The attractiveness of Thailand for Chinese investment : Chiang Mai case study

Abstract

A great deal of research has been conducted to explain the development of Chinese OFDI in Southeast Asia; however, not much attention has been placed on the determinant factors that contribute to an uneven distribution of Chinese investment in this region. This dissertation investigates the determining factors contributing to the high Chinese investment in Thailand using the dataset from 2018. The findings show that Thailand has five advantages based on the Porter Diamond Model (PDM). Surprisingly, factor conditions are not the most influential determinant that contributes to the increasing of Chinese investment. Another objective of this study is to examine the impacts of Chinese investment on the host city, in which Chiang Mai is selected as a case study. The author conducted in-depth interviews with nine interviewees. While existing literature suggests that the most vital factor which results in an increase of Chinese investment is proximity, this study found that the local culture is the most influential factor. Moreover, most participants view Chinese investment as having positive influences on the city. This result contradicts with the previous research stating that locals found Chinese investment to be detrimental to the city. This study points out the advantages that the host country will receive from the Chinese investment in Thailand and suggests the weaknesses of Chiang Mai, which requires further improvement. Therefore, the government should regulate the investment law further, and the future studies should research the policies which can strengthen “the attractiveness" of Thailand and Chiang Mai to maximise the advantages they should gain from their comparative advantages.