Thailand's Manufacturing Sector: Investment Potential Analysis Report

This report provides an analysis of investment opportunities within Thailand's manufacturing sector, focusing on the automotive, electronics and electrical appliances, and food processing industries. The automotive industry, the largest in South East Asia, shows a high demand for automation driven by cost, quality, and environmental concerns. The electronics sector, while large, primarily focuses on export-oriented assembly with a lower demand for automation. The electrical appliances sector, also significant in South East Asia, presents opportunities for automation solutions related to energy efficiency and quality. However, the report concludes that the food processing industry offers the highest potential for return on investment due to its reliance on imported high-tech equipment and the sector's growth, which will increase the demand for automation and machinery. The report recommends investing in high-tech equipment for the food processing industry in Thailand, as it is expected to have a high local demand.

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Investing in Thailand
Thailand is an attractive and strategic economy in Southern Asia for investment. The Thai’s
manufacturing sector has several opportunities for foreign investors (Petri, 2018). These
industries are automotive, electronics and electrical appliances, and food processing. There is a
high demand of solution and automation machinery, quality and safety, energy efficiency and
economic control. The following section analysis the three industries; automotive, food
processing, and electronic and electrical appliances to find out the industry with the highest
potential for returns on investment (ROI).
The automotive industry in Thailand is the largest industry and biggest producer in the whole
South East Asia. The industry is ranked as top 15 automotive producer around the world and top
5 in Asia. The industry produces more than 1.88 million vehicles per year (Intarakumnerd, &
Techakanont, 2016). About 60% of the industry production is export and 40 percent is bought
locally. The dominant companies are Toyota, Mitsubishi, Isuzu, Honda, Nissan, Ford, Volvo,
MAN, Scania, Mercedes-Benz, and GM (Intarakumnerd, & Techakanont, 2016). The industry
trend is automation that is driven by increasing labour costs, quality, safety, economic control
and environmental concerns. The equipments on high demand in the Thai’s automotive industry
are equipments that will enhance safety and quality, energy efficiency, and equipments for metal
processing and cutting. Therefore, the biggest opportunity in the Thai’s automotive industry is
solutions that will decrease energy use and those increasing control and quality.
The second major industry of interest is electronics production. The Thailand’s electronic and
electric appliances industry is large and it production is export focused. The local market for the
product is insignificant for the industry. The country’s leading electronic products are integrated
circuits, compressors, mobile phones, Hard Disk Drives (HDD’s) and semiconductors. Some of
the major companies in the electronic industry are Toshiba, Western Digital, Fujitsu, Philips, LG
Electronics, Schneider and Hitachi (Errighi, & Bodwell, 2017). Most of the equipments used in
the production of electronics are imported. The industry demand for automation solutions in low
as production of electronics is focused on low value added assembly. On the other hand,
Thailand’s electrical appliances production is the largest in South East Asia. The country is
ranked top 5 in global production of refrigerators and air condition units. Some of the key
products in the electrical appliances in the industry are digital cameras and washing machines.
Major manufacturers in the industry are Sony, LG, Acer, Canon, Electrolux, and Nikon. The
industry has a high presence of domestic suppliers and most content amounting to 70% is
sourced in the country (Errighi, & Bodwell, 2017). The industry has a high demand for
automation solutions such as equipments for energy efficiency, robots, safety, quality, and
injection moulding machines.

The other industry of interest is food processing and Thailand is a large producer of food and has
a growing export industry. The country has more than 1500 Medium and large sized food
processing businesses. Most of the food processed is frozen seafood, chicken, rice, canned fruits
and sugar processing. The country has attracted multinational companies such as Nestle and
Unilever. More than 60% of the foods processing equipments that are used in the industry are
imported from China, UK, Japan, Korea, EU, and US. The industry demand for automation is
driven by high importation requirements on food standards, safety, and high potential market
(Balasubramaniam, Barbosa-Cánovas, & Lelieveld, 2016). Equipments in high demand are
machinery for filling, sealing, labelling, laboratory equipments, freezing, and refrigerating
equipments and machinery for labelling food containers.
From the research on three major industries of Thailand, investment on food processing industry
has the highest potential for high returns on investments as compared to automotive and
electronic and electrical appliances industries. The food processing industry has a gap for high
tech equipment for production. The country depends on import which makes over 60% of
equipment used in the food processing industry. The multinational companies in food processing
such as Unilever and Nestle import high tech machineries for their operations. The food
processing industry in Thai is also expected to grow increasing the demand for automation and
machinery for food processing. This shows that the equipments will have a high demand locally
hence enabling investors to have a steady income from their investment. Therefore, the
recommendable industry to invest in is food processing high tech equipments in Thailand.

References
Balasubramaniam, V. M., Barbosa-Cánovas, G. V., & Lelieveld, H. L. (2016). High pressure
processing of food. Food Engineering Series: Principles, technology and applications.
Errighi, L., & Bodwell, C. (2017). Electrical and electronics manufacturing in Thailand:
Exploring challenges and good practices in the workplace. International Labor
Organization, ILO Asia-Pacific Working Paper Series.Intarakumnerd, P., &
Techakanont, K. (2016). Intra-industry trade, product fragmentation and technological
capability development in Thai automotive industry. Asia Pacific Business
Review, 22(1), 65-85.
Petri, P. A. (2018). The interdependence of trade and investment in the Pacific. In Corporate
links and foreign direct investment in Asia and the Pacific (pp. 29-55). Routledge.