Arya News - Faced with this low-price offensive, ASEAN nations are fighting back with anti-dumping duties and protective measures to defend their domestic industries.
KUALA LUMPUR – Through e-commerce app from China, one can buy almost everything—from clothes, shoes, and storage organisers to kitchen racks and electric scooters— are delivered to doorstep at ultra-low prices, often with free shipping.
Have you found yourself happily adding items to your cart and shopping non-stop?
While consumers are thrilled, local business owners across Southeast Asia are far from smiling.
Many are pleading: “We can’t take this anymore—stop the price war!”
Over the past decade, a massive influx of low-priced goods into Southeast Asia from China are hitting local manufacturing, construction, textiles, and retail sectors hard. Faced with this low-price offensive, ASEAN nations are fighting back with anti-dumping duties and protective measures to defend their domestic industries.
Since the COVID-19 pandemic disrupted global supply chains six years ago—compounded by the ongoing US-China trade war—the spillover of China’s industrial overcapacity has accelerated, placing acute pressure on countries across the Global South.
Cross-border trade was facilitated by trade benefits under the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN-China Free Trade. Geographically, Southeast Asia is also close to China.
As China’s exports to the United States and Europe have slowed for several consecutive years, industries such as steel, chemicals, electric vehicles, solar energy, and fast-moving consumer goods (FMCG) have increasingly viewed Southeast Asia as a critical market to absorb the excess.
In an interview with Sin Chew Daily, Dato’ Jeffrey Lai Jiun Jye, vice president of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), said Chinese enterprises have aggressively expanded into Southeast Asia in recent years.
Their footprint spans technology companies to food and beverage (F&B) brands, covering e-commerce, logistics, construction, wholesale and retail, hospitality, bubble tea shops, and cafes.
Matching low prices means selling at a loss
However, when deep-pocketed foreign firms slash prices to capture market share, local Southeast Asian businesses are dragged into price wars that decimate their profit margins and threaten their survival.
“If local merchants try to match these prices, they are essentially selling at a loss,” Lai said.
He cited light bulb as an example: whether imported or assembled locally, a bulb costs a local trader about RM6. After adding logistics, labour, and inventory expenses, the retail price sits around RM10.
By contrast, Chinese manufacturers leverage massive economies of scale and lower labour costs to sell the same product for RM7 while still turning a profit.
“Unlike Indonesia, which has an internal market of nearly 300 million people, Malaysia only has 34 million. Local competition is already fierce. When foreign capital dumps products here, the economic pie simply isn’t big enough for everyone,” Lai said.
Chinese contractors winning construction and data centre bids
It is not just consumer goods. Many construction contracts and data centre projects are being won by Chinese state and private firms submitting significantly lower bids.
“Everyone talks about the data centre boom in Malaysia, but aside from landowners who sell the property, local contractors get very little business out of it. Most projects are awarded directly to Chinese firms, and the boost to local employment is nowhere near what people imagined,” Lai said.
In the construction sector, Chinese firms can ship entire fleets of piling equipment directly to project sites, eliminating equipment rental costs. Furthermore, China’s mature real estate supply chain means idle equipment from home can be shipped over to remain productive at a fraction of the cost, he said.
Concerns over economic sovereignty and entrepreneurship
While acknowledging the mechanics of a free market, Lai expressed deep concern:
“We simply don’t have that level of competitiveness—their scale is far too massive. A single province in China can have a population of over 100 million, and many of its private enterprises have market caps larger than publicly listed companies in Southeast Asia,’’ he said.
While Chinese enterprises bring capital, operational efficiency, and advanced management systems, they are simultaneously undermining the competitiveness of domestic businesses, pushing many toward closure or acquisition.
“Without proper guidance and regulation, these trends will permanently harm our national economic sovereignty, local business culture, and entrepreneurial environment,” he warned.
Steel and manufacturing on the front lines
SMEs in Indonesia, Vietnam, and Thailand felt the brunt of cheap imports even earlier than Malaysia, with steel and heavy manufacturing hit hardest.
Products like hot-rolled coils, steel strand, and H-beams now face varying levels of anti-dumping tariffs across these nations.
Other labour-intensive industries—including textiles, apparel, footwear, furniture, and electronic components—have also been severely impacted.
In late 2024, half of the traditional ceramic factories in Lampang Province, Thailand, were forced to halt production due to rising costs and intense import competition.
The number of ceramic plants plummeted from 328 to 89, and pressure on the industry remains unresolved.
Why is China at the centre of the dumping controversy?
“It’s not just low prices—it’s unmatched scale”
The “ultra-low price” strategy of foreign e-commerce platforms is hitting Southeast Asia’s retail sector hard.
In response, Thailand announced that starting in January 2026, all imported goods bought online will be fully taxed, eliminating the previous tax-free threshold for items valued under 1,500 baht (RM181.48)
Recently, Datuk Liew Bin, president of the Malaysia Retail Chain Association (MRCA), voiced similar grievances on behalf of local retailers.
He pointed out that while the government has placed no restrictions on the influx of foreign brands and cross-border e-commerce, local operating costs continue to rise, leaving homegrown retailers in a difficult position to continue operating.
Following representations to the Ministry of Domestic Trade and Cost of Living (KPDN), officials indicated that legislation to regulate cross-border e-commerce is expected to be tabled in Parliament.
Wherever free trade exists, dumping and anti-dumping disputes naturally follow. But why has China become the primary focal point?
Historically, US agricultural produce, Japanese and South Korean technology and heavy industry, and European dairy and wine have all flooded foreign markets at low prices. However, for Southeast Asia, China stands out not just because of low prices, but because of its colossal scale.
With a population of 1.4 billion, China is the only country in the world that possesses all industrial categories classified by the United Nations. The output capacity of its primary industrial sectors is so massive that it can fulfill the majority of total global demand—accounting for nearly 30% of global manufacturing value-added.
Protecting local businesses is not protectionism
Lai emphasised that he is neither anti-foreign investment nor advocating for economic protectionism.
“Some people misinterpret our message, thinking we want to attract foreign direct investment to boost GDP on one hand while shutting our doors on the other. That is not what we mean,” he said.
Malaysia welcomes foreign investment—especially the capital, advanced technology, and supply chain maturity brought by Chinese firms—as these are vital resources for national development.
“However, the government must step in with proper monitoring and guidance to strike a balance between attracting foreign investment, fostering international cooperation, and safeguarding local industries. Otherwise, given the immense disparity in financial strength, local SMEs cannot compete fairly.”
Regarding anti-dumping measures, Lai noted that these are standard rules that all foreign investors should abide by, regardless of nationality. Cross-border partnerships should be locally led rather than passively accepted, giving domestic businesses room to grow and transform amid global competition.
Six policy recommendations from ACCCIM
With the global business landscape and trade policies constantly shifting, Lai noted that long-term strategic planning has become increasingly difficult. Success now belongs to businesses that adapt fastest to a hyper-competitive market.
“Of course, local merchants cannot just sit back and complain. We must strengthen ourselves, actively seek business partners, and look for breakthroughs in international markets.”
Supporting targeted government intervention against dumping, ACCCIM put forward six policy recommendations:
Prioritise domestic interests: Implement a minimum 51% local equity requirement in sensitive sectors (e.g., F&B, retail, interior design), restrict excessive replication by foreign brands, and enforce local sourcing and hiring quotas.
Encourage joint ventures: Expedite approvals and offer tax incentives for Malaysia-China joint ventures, while mandating technology transfer and local participation in executive decision-making.
Enhance SME digital capabilities: Provide grants and subsidies to accelerate the adoption of e-commerce, digital payments, and logistics systems. Establish live-stream e-commerce training academies and support the growth of local e-commerce platforms.
Help local brands go global: Assist homegrown brands—such as specialty coffee, halal cosmetics, modest fashion, and durian products—in expanding overseas, requiring foreign firms expanding locally to co-brand with local partners.
Establish a level playing field: Impose Sales and Service Tax (SST) and digital taxes on cross-border e-commerce, crack down on customs under-declaration and counterfeit goods, and mandate public disclosure of salary, EPF, and tax compliance for foreign firms.
Lead regional business collaboration: Position Malaysia to lead the creation of an ASEAN SME Brand and Trade Alliance, drive joint export initiatives, build a Southeast Asian B2B e-commerce platform, and develop regional logistics and fintech infrastructure.
The other side: free market efficiency at work
As China is being criticised for “low-price dumping” and “overcapacity,” opposing voices defend Beijing, arguing that China’s high-volume production reflects global demand and sheer competitive advantage.
Victor Gao, a prominent Chinese international relations scholar and Vice President of the Centre for China and Globalisation (CCG), addressed the issue in an interview:
“Overcapacity is a narrative fabricated by Western countries and media. Is it really overcapacity, or is it extraordinary efficiency? In my view, it is simply that China’s efficiency has soared, so its output is naturally higher than others.”
Gao explained that China’s advancements in infrastructure connectivity, technology, logistics, and supply chain management have dramatically boosted its manufacturing capacity. In a free market, high-quality, competitively priced goods will naturally win over consumers.
“If my product is better than yours and priced lower, it will inevitably flow into your market. For example, even though the US restricts Chinese electric vehicles, people still smuggle them in through Mexico because American consumers want Chinese EVs! That is how a market economy works—you cannot block it.”
Gao suggested that instead of resisting competition, Malaysia and Southeast Asia should focus on their unique strengths and identify sectors that China cannot easily replicate—or areas where cross-border collaboration can unlock new growth.
“For instance, durians and natural rubber are not widely produced in China. These are your natural competitive advantages,” Gao noted.
Beyond traditional resources, Gao also recommended that Malaysia leverage its proximity to the equator to develop a commercial space industry, noting that rocket launches near the equator require less fuel, cost less, and offer higher operational efficiency.