Gulf of Thailand's Industrial Park

by Lu Jie, Yu Wei
[Thailand] Phatcharee Paitoonngamta

It's the end of the year and a cool breeze from the north provides relief from the tropical heat. The night sky of Thailand looks bright with stars, and music and songs, together with dancing and beer, have kicked off the New Year carnival. "Happy New Year" banners can be seen everywhere.

For Prasong, a Thai factory worker in the Thai-Chinese Rayong Industrial Park, this is his third year in the industrial park and he is still as excited as he was in the first year. The New Year's Day party is an exciting event in the factory when the offices are decorated lavishly and every Chinese and Thai employee prepares a gift. Then the gifts are numbered and used as prizes in a raffle. Music and free-flowing beer are the two must-haves at the party with the lucky draw its climax.

A bird's eye view of the Thai-Chinese Rayong Industrial Park

Prasong loves his work at the park and the warm atmosphere there, and he is grateful to the Rayong Industrial Park for the platform it has provided. So far, the industrial park has attracted more than USD3.5 billion in foreign direct investment for Thailand and created more than 40,000 local jobs.

From Unfamiliarity to Localization

Like Prasong, Xu Genluo, a Chinese, also works here. Xu arrived in Bangkok to start his business venture on a mid-summer morning when it was drizzling and the streets were wet.

Thailand was a foreign country to him then and he faced teething problems. Managing the Thai workers was the first challenge. Xu and his colleagues tried to follow the traditional Chinese management model, which did not work well. Even after the Chinese managers themselves went to the assembly line to demonstrate how the work should be done, there were no results.

"Though we tried to show the staff in the workshop how things should be done, they looked confused. We couldn't understand what they were thinking and they didn't understand us either and we were all at a loss," he said.

Then they discovered that the Thai workers could not understand the operation manual they had brought from China and so could not master the techniques even after hands-on instructions. The language barrier created a communication problem. It made the Thai employees perplexed and the Chinese managers helpless.

Soon after the factory opened, it obtained an order from a customer in the Philippines. As the delivery time approached, there was still a lot of work to finish and the factory asked all employees to work overtime at night. But no one complied and the workers complained to the authorities. Xu was called to the local government labor department several times for questioning and asked to resolve the issue.

It was an eye-opener for him and he began to study the local laws and regulations, such as the Thai Labor Law and Investment and Business Law, and began to adapt employee management to local conditions. He introduced a new measure. The workers were told they could leave early once they had met the day's quota. Workers on the assembly line, for example, could leave once they finished 600 pieces.

A night view of the Chao Phraya River

It motivated the workers, who concentrated on finishing the work early and soon, they were leaving at 3:00 p.m., two and a half hours earlier. Then the management announced that workers who finished 900 items a day would be paid 50 percent more than their normal daily wage. On the first day after the announcement, the workers had assembled the required 900 pieces each by 8:00 p.m. Soon, they were doing it by 6 p.m. and doing it happily since they could earn 50 percent more.

Pursuing Excellence

Once they had found a management model suitable for the Thai employees, Xu and his Chinese colleagues were impressed by their excellent performance.

Thai engineers told him the manual brought from China was too concise, and the Thai workers were not clear what to do even after reading them. He suggested that the technical information be detailed, and the operational breakdown of every procedure, from instructions for the use of tools to configuration of the parts, placement of auxiliary parts and cleaning be made explicit.

Subsequently, the Chinese and Thai technicians refined and revised the operation manual and every Thai worker was given a copy of it. Photographs of the equipment parts captioned in Chinese, Thai and English were hung on the walls of the factory to help them at work. The Thai workers studied the revised manual and began applying the now clear instructions in their work. The quality controllers on the production line also followed the instructions meticulously.

With a clearly written operation manual, the Thai employees did better than expected. They were meticulous in every detail, however small, such as binding files.

In this way, a complete factory operation model with standardized production, localized management and systematic institutions was established.

The factory organizes an annual sports event where different kinds of matches are held, such as football, sepak takraw, volleyball and table tennis. It is a joyful event with music, dancing, cheerleaders resplendent in their costumes and the competitors brimming with energy. Then the prizes are given out in a formal ceremony. The event provides a relaxing interlude and also cements the rapport between the employees of the two nations.

