Thailand’s economic struggles take centre stage as the global success of elephant pants reveals a harsh truth – over 70% are manufactured in China. The decline in the manufacturing sector, exacerbated by the Regional Comprehensive Economic Partnership (RCEP), raises questions about the country’s economic policies.
With Thailand’s economy in crisis, the worldwide success of elephant pants seems like a bright spot. The garments are selling like hot cakes across the world. However, the good news stops there. In short, it has emerged this week that well over 70% of elephant pants sold are, in truth, manufactured in China. The story is one that highlights the decline of Thailand’s manufacturing industry. In particular, this began dramatically at the end of 2022. Since then, exports have slumped and output with it. While many economists like to blame this on geo-political trends and the demographic crisis, there is also another potential culprit. The Regional Comprehensive Economic Partnership (RCEP) trade deal. The biggest trade deal in the world, it liberalised trade between China, Thailand and ASEAN countries. Furthermore, it came into effect fully in 2022.
In recent months, the global fashion landscape has been swept by a surprising trend – elephant pants. Hailed for their comfort and distinctiveness, these trousers have become a symbol associated with Thailand’s cultural connection to elephants.
However, beneath the surface of this apparent soft power triumph, challenges and controversies are already brewing. In short, the question is who are the true beneficiaries of this fashion phenomenon.
Resignation of Thailand’s soft power fashion panel en masse. Despite denials and official statements, discord and grievance were at play behind the scenes
Certainly, the initial glow surrounding elephant pants took a hit this week.
This came with the mass resignation of all 24 members of Thailand’s ‘soft power on fashion’ subcommittee. This happened on February 1, 2024.
While officially citing completed assignments and time constraints, reports suggest underlying discord.
Grievances are believed to stem from promotions organised by other government agencies in tandem with the country’s soft power push. For instance, unconventional ideas like setting Guinness Book of Record stunts.
In particular, an inane competition to wear as many elephant pants as possible in one minute.
Panel chair voiced concerns about projects being approved without prior consultation. Reports point to a Guinness Book of Records elephant pants stunt
Kamonnart Ongwandee, the committee chair, voiced concerns about projects proceeding without consultation.
In addition, she also highlighted a divide between fashion experts and state agencies. This minor upheaval hints at the challenges in aligning diverse interests and talent within the soft power strategy.
Indeed the idea of a government-orchestrated soft power programme is, in itself, an oxymoron. In truth, soft power should be something alien to government control and interference.
Over 70% of elephant pants are manufactured abroad with most being made in China under more competitive conditions including machinery and labour costs
Compounding matters is the revelation that a significant majority of elephant pants worldwide are manufactured in China, not Thailand.
Afterwards, Nattawat Phutthasiriwat, the Director of the Thai SME Confederation, outlined the reality on the ground.
He revealed that only 30% of the clothing market in areas like Bobae and Pratunam is produced in Thailand.
At the same time, the remaining 70% is outsourced or imported, mainly from China.
The dependence on foreign production, especially from China, arises from cost considerations. Thai manufacturers struggle to compete on price due to higher production costs and a slower delivery pace.
The situation reflects a broader and disturbing trend. In effect, Thai-designed products, like elephant pants, gain popularity but are produced outside the country, impacting local industries.
Leading fashion retailer calls for Thailand to re-impose tariffs on imports to protect the country’s fashion and garment manufacturing sector from rivals
Mr Nattawat, the owner of a clothing store in the Pratunam area, acknowledged the longstanding issue. Partunam is a huge clothing market in central Bangkok with tentacles reaching across Southeast Asia.
At length, he points out that it is directly linked to minimum wage hikes in Thailand. He explains that in turn, many manufacturers turned to production or importation, primarily from China, Cambodia, and Vietnam.
The retailer highlights the lack of competitiveness in Thailand when labour rates rose above the ฿300 a day mark. At this time, elephant pants are made in adjacent countries but a Made in Thailand label is applied.
‘This kind of thing has been going on for a long time. After domestic production groups encountered the problem of raising the minimum wage to ฿300, it affected costs and caused the disappearance of Thai manufacturers. Some parts have to turn to production or import instead, including from China, Cambodia, and Vietnam,’ he explained this week.
He says, certainly the only answer is to apply tariffs and protect the industry in Thailand. In short, it is the same strategy as Trumponomics in 2017.
Despite the confident prognosis of experts at that time that this would fail, it worked for the United States.
Afterwards, it was retained by the Biden White House post-2021 and even enhanced.
Fears it could be linked to the much-vaunted Regional Comprehensive Economic Partnership (RCEP), the World’s largest free trade deal implemented in 2022
At this time, it is still not clearly linked to the huge Regional Comprehensive Economic Partnership (RCEP) trade pact.
Following the implementation of this pact in 2021 and 2022, trade between Thailand, ASEAN countries and China has been vastly liberalised.
Thailand formally ratified the trade deal on the 28th of October 2021. China had ratified it previously on March 22nd 2021. However, it began to kick in economically in 2022.
This is something the government may need to look out for.
Significantly, Thailand saw a 5.11 % decline in manufacturing output throughout 2023. Similarly, the decline for December 2023 alone was 6.27%.
Thailand and China are parties to the gigantic Regional Comprehensive Economic Partnership (RCEP) currently being ratified by member states
The small retailer, this week, emphasised the need for government intervention. Thailand needs help in both promoting the industry and manufacturing for added value.
Certainly, he also felt there was a need to curb imports to protect local creativity.
Calls also for stricter border controls and streamlined copyright and protection of creative rights. Elephant pants phenomenon highlights the challenge
As the soft power fashion panel disbands, the government faces a challenge. That is how to foster an environment where local industries can thrive.
Suggestions include strict measures to prevent overflow of border products. Additionally, there are calls for expediting copyright registrations to safeguard Thai creativity.
However, Prime Minister Srettha Thavisin played down the drama surrounding the mass resignation this week. Moreover, he told reporters of the imminent nomination and appointment of new members.
Dr Surapong Suebwonglee, secretary of the National Soft Power Strategy Committee, thanked the outgoing sub-committee for their contribution. At the same time, he acknowledged their personal commitments.
The incident highlights the challenges involved in harnessing soft power by government agencies. Nevertheless, for Thailand, the bigger story is the elephant pants phenomenon.
Despite the country successfully capturing global attention, it has revealed underlying challenges within the fashion industry.
Story focuses on the need for more coherence and realism, particularly in the Thai government’s policies and how they impact the country’s real economy
In short, this highlights the need for greater coherence in government policy. The country’s manufacturing industry appears unable to compete with foreign competition.
Furthermore, much of this competition is subsidised while the Regional Comprehensive Economic Partnership (RCEP) is a free trade pact with few strings attached.
The slowdown and erosion of manufacturing in Thailand may have begun in 2022 and 2023.
Macroeconomics or monetary policy may not be driving a declining and weaker economy but the inability of Thai industry, at grassroots level, to compete
As the government grasps at straws with short-term stimulus measures and criticism of the central bank, this in truth may be the elephant in the room.
In essence, this trend may spell disaster for the country’s second-generation industrialised economy.
Furthermore, it may stem from the policy of successive Thai governments who opened up trade to China without looking at whether Thai industry, across the board, can compete.
India’s Prime Minister Narendra Modi opted out of the free trade deal at a Bangkok summit in 2019. Maybe he was right and Thai leaders should have also
For instance, in Bangkok in November 2019, the Regional Comprehensive Economic Partnership (RCEP) was all but concluded.
However, India’s Prime Minister Narendra Modi opted out at the last minute despite intense pressure to sign on.
In brief, he knew India’s industrial base was not quite yet ready for the competition that would be unleashed.
The question should be asked if Thai leaders at the time should not have come to the same conclusion.
Instead, buoyed by their status as summit hosts, they took a short-term view and optimistically assumed the best.