Chinese e-commerce sellers brace for Thai import duties. Will a 30% tariff threaten sales?

A new tariff of up to 30 per cent on e-commerce goods entering Thailand may squeeze Chinese vendors, but intense price competition and their ability to keep costs low are likely to limit its impact, analysts said.

Thailand’s cabinet on Monday authorised the finance ministry to impose duties of up to 30 per cent on goods ordered through foreign e-commerce platforms and delivered by express courier or international post, according to Thai media. The actual rate will vary by product.

The new duties, expected to take effect next year, could generate an additional 6.3 billion baht (US$186 million) in customs revenue, the Bangkok Post reported. They are also designed to give local sellers a fairer shot at competing in the domestic market.

Thailand’s Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas was quoted as saying that e-commerce had made cheap foreign goods more accessible to Thai consumers while domestic businesses had to pay local wages and taxes.

Alfredo Montufar-Helu, China-based managing director at Ankura Consulting, said fierce price competition in China would ensure e-commerce vendors continued pursuing sales in overseas markets, even as the new Thai duties could hurt some of them.

“Many sellers on these platforms are small firms with very thin margins,” Montufar-Helu said. “We’ll have to see how much of the tax Chinese sellers absorb and how much they pass on to Thai consumers.”

Song Seng Wun, an economic adviser based in Singapore, said Chinese e-commerce firms benefited from economies of scale – the ability to cut costs by handling large volumes of goods. This could allow them to keep prices below those of Thai retailers even after the new tax is introduced.

“Clearly this is Thailand’s attempt to help local retailers from cutthroat e-commerce,” Song said. “The challenge is, the (Chinese platforms) are very, very competitive and they really know how to squeeze. They will still be cheaper and with more varieties.”

Temu, JD Global Sales and Alibaba’s Taobao platform ship to Thailand from China. None of the three answered requests for comment. Alibaba owns the South China Morning Post.

Thailand’s retail e-commerce market reached about 1.258 trillion baht last year, according to the Hong Kong Trade Development Council, which said international sellers, particularly from mainland China, had “flooded” it with cheaper goods.

Products shipped directly from China to Southeast Asia, including Thailand, made up nearly 60 per cent of cross-border e-commerce transactions, according to Singapore-based digital marketing agency Hashmeta.

Thailand is Southeast Asia’s second-largest e-commerce market after Indonesia, which also imposes taxes on some imported goods.

Jayant Menon, a visiting senior fellow at the ISEAS – Yusof Ishak Institute in Singapore, said Thailand’s new tariff represented a “significant rise” in the tax rate and could affect the flow of goods into the country.

He forecast a potential “trade deflection” strategy, where Chinese goods enter a country with lower duties in the 11-member Association of Southeast Asian Nations before moving across borders into Thailand.