Chinese enterprise software companies are entering the Thai market, viewing the country as potentially one of the fastest growing for digitalisation going forward.
Several Chinese software companies, most of which are small and medium-sized enterprises (SMEs), entered the market earlier to offer cloud-based solutions to Chinese online merchants operating in Thailand, including solutions for sales order management, inventory management and accounting.
Some Chinese food delivery platforms are providing services in areas of the country that are densely populated by Chinese expatriates.
Somchai Sittichaisrichart, managing director of IT product distributor SiS Distribution (Thailand), said the first batch of major Chinese tech companies to enter Thailand sold network equipment and smartphones. The latest trend is major enterprise software companies entering Thailand to provide cloud-based software solutions.
"Chinese software companies are headed to the Thai market, in line with their strategy of business expansion outside China," said Mr Somchai.
Since the start of the US-China tech war, Chinese companies have developed their own technology to serve their domestic market in a bid to avoid over-reliance on US technologies. Then they expanded from the domestic market to overseas, he said.
SiS recently announced a partnership with China's ZStack, a cloud computing software and hardware company, to be the sole product distributor for ZStack in Thailand.
Mr Somchai said SiS chose to work with ZStack based on its proven track record to ensure credibility as well as to offer a broader choice to SiS's customers, as some US tech companies have changed their subscription policies. This change affects the ways SMEs access their technology, he said.
"We have a lot of SME customers that need private cloud software to help them automate the management of their IT systems," said Mr Somchai.
Thailand stands out as a key economy in Southeast Asia, positioning itself as one of the fastest-growing markets for digitalisation in the future, said Frank Zhang, founder and chief executive of Shanghai Yunzhou Information and Technology Ltd, also known as ZStack.
The company offers cloud computing products, including private cloud, hybrid cloud and a cloud management platform.
Mr Zhang said Thailand is considered a risk-free market for China technology amid the US-China trade war.
He cited a report from IT research company Gartner Inc that found Thailand's IT expenditure will exceed 1 trillion baht this year, with software spending expected to increase by 15.9%.
By 2025, the size of Thailand's cloud market is expected to reach $1.7 billion, with a compound annual growth rate of 23.4%.
By 2027, the digital economy is expected to contribute 25% of Thailand's GDP, reaching 30% by 2030, according to Gartner.
Mr Zhang said ZStack has many large firms such as Alibaba Cloud, China Telecom and Shenzhen Capital Group as its strategic investors and partners.
"Our partnership with SiS is a significant turning point in our business expansion in Thailand. SiS has an extensive sales network and skilled personnel, while ZStack provides a commercial cloud computing platform and technical support to better serve local requirements," he said.
Regarding Thai IT trends, Mr Somchai said consumer purchasing power weakened based on the economic slowdown and rising household debt, while government disbursement was delayed.
As a consequence, IT product sales to consumers and government agencies shrank in the first half of 2024 year-on-year.
However, with the recent approval of the government's budget, spending is expected to pick up in the second half this year, he said.
The cloud computing market in Thailand continues to grow, despite the softening economy, as the world's leading IT companies have been investing to build data centres here, said Mr Somchai.