Thai commerce minister, has been busy. He has set his sights on increasing e-commerce’s contribution to bilateral trade. His aim is to boost bilateral trade from US$73 billion to US$120 billion in three years. This is not an overly ambitious dream. The cross-border e-commerce market is a significant growth driver. Back in 2016, a Thai government agency valued the market at 2.6 trillion baht (US$80 billion).

According to the Digital 2018 Global Overview report, there are around 57 million Internet users in Thailand. Around 82% of the Thai population is online. This group spent more time online than the average Southeast Asian. In 2017, Thais spent 9.38 hours a day online- the most out of any ASEAN nation. This high level of online penetration provides the perfect growth environment for the Thai e-commerce market.

Alibaba’s four MOUs with Thailand mark the Chinese e-commerce giant’s long-term commitment. The Secretary-General of the Eastern Economic Corridor Office of Thailand (EECO) described the collaboration with Alibaba as a new chapter of digital trade.

The MOUs signed will promote Thai products, tourism and business operators globally. Also, there will be training programmes for Thais to boost their digital knowledge. It is hoped this technical know-how will give Thailand an edge over other developing nations.

Progressing well into Thailand 4.0

Mr Kanit Sangsubhan, Secretary General of EECO, also noted, “the transformation of digital trade and businesses will be an important step towards Thailand 4.0”. Thailand 4.0 is the nation’s plan to become a high-income country through innovative industries. It envisions a new economic model after the agricultural, light industry and advanced industry economic phases. If Thailand 4.0 goes according to plan, the country will be at the forefront of the global digital economy.

Source: Royal Thai Embassy

Bringing e-commerce to the farmers

In 2017, the average farm income was 57,032 baht (US$1,776) per household. This figure is far above Thailand’s poverty line of 32,000 baht (USS$997), but below the government’s goal of 60,000 baht by 2021. The introduction of e-commerce into the farming community presents excellent opportunities.

The Thai Deputy Prime Minister, Somkid Jatusripitak, is highly supportive of Alibaba’s investments into Thailand. He said, “The government wants this [investment] because the majority of Thais are farmers. Every year, we have product oversupplies and this investment could help them a lot. We believe these people want changes.”

Alibaba has already impressed Thai farmers by selling 80,000 durians in one minute. The listing of Thai’s produce on Alibaba’s Tmall will skyrocket the demand for Thai produce. Tmall is China’s largest online business-to-consumer (B2C) platform. There are 1.4 billion Chinese consumers, who are eager to purchase Thailand’s agricultural products.

Thailand’s Ministry of Commerce also has plans to scale up the government’s Thaitrade.com website. The creation of a large, national e-commerce platform will intensify competitiveness and help smaller businesses access a large pool of Thai consumers.

Thaitrade.com has also opened a Thai Flagship Store on the Tmall platform. A presence on Tmall will provide greater visibility to Chinese consumers. The Ministry of Commerce hopes Thaitrade’s presence on Tmall will provide a significant boost for the nation’s small and medium-sized enterprises (SMEs).

Alibaba’s commitment to Thailand

Alibaba is committed to investing a total of 11 billion baht (US$340,000) in Thailand. The four MOUs are merely part of the initial phase. The current series of investment will be around US$330 million.

However, there are already fears over China’s potential dominance over the Thai market. Alibaba’s venture into the market could affect Thai e-commerce businesses and retailers. With mass purchases by Chinese consumers, Thai citizens may be disadvantaged. Increased demand could drive prices up, excluding Thais from consuming their own products.

The founder of Alibaba has been trying to ease Thai fears. In a business reception, Jack Ma said, “We don’t have the capability to monopolize trade”, adding, “it is impossible to monopolize a digital market”.

Alibaba also points to the non-commercial benefits of its venture into Thailand. Alibaba Business School provides e-commerce training initiatives. Alibaba and Thai agencies jointly organise these initiatives.  They seek to inculcate a digital mindset. As technological disruptions are pervasive, the right mindset will empower Thai entrepreneurs, government executives, lecturers and students.

Thailand has quite a journey ahead before it fully realises its digital economic aspirations. Alibaba offers the technical expertise needed to bridge the gap. Without Alibaba’s interest in Thailand, the latter would still be struggling to fully embrace e-commerce.

Alibaba’s investments may be unwelcomed by some, and there may be some unwelcome side-effects. However, in the long term, Thailand will reap the rewards. Thanks to Alibaba’s knowledge and investment, Thailand will be much better equipped with the skills necessary to succeed in the modern digital-economic era.