MARKETS IN SEARCH OF HIGH-QUALITY PRODUCTS
With a 2021 GDP of $506 billion, Thailand is the second-largest economy in Southeast Asia. Thailand’s economy is diversified and competitive, and has proven resilient to external and domestic economic shocks. Thailand offers a favorable business environment with an open, market-oriented economy; efficient regulatory systems; relatively low tax rates; and open policies toward investment and trade.
With a 2021 GDP of $363 billion, Vietnam has been one of the world’s fastest-growing economies during the past decade. Vietnam has a large population of nearly 99 million, more than half of whom are under the age of 30, representing a huge pool of potential customers and employees. The country has gained a reputation as a go-to place for export manufacturing, largely because of cheap labor. It has been the biggest beneficiary of the U.S.-China trade conflict, with many manufacturers shifting operations to Vietnam.
These two markets are promising targets for Wisconsin exports. Both markets anticipate solid economic growth for 2022 and seek product categories that represent Wisconsin’s strengths—including the advanced manufacturing, food and beverage, and biohealth industries. Thailand purchased $298 million worth of Wisconsin goods in 2021 and ranked 15th among Wisconsin’s export destinations. Vietnam bought $169 million worth of Wisconsin goods in 2021 and ranked 26th among Wisconsin’s export destinations.
To further develop trade opportunities, the Wisconsin Economic Development Corporation (WEDC) will lead a Global Trade Venture to Thailand and Vietnam in April 2023. For each Wisconsin business that participates, WEDC’s trade representatives in Southeast Asia will screen for the best partners, which could include distributors, agents and potential customers. WEDC will handle all arrangements to get Wisconsin participants to business meetings and will assign interpreters to accompany them. The interpreters will not only facilitate communication during the meetings but will also provide cultural and business insights relating to the market. With all your appointments arranged for you, you can focus on business rather than logistics and scheduling.
Thailand has a strong, diversified manufacturing base across sectors such as automotive, electronics and food. The free elections held in 2019, the first since a military coup in 2014, have brought political stability to the country. Thailand is also a hub for the Indochina region (encompassing what are sometimes called the CLMV countries—Cambodia, Laos, Myanmar and Vietnam). Thailand presents opportunities for exporters of aerospace and defense equipment, agricultural machinery, industrial machinery, medical devices, pharmaceuticals and automotive accessories, among other categories. Thailand’s $298 million worth of imports from Wisconsin in 2021 represented a 29% increase over total from a decade earlier ($231 million in 2011). Thailand’s economy continues to recover from the pandemic, with growth between 3.0% and 3.5% projected for 2022. Driving this growth are exports to major markets such as the U.S., China, the European Union and Japan; the recovery of business activities in the country; and an uptick in domestic consumption.
Over the last three-plus decades, economic and political reforms launched in 1986 have made Vietnam one of the most dynamic economies in Asia. From 2002 to 2018, more than 45 million people were lifted out of poverty. An emerging middle class currently accounts for 13% of the population and is expected to reach 26% by 2026. Vietnam is also a highly favored destination for shifting supply chains. Labor-intensive manufacturing has been migrating to Vietnam from China for at least a decade, and the process has been accelerated by trade tensions between the U.S. and China. Supported by steady opening of the market and easing of regulations, Wisconsin’s exports of goods to Vietnam reached $169 million in 2021—nearly triple the 2011 total of $58 million. The country’s political stability, positive economic outlook, large population, and rapidly expanding higher and middle classes make it an attractive market for exporters in a range of sectors, from industrial machinery to medical equipment and environmental solutions. Determined to return annual economic growth to the pre-pandemic level of 6.5-7%, in January 2022 the government ratified the largest economic recovery package in Vietnam’s history: a $15.4 billion socioeconomic recovery program for 2022-2023 that will cover improvements in preventive health care, support for businesses and households, infrastructure development and more.
Wisconsin businesses that take part in this Global Trade Venture will be connected to a wide range of opportunities in these promising markets. When entering these markets, companies can expect to encounter competition from both domestic and foreign suppliers, but firms can find success by being innovative, patient and committed pursuing opportunities in each market. Participating companies should have a good understanding of the export process and be prepared to modify their products to align with the demands and tastes of consumers in Thailand and Vietnam. Companies in the following sectors are especially encouraged to attend:
- Advanced manufacturing, including aerospace; machinery and tools; and energy, power and controls. Wisconsin is a global center for energy, power and controls. Electrical machinery and control manufacturing is one of the state’s fastest-growing industrial sectors. Both Thailand and Vietnam are focused on continuing to build their advanced manufacturing technology, so the demand for specialized machinery and tools is expected to rise.
- Food and beverages, including food and agricultural products and food processing equipment. The U.S. is the leading exporter of food and agricultural products to Southeast Asia. Wisconsin is the market leader in cheese sales to those markets; Wisconsin also is the largest producer of cranberries, which are popular in these markets. As the economies of Thailand and Vietnam grow and residents become more prosperous, demand for high-quality food products is expected to grow.
- Biohealth, including medical devices, pharmaceuticals and biotechnology. The U.S. is the primary source of advanced medical products sold to Asia, and Wisconsin is a global leader in biohealth products and services. Thailand and Vietnam import most of their high-end biohealth products from overseas.