Thailand’s western Ratchaburi province is a major producer of aromatic coconuts, but in the past few years, Chinese firms have invested heavily in establishing collection and export hubs. From leasing land for cultivation to procurement, grading, packaging and export, Chinese companies have gradually taken control of the entire supply chain and pushed prices down. It is not ordinary investment; it is a model of control and exploitation achieved through monopolizing everything from farms to exports.
While Thai farmers only receive about 4 to 5 baht (US$0.12 to US$0.15) per coconut, prices in the Chinese market can reach up to 36 to 53 baht. With procurement, grading and export channels all concentrated under the control of a single entity, farmers nominally remain in the production and sales process, but have gradually lost any real pricing power.
This is not a new pattern for Chinese companies. Described as “lure, trap and kill” tactics, producers are first attracted by market demand and capital. Then processing and distribution are gradually taken over until control over industry lifelines is achieved, and prices are unilaterally driven down. Thailand’s durian industry has previously suffered price volatility due to overreliance on the Chinese market, and a similar situation is now unfolding in its aromatic coconut sector.
From the perspective of competition law and industrial policy, when procurement, processing and export channels are all controlled by the same entity, market mechanisms cannot function properly and pricing power at the production level is eroded. It might come in the form of free trade but, in reality, structural dependencies are created.
Taiwan’s agricultural exports have historically been highly dependent on the Chinese market, leading to shocks when Beijing temporarily suspended purchases of pineapples, groupers and sugar apples. Some Taiwanese firms moving westward have also faced issues with technology leakage and market dependency. When exports are concentrated in a single buyer, markets might look positive, but they effectively surrender their price-setting power.
What is concerning is that some members of the Chinese Nationalist Party (KMT) continue to promote further investment in China, even advocating for a “second westward push.” They portray the Chinese market as a prime avenue for economic growth, emphasizing short-term gains while ignoring supply chain and political risks.
Economic cooperation is not inherently problematic; the question is whether institutional safeguards and market diversification are sufficiently maintained. Once pricing power is lost and export channels are controlled, government policy space also shrinks. The case of Thailand’s aromatic coconuts serves as a warning to Taiwan: If it blindly pursues the fruits of a westward expansion, what has happened in Thailand could play out in Taiwan.
Yeh Yu-cheng is a secretary at the Pingtung County Public Health Bureau.
Translated by Gilda Knox Streader
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