The players and cheerleaders in a sports game organized by the industrial park

A Green Industrial Park

To build its Eastern Economic Corridor, Thailand has established a special economic zone (SEZ) straddling three eastern provinces, Chachoengsao, Chonburi and Rayong. Infrastructure is being vigorously developed in the SEZ and a series of preferential investment policies has been announced to attract high value-added industries. The local governments have also launched high-speed rail projects connecting the Don Mueang International Airport and Suvarnabhumi Airport in Bangkok and the Utapao Airport in Rayong.

Supported by favorable local policies, the development of the Thai-Chinese Rayong Industrial Park has been accelerated and industrial clusters have been created, mainly attracting auto and motorcycle parts, machinery, new energy, electronics and building materials industries to build their factories there.

The industrial park has technological and environmental standards for the companies coming in. They must be high-tech enterprises in Thailand or in the international market and must have high added value. Manufacturing industries with high energy consumption and heavy pollution are barred.

To minimize its environmental impact, the industrial park requires all enterprises operating inside to build their factories in strict accordance with the ISO14001 environmental standards and pass the Thai Environmental Impact Assessment (EIA). The plants must also have their wastewater treated and monitored by a thirdparty wastewater treatment company.

"We have rejected many projects with heavy pollution and high energy consumption though many of them pledged high invest- ment," Xu said. "Environmental protection is a mandatory standard so we turned down such projects."

Xu said the reason for these rules is the realization that China and Thailand need to grow together. "We must abide by local laws and respect the long-term development interests of the local people. Only by mutual benefit and mutual help can we achieve lasting success in our cooperation," he said.

In 2013, Futong Group Communication Technology (Thailand) Co. built its optical cable factory in the Thai-Chinese Rayong Industrial Park, the largest of its kind in the ASEAN region. Such enterprises are low on pollution and high on returns and additionally, promote local employment. According to Xu Muzhong, executive general manager of the Futong Group, with the factory in the park, the company has expanded its overseas development, filled the gap in optical cable technology in Thailand, and become a model for Sino-Thailand production capacity cooperation. Futong is currently building its second-phase project in the industrial park, which will be the largest optical cable project in the area, providing more opportunities for local development.

The Enterprise Service Center of the Thailand-China Rayong Industrial Park

As of November 2019, more than 130 companies had settled in the Thai-Chinese Rayong Industrial Park, with over half of them arriving in the past five years. Thai employees account for about 90 percent of all employees in the park.

A manager at the park said production capacity cooperation is a key consideration. The park is trying to bring in industry leaders so that industrial chains are formed. The aim is to build the Thai- Chinese Rayong Industrial Park into a comprehensive business ecosystem encompassing industry, commerce, medical care, culture and education so that it becomes a sustainable industrial park.

Since the beginning, the Thai-Chinese Rayong Industrial Park has positioned itself as a localized industrial park in Thailand, integrated with the local culture and calling Thailand its home.

The new Rod Fai Market (the new train market) in the Ratchada area of Bangkok

Dotted with trees, flowers and green lawns, the green industrial zone looks like a beautiful garden where Chinese and Thai employees can be seen taking a walk together. They enjoy the beautiful scenery, teach each other their language, and envisage a future together fulfilling their common dreams.


Project Overview:

The Thai-Chinese Rayong Industrial Park has been developed by Rayong Industrial Zone Development Co., in which Holley Group (China) holds controlling shares. The park is located in Amata Industrial City, Thailand.

The park is located on the east coast of Thailand, 114 km from Bangkok and 27 km from the Laem Chabang deep seaport. Its total planned area is 12 sq km (1.5 sq km in the first phase, 2.5 sq km in the second phase, an 8 sq km in the third phase). This includes general industrial areas, bonded areas, logistics and storage areas, and commercial and residential areas.

Up to now, an area of 7 sq km has been developed, and more than 130 enterprises have settled in, bringing in Chinese investment of nearly USD2.3 billion to Thailand with a total industrial value of over USD5 billion. The park has mainly attracted Chinese enterprises in auto and motorcycle parts, machinery, new energy, electronics and building materials. It is creating industrial clusters and playing an important role in creating jobs, raising the tax revenue for the local authorities as well as increasing foreign exchange earnings.