The role of R3A road and digital platform to promote Thai agricultural product into China market

China Intelligence Center (CIC) (泰国商务智能中心)

CAMT DIGITAL SCHOOL, CHIANG MAI UNIVERSITY

Dr. Danaitun Pongpatcharatorntep (李雄英)

Expert Group Meeting on Enhancing Rural Transport

Connectivity to Regional and International Transport Networks

9-10 July 2019, Bangkok

Researches and projects

which related to this presentation

Research Project

Evaluating the costs and value chain analysis of Thai fruit for exporting to China on R12

road (2017): granted by ARDA

Analysis of cost and obstacle on Thai rice exporting to China through R3A road (2013):

granted by National Research Council of Thailand.

Analysis of cost and obstacle on Thai fresh food exporting to China through R3A road

(2012): granted by ARDA.

“An analysis of the emerging of R3A route and E-commerce on Thai fresh fruit exporting

to China.” Proceedings the Fifth Thai-Chinese Strategic Research Seminar “Thailand-

China Strategic Partnership : Present to Future” 17 - 19 August 2016Centara Grand Hotel

and Bangkok Convention Centre at Central World, Bangkok, Thailand

National Strategies Project

- Cross Border E-commerce to promote Northern Thai product into China Market (2018)

Chiang Mai University New Innovation Platform

- Research to Commercialize (CMU carelicious) (2019)

China Important policies which related to

Thailand in China's 13th 5 years Economic

Development Plan (2016-2020)

Belt Road Initiative (BRI)

Made in China 2025 (Advance Technology)

Digital Revolution (Internet+)

Cross Border Ecommerce (CBEC) is one of the strategies that are directly related to the three main strategies of China And the government announced that it was one of the national agenda on 20 June 2015

“一带一路建设中，要电商先行”

CBEC is a step that must be taken to achieve the OBOR strategic framework

Belt Road Initiative (BRI)

1) North Western (connect to Europe Middle/Southern/Eastern Asia)

2) North Eastern (Western Russia)

3) Guangxi Zhuang Autonomous region as gateway (Inland (road,rail)/sea transport) connects to ASEAN countries)

4) Yunnan Province as gateway (Inland (road,river,rail) transport)

connects to GMS and South Asia countries)

4 Gateways

R3B

R3A

BIMST-EC

GMS

CHINA-

ASEANLand Bridge

Northern Thailand and southern China, the center of

an economic integration

EWEC

NSEC (R3A)

BRI through R3A road making Northern Thailand

move from “Land lock” to become “Land link”

R3A,Bangkok-kunming Road, NSEC

Bangkok – Chiang Khong (Chiang Rai

Province) (Thailand) (860 km)

Chiang Khong/Huay Sai (Bokaew) –

Boten (Luang Namta) (Laos) (240 km)

Boten/Mohan (Xishuangbanna) –

Kunming (China) (670 km)

The role of R3A for Thai fruit exporting to China

2003 ASEAN-China FTA early harvest program had implemented, increasing Thai fruit volume into China market

Since 2009 R3A was become one of Thai fresh fruit gate way to China market, but exporters cannot use FTA tax privileges on this route due to logistics quality issue.

May 2011 A Protocol on the Inspection and Quarantine Requirements for Exportation and Importation of Fruits between Thailand and China through Territories of the Third Countries was implemented, China accepted Thai fresh fruit can enter into China market through R3A road with 0% custom tax regulation.

Protocol was implemented in May 2011

To China

To Laos

2013 4th Thai–Lao Friendship Bridge at Chiang Khong

border custom was opened to the public on

11 December 2013

Table 1: China’s imported fruit quantity (ton) during year 2010-2017 Year Imported from Thailand Total imported quantity The proportion of

Thai fruits imports Quantity (ton) Proportion Quantity (ton) Proportion

2010

2011

2012

2013

2014

2015

2016

2017

474,886.0

605,808.5

720,023.1

773,838.6

634,366.6

635,310.9

572,317.4

638,994.2

27.57%

18.85%

7.47%

-18.02%

0.15%

-9.92%

11.65%

2,611,097.8

3,200,772.4

3,266,462.1

3,119,497.0

3,838,013.8

4,296,663.1

3,971,842.7

4,507,859.1

22.58%

2.05%

-4.50%

23.03%

11.95%

-7.56%

21.05%

18.19%

18.93%

22.04%

24.81%

16.53%

14.79%

14.41%

13.29%

Average Growth 5.39% 9.80%

Source: ข้อมูลสถิติน ำเข้ำสินค้ำเกษตรรำยเดือนของกระทรวงพำณิชย้จีน (2561)

China’s imported fruit quantity (ton)

during year 2010-2017

Table 2: China’s imported fruit value (Million USD) during year 2010-2017

Year

Imported from Thailand Total imported value

The proportion of Thai fruits imports

Value

(Million USD)

Proportion Value

(Million USD)

Proportion

2010

2011

2012

2013

2014

2015

2016

2017

494.49

747.02

1,056.41

1,289.76

1,093.70

1,130.47

1,111.56

1,146.48

51.07%

41.42%

22.09%

-15.20%

3.36%

-1.67%

3.14%

2,059.71

2,926.56

3,671.96

3,981.97

5,021.36

5,865.85

5,704.32

6,215.21

42.09%

25.47%

8.44%

26.10%

16.82%

-2.75%

8.96%

24.01%

25.53%

28.77%

32.39%

21.78%

19.27%

19.49%

18.45%

Average growth 14.89% 17.87%

Source: ข้อมูลสถิติน ำเข้ำสินค้ำเกษตรรำยเดือนของกระทรวงพำณิชย้จีน (2561)

China’s imported fruit value (Million USD) during year 2010-2017

Role of R3A to increase Thai

fruit entering to China market

Responding to the needs of the western area market of China

Sea transportation

To “Jiang nan” market

in Guangzhou

Kunming become a new Thai fruit DC in China competed with

“Jiang nan” market

Flexibility to change routes to meet market demand and speed of transportation

4 days from Chiangkhong to Beijing

8 days from Laemchabang to Beijing

Time and cost comparison between R3A and

sea transportation from fruit plant to Guangzhou“Jiang nan” market

Cost Time

Origin Compare result Origin Compare result

From

Northern

Not difference From

Northern

R3A is faster 28.6%

From

Eastern

Sea is cheaper 32.1% From

Eastern

R3A is faster 25.0%

From

Southern

Sea is cheaper 22.5% From

Southern

R3A is faster 25.0%

Source: Danaitun Pongpatcharatorntep, (2012) “Analysis of cost and obstacle on Thai fresh food exporting to

China through R3A road”

New paradigm of China border area developed from BRI

1. To encourage bilateral trade between China and ASEAN,

especially increasing import volume through online platform

and cross border trade

2. Giving privileges regulation to border area citizens/firms- Guanlei port (MaKhong River) : tax privileges for import

frozen meat product- Mohan (R3A) : Cross Border E-commerce regulation

- PingXiang (R12): tax privileges for import fresh fruit

product

3. Identify ASEAN as a country, therefore, some product

from each country in ASEAN can apply border trade privileges

regulation to export product into China.

(VAT = 11%, Cross border fee = 4%-6%)

Compare the amount of transportation proportion R3A: R12: Sea transport

Transportation

route

Before BRI After BRI

R3A 10% 25%

R12,R9 10% 50%

Sea transport 80% 25%

Source: Interview Chinese fruit exporters by researcher

Danaitun Pongpatcharatorntep,

Evaluating the costs and value chain analysis of Thai fruit

for exporting to China on R12 road (2017)

R3A,R12 Logistics time/cost comparison

Fruit Plant (Jantaburi) to Guangzhou

1 container mangosteen to China (March 2017)

Jantaburi

Chiangkhong

Nakornphanom

Mohan

PingXiang

GuangzhouJiangnan market

R3A: Jantaburi→Chiangkhong→ Mohan = 36 hrs.

Mohang→Guangzhou = 72 hrs. (Total 108 hrs.)

R12: Jantaburi→Nakornphanom→ PingXiang = 108 hrs.

PingXiang→Guangzhou = 24 hrs. (Total 132 hrs.)

R3A: Jantaburi→Mohan = 75,000 (Tran.)+250,000 (VAT)

Mohang→Guangzhou = 80,000 (Total 400,000 Baht)

R12: Jantaburi→PingXiang = 220,000

PingXiang→Guangzhou = 50,000 (Total 270,000 Baht)

Opportunities along

the route R3A

1. Chiang Khong SEZ

2. Kunming-Mohan high speed train3. Mengla District SEZ (Include: Mohan)

4. Mohan (China)- Boten (Laos) border

SEZ

5. Kunming E-commerce FTZ

High speed railway

Kunming-Mohan

Chiang

Khong SEZ

Mohan

Kunming

- Mohan-Boten SEZ

- Mengla SEZ (Include:

E-commerce B2C product

OSS clearance)

Kunming

E-commerce FTZ

Opportunities along

the route R3A

China high speed train railway network 2020

Kunming-Mohan

2021 to link with R3A

Kunming E-commerce Free Trade has been increased

the potential to export Thai products to China by R3A

road and air freight (via Kunming International Airport)

Northern Thai can get benefit from

E-commerce FTZ and Mohan OSS (R3A (China-

Laos Border), to manage E-commerce B2C

shipment in term of establishing a Fulfillment

Center in Thailand, Laos or China

OSS : For B2C shipment in Mohan

SEZ Mohan-Boten (China-Laos Border)

Last railway station in

China and 1st

station in Laos

老挝磨丁经济特区: “一带一路” 的免税天堂 国际自由港

China supports the feasibility study of the construction

of Huai Sai-Mo Han Expressway (new R3A), to reduce a

distance from 240 km to 180 km. which takes only 1.5

hours travel time after an expressway finished.

China 36 CBEC City covering 20 Provinces + 4 Mega citySource: https://baike.baidu.com/item/中国跨境电子商务综合试验区

1. หำงโจว2. เทียนจิน3. เซี่ยงไฮ้4. ฉงชิ่ง5. เหอเฝย6. เจ้ิงโจว7. กว้ำงโจว8. เฉิงตู9. ต้ำเหลียน10. หนิงโป11. ชิงเต้ำ12. เซินเจิ้น13. ซูโจว14. กรุงป้กกิ่ง15. ฮอฮอต16. เส่ินหยำง17. ฉำงชุน18. ฮำร้บิ้น19. นำนกิง20. หนำนชำง

21. อู้ฮั่น22. ฉำงซำ23. หนำนหนิง24. ไหโข้ว25. กุ้ยหยำง26. คุนหมิง27. ซีอำน28. หลำนโจว29. เซี่ยเหมิน30. ถังซำน31. อู้ซี32. เวยไห้33. จูไห้34. ตงก้วน35. อ้ีอู36. ผิงถัน

ปี 2019 เหลือเพียง ทเิบต ซนิเจียง ชิงไห่ ซานซี หนิงเซี่ย ที่ยังไม่มีด่าน CBEC

Yunnan will become “Gateway” for

ASEAN product to China and Europe

Fresh fruit

E-commerce

Tourists

Etc.

R3A route and

E-commerce, opportunity

for small scale

gardeners/rural

community enterprise/

premium grade fruit

entering into China market

Number of users And growth rate (million)Growth rate(%)

2016 Proportion(%) 2017 Proportion(%)

Online Shopping 466.70 63.8 533.32 69.1 14.3%Mobile Commerce 440.93 63.4 505.63 67.2 14.7%

Number of internet users in

China (ten thousand)

2007-2017

Favorite mobile App and

number of user to buy

fresh product (Million)

China fruit E-commerce

Thai fruit logistic/distribution model to China

B2B (Traditional Platform)

- To via R3A, R12 route or sea freight transportation are main logistics way for a large-scale product (per container) distribution

(Low logistics cost per unit , a large scale of money to invest)

B2C online (E-commerce Platform)

- Logistics through cold chain air express delivery from Thailand to China

(Best for premium grade product and small scale gardeners, a high logistics cost per unit)

Model Strength Weakness

B2B Low logistics cost Need a big volume

B2C Small scale gardeners can

buy on the platform

High logistics cost

B2B2C Logistics by B2B method, and Order by B2C E-Commerce method

Model Strength Weakness

B2B Low logistics cost Need a big volume

B2C Small scale gardeners can

buy on the platform

High logistics cost

Using online platform to buy product and logistics by

the B2B transportation

Thai fresh fruit E-commerce channel and Delivered by R3A,

Shipment delivered by road transportation through R3A route

Shipment is sent to local express logistics provider, delivers to end customer (air+road)

1

2

3

4

5

R3A cross border logistics process

Fruit Ordered by customer(PC/Tablet/Mobile)

Online trading system

Thai gardeners receives order and delivers shipment

Logistics process in Thailand

E-commerce service providers

Logistics process in China

B2B2C: Thai fruit transported throuth R3A route and

change to domestic air delivery to end customer

Chiang

khong

Mohan

Jinghong

Xishuangbanna

international airport

Case study: Social network E-commerce platform

Fruit retail agents trade on

Social-Network

1

2

3

4

5

1. A fruit retail agents open social network channel to contact with end customers

2. Order is sent to the fruit cross border trading company, to deliver shipment to end customer’s address

Online trading system

Gardener receives order and delivers shipment

Fruit has ordered by customer(PC/Tablet/Mobile)

Logistics process in Thailand

Delivered by road transportation through R3A route

Logistics process in China Shipment is sent to local express logistics provider, delivers to end customer (air+road)

R3A cross border logistics process

My future businesses model study

B2B2b : Fruit has ordered through Chinese online E-commerce Platform which is manage by Thai enterprises and distributed by China transportation network to fruit wholesale market in China’s each provinces.

(Thai Online Middle man Model, ล้งไทย)

B2C, O2O

- Establish brand of the Thai fruit premium grade to promote in a famous tourists destination (Chiang Mai / Bangkok/ Pattaya/ Phuket) (Offline)

- Develop the multi-online platform on Chinese online channel (Online)

O 2 O C B E C M o d e l

Chiang Mai Offline shop

Online Supporting system(Information/Financial/Physical Flow)- Wechat official account /mini program- Mobile Application.- Payment gateway (alipay,wechat pay)- Back office service

Chinese online shop- Taobao shop - Tmall Shop - Social network- etc

Activities- Net Idol/Influencer- Product development- Business Matching

CAMT กบับทบาท CBEC

KIOSK ตน้แบบกบัเอกชน

CAMT

O2O

CBEC

Thank you

China Intelligence Center (CIC) (泰国商务智能中心)

CAMT DIGITAL SCHOOL, CHIANG MAI UNIVERSITY

Dr. Danaitun Pongpatcharatorntep (李雄英)