Environmental damage has now become a global international issue, particularly the contribution of fossil fuel emissions, which account for at least more than 60% of the total carbon dioxide produced (IQAir, 2023). Pollution issues have become highly relevant alongside initiatives in many countries to adopt clean energy policies as outlined in the 2015 Paris Agreement. One such example is China, with its electric automotive innovations as a preventive measure to mitigate ongoing environmental damage. Globally, China has successfully introduced electric vehicle product innovations pioneered by several brands, one of which is BYD. BYD began its journey in 1994, initially focusing on batteries and electronics, but its vision and mission of zero emissions provided an opportunity to create products with the capability and capacity to process energy efficiently and effectively in the long run for the environment (BYD Co., Ltd, 2025). Supported by favorable policies, BYD has been able to shift market dominance thanks to several advantages, such as market adaptation (consumer needs), an efficient supply chain system, coherent technological innovation capabilities, and large-scale battery production capacity (Chen, 2023). On the other hand, the World Air Quality report highlighted that in 2023, several countries such as Thailand in Southeast Asia ranked among the highest polluters, occupying the 36th position. As a strategic step, the Thai government promoted the adoption of a policy known as EV 3.5. This policy sets a target of 30% of vehicle production or registration to be electric vehicles by 2030 (UNDP Thailand, 2024). Besides aiming to reduce carbon emissions in the transportation sector, the policy is also designed to position Thailand as the automotive manufacturing hub of Southeast Asia, which in turn will have an impact on massive direct investment potential. Through this policy, Thailand has become an attractive target for FDI due to its strategic location, various fiscal and non- fiscal incentives, subsidies, and other advantages (ASEAN Briefing, 2025). Several Southeast Asian countries have shown promising EV market growth, particularly Thailand. According to ASEAN Briefing (2025), by 2030, the contribution of the automotive industry to Thailand's GDP is projected to reach 30%, compared to 2.55% in 2024. Incentive policies and massive charging infrastructure development have become significant foundations for fostering foreign investment cooperation.

In this context, foreign investment plays a crucial role in accelerating the development of Thailand’s EV industry, not only by bringing capital but also by introducing essential technology and expertise. Based on this background, the analysis of BYD’s strategic manifestations demonstrates both practical and theoretical value, particularly in showing empirically that BYD can surpass global markets through a type of foreign investment strategy that prioritizes market-seeking as the basis of expansion. As a company experiencing dynamic growth, BYD considers several factors when engaging in foreign investment. These considerations reflect BYD’s confidence in maintaining control and comprehensiveness in its products, enabling it to excel in market competition. Another notable aspect is BYD’s foresight in selecting qualified locations by identifying opportunities arising from technological transformation and institutional transitions (government policies).

This study adopts a paradigm focused on exploring the operational mechanisms implemented by BYD in emerging markets such as Thailand to transform market growth potential into competitive advantage during the internationalization process. Based on the phenomenon and literature gap, the researcher identifies the central research question: how can BYD’s market- seeking FDI strategy in Thailand’s electric vehicle industry be explained through Dunning’s Eclectic Paradigm? This study aims to elaborate on the driving factors underlying BYD’s rise in market competition, as well as to examine opportunities for adaptive, innovative, and regulation-integrated partnerships that align with consumer needs amid the challenges of market adaptation. Using a case study approach, the researcher selects BYD as the subject of in-depth analysis to provide empirical insights into the collaboration of corporate strategy, market conditions, and relevant theoretical frameworks.

International production is a complex phenomenon that involves various corporate strategies to expand market reach beyond the home country through operational capabilities (Dunning & Lundan, 2008). In this context, ownership and location advantages are specifically leveraged to access new markets. Ownership advantages refer to firm-specific assets or capabilities that enable a company to compete effectively in international markets compared to local firms (Dunning, 1988). According to Rugman and Collinson (2012) in their book International Business, such assets may be tangible or intangible, including trademarks, technology, and managerial expertise.

In this case study, BYD represents a company with strong ownership advantages, evident in its capacity to innovate. BYD’s ownership advantages can be observed through its battery technology, which is claimed to be both efficient and safe (BYD BD Autogroup, 2023). High R&D investment is a strong indicator of a firm’s ability to innovate and develop products (Narula, 2004). Firms with substantial R&D commitments often achieve technological advantages that differentiate them from competitors (Dunning & Lundan, 2008). BYD’s financial reports indicate a significant increase in annual R&D spending since 2018, reaching a remarkable figure in 2023 (BYD Annual Report, 2023). This investment has resulted in innovations such as the “Blade Battery,” recognized for its safety and energy density (TechCrunch, 2022). In addition to the Blade Battery, BYD has invested in the development of advanced innovations including the Fifth Generation DM Hybrid System, E3 Platform with Triple-Motor Powertrain, DiSus Intelligent Body Control System, and Super E-Platform.

BYD has also actively pursued global branding strategies through advertising and sponsorship expenditures, which play a crucial role in building market trust in Chinese-made electric vehicles. According to Kotler and Armstrong (2018) in Principles of Marketing, significant advertising spending reflects a company’s strong interest in investing resources to reach broader consumer bases and communicate product value. In 2022, BYD’s advertising spending rose by approximately 174.24%, totaling US$1.45 billion—an impressive increase from the previous year.

BYD’s success in establishing substantial market share in the global EV market, especially in China, has provided the company with credibility and resources to expand into Thailand (Doe & Smith, 2023). Market share reflects a firm’s dominance or strong position in a particular industry or segment (Grant, 2016). Firms with large market shares often benefit from economies of scale, bargaining power, and brand recognition that can be leveraged for international expansion (Porter, 1980). By 2024, BYD had captured several regional markets, including East Asia (36%), Southeast Asia (14%—Thailand, Indonesia, Malaysia, Singapore, and the Philippines), and Latin America (25%—Brazil, Chile, Colombia, Mexico, Ecuador, and Paraguay) (Clean Technica, 2025; Dialogue Earth, 2025). These market shares provide a solid foundation for BYD to maintain its investment standards in market-seeking networks, enabling the company to advance its expansion.

The qualification of BYD’s workforce is also considered an ownership advantage that underpins its investment objectives in Thailand. Although labor qualifications are often treated as location advantages, in BYD’s case, the expertise of its internal workforce represents an intangible, inimitable asset, thereby constituting a strong ownership advantage (Teece, 1986). BYD invests in internal education and training, ensuring a skilled labor pool aligned with its technological needs and long-term commitments (Yu, 2012).

Location factors include economic conditions, resource availability, government regulations, and infrastructure (Dunning & Lundan, 2008). Thailand offers several location advantages attractive to automotive investors such as BYD, including growing domestic demand for EVs, strong government support, and its geographical position as ASEAN’s manufacturing hub. Fiscal policy in Thailand provides well-structured tax and subsidy frameworks, while non-fiscal elements include infrastructure development and emissions standards. Political stability, consistent policy, and regulatory transparency further foster investor confidence both at macro and micro levels.

Gross Domestic Product (GDP) per capita is an indicator of prosperity and purchasing power, reflecting consumer capacity (Todaro & Smith, 2011). Rising GDP per capita signals greater disposable income for high-value goods such as automobiles. Thailand’s GDP growth is projected at 2% in 2023, 2.5% in 2024, and 1.8% in 2025, reaching US$546.22 billion by 2025, with GDP per capita estimated at US$7,770. The manufacturing and industrial sector contributed around 34.8% to GDP in 2021. These projections indicate a stable and steadily growing economy, creating a promising environment for investment (Dunning & Lundan, 2008).

Thailand also maintains low minimum wages compared to neighboring Southeast Asian countries, averaging US$417 per month in 2021, while sustaining high productivity levels (Saglam & Boke, 2017). This combination enhances labor cost competitiveness. Trade barriers such as high tariffs often push foreign firms to shift from exports to local production (Root, 1994). Thailand has extensive non- tariff measures (NTMs), including SPS, TBT, and QC policies, totaling 3,276 by 2019 and over 1,000 additional regulations by Q1 2025 (Khalid et al., 2021). To attract EV investment, the Thailand Board of Investment (BOI) has introduced incentive packages covering tax holidays, import duty reductions, and subsidies under the BEV 3.5 scheme (BOI, 2024).

Political stability indicators (e.g., governance effectiveness, rule of law, absence of violence) strongly influence FDI inflows (Busse & Hefeker, 2007). According to World Bank’s WGI data (2025), Thailand scored 71 for Government Effectiveness in 2020, dropping slightly to 70.5 in 2021; its Rule of Law score decreased from 62.4 in 2020 to 61.9 in 2021. Thus, BYD’s investment strategy incorporates staged investments, BOI agreements, and regional diversification to mitigate such risks. Geographically, Thailand is closer to ASEAN markets compared to Europe or the US, with its Eastern Economic Corridor (EEC) and Laem Chabang port serving as strategic logistics hubs (ECC, 2020). Thailand thus functions as a final assembly and regional export hub, aligning with BYD’s market-seeking expansion strategy.

Internalization advantages relate to a firm’s choice to conduct operations internally rather than relying on external markets (Coase, 1937; Williamson, 1975). Internalization enables firms to protect technology, control quality, and enhance efficiency (Dunning & Lundan, 2008). For BYD, establishing local plants allows large-scale production, faster market responsiveness, and customization for local preferences. Currently, BYD operates in more than 30 industrial sectors and has a presence in 88 countries with over 400 dealers (BYD, 2024, 2025).

Thailand’s comprehensive Intellectual Property (IP) framework strengthens BYD’s internalization strategy. Governed by the Department of Intellectual Property (DIP) under the Ministry of Commerce, Thailand upholds IP through memberships in WTO and TRIPS, as well as a specialized Intellectual Property and International Trade Court (IPITC) (ITA, 2024). These protections support BYD’s preference for wholly owned FDI rather than licensing or joint ventures.

BYD’s complex product integration further supports internalization. Its EVs combine proprietary technologies such as structural battery design, e-axle integration, Cell-to-Body (CTB) