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8 Jul 2005


Plastic Tableware and Kitchenware in 2005: Potential Remains despite Raw Material Price Risk


At present, the export value of Thai plastic products is around Baht60,000 million per annum, and are usually in the top twenty list of Thailand's important exports. Among all plastic products for export, it was found that sheets and other flat-shape plastics (such as film, foil and tape) are the plastics that have the highest proportion of export value at Baht18,732.8 million, and the export value of the plastic sacks and bags of Baht15,000.7 million in 2004, followed by plastic tableware and kitchenware, which had an export value of Baht2,764.9 million1. However, trade liberalization under the WTO and AFTA has resulted in low-grade, cheap, simple items like sacks and bags, tubes, pipe, hose and rudimentary packaging of Thailand to face tougher competition from such rivals as China and Indonesia.

Meanwhile, at present, Thai entrepreneurs of plastic tableware and kitchenware, both the new and existing producers, are steadily developing materials and designs. Kasikorn Research Center (KRC) expects that Thailand still has competitive potential in the world market for these goods, and the opportunity to expand our market share in the future along with increasing demand in the world market. Plastic tableware and kitchenware are products that are easy to maintain, and are cheaper than those made of other materials, even though the price of plastic pellets has shot up along with world oil prices. Moreover, these Thai goods have quality and designs that meet demand in overseas markets. They have been developed constantly, and Thailand is recognized for its ability to deliver goods rapidly and on-time. Therefore, exports should grow further in 2005. But at the same time, it is possible that in the last half of 2005, Thai entrepreneurs may have to cut their production because of the price of plastic pellets, which as petrochemical products and the main raw material for production, have been getting more expensive. Therefore, KRC forecasts that by the end of 2005, exports of Thai plastic kitchenware and tableware should show growth of at least 10 percent, but not more than 20 percent, particularly in the middle to upper markets like the US, EU and new markets like Australia. These countries have demand for plastic tableware and kitchenware that is increasing steadily, as well as having high purchasing power.

Although the export situation for Thai plastic tableware and kitchenware is prosperous, and opportunities to expand our market share exist in the future with world market demand, KRC views that in the era of trade liberalization, Thai entrepreneurs must apply proactive strategies seriously to support competition that is expected to become more serious. These strategies would include, for example, the development of quality, models and designs that conform with demand and the tastes of target groups, as well as creating brand names, etc. Meanwhile, amid a condition where the price of crude oil in the world market has affected raw material costs for this industry, this cost remains high, along with an exchange rate between the Baht and the USD that is still volatile ? where the international plastic pellet trade is usually conducted in USD ? Thai entrepreneurs should therefore also impose supportive strategies such as reducing costs, particularly transportation costs, by introducing efficient logistics systems, finding raw material sources with cheaper prices while still maintaining quality, and forming cooperative ventures or mergers with other entrepreneurs, particularly smaller ones, in order to have better bargaining power on raw materials. They will also likely need to adjust the prices of their products to conform with the higher costs, improve internal management at factories to produce larger quantities at the same cost (lower unit cost) by investing in new machines, or switching to the energy saving air-conditioning systems, etc.