Thai-riffic tech boom: Chinese software firms set sights on Thailand
Chinese software companies are increasingly setting their sights on Thailand, recognising it as a key market for digital growth. Many of these firms, mostly small and medium-sized enterprises (SMEs), started by providing cloud-based solutions to Chinese online merchants in Thailand. Their offerings include sales order management, inventory control, and accounting software.
In a sign of the times, Chinese food delivery platforms are now serving areas with large Chinese expatriate communities, reflecting a wider trend of Chinese tech firms expanding their presence in Thailand.
Somchai Sittichaisrichart, Managing Director of IT product distributor SiS Distribution (Thailand), noted that while the first wave of major Chinese tech companies in Thailand focused on network equipment and smartphones, the current buzz is all about enterprise software and cloud solutions.
“A lot of Chinese software companies are making their way into the Thai market as part of their strategy to expand business beyond China.”
The US-China tech war has driven Chinese companies to develop their technologies to reduce reliance on US tech. This has led to their expansion into international markets, including Thailand.
SiS Distribution recently formed a partnership with China’s ZStack, a cloud computing software and hardware company, to become the sole distributor of ZStack products in Thailand.
Cloud software
Somchai mentioned that SiS chose ZStack due to its credible track record and to provide more choices for SiS’s customers, particularly as some US tech firms have altered their subscription policies, impacting SME access to technology.
“We have a significant number of SME customers who need private cloud software to automate their IT system management.”
Frank Zhang, founder and CEO of Shanghai Yunzhou Information and Technology Ltd, also known as ZStack, highlighted Thailand’s potential as a key economy in Southeast Asia and a rapidly growing market for digitalisation.
“Thailand is seen as a low-risk market for Chinese technology amid the ongoing US-China trade conflict.”
He referenced a Gartner Inc., report stating that Thailand’s IT expenditure is set to surpass 1 trillion baht this year, with software spending projected to rise by 15.9%. By 2025, the Thai cloud market is expected to reach US$1.7 billion, with a compound annual growth rate of 23.4%.
Additionally, Gartner forecasts that by 2027, Thailand’s digital economy will contribute 25% to its GDP, increasing to 30% by 2030.
Investments and partnerships
Zhang noted that ZStack has secured investments and partnerships with major firms like Alibaba Cloud, China Telecom, and Shenzhen Capital Group.
“Our collaboration with SiS represents a significant milestone in our business expansion in Thailand. SiS boasts a broad sales network and skilled workforce, while ZStack provides a commercial cloud computing platform and technical support to meet local needs.”
Somchai also touched on current Thai IT trends, indicating that consumer purchasing power has weakened due to economic slowdown and rising household debt, coupled with delayed government disbursements.
Consequently, IT product sales to consumers and government agencies declined in the first half of 2024 compared to the previous year. However, with the recent government budget approval, spending is expected to increase in the latter half of the year, reported Bangkok Post
Despite the economic challenges, Thailand’s cloud computing market remains robust, driven by investments from leading global IT companies in building data centres within the country, according to Somchai.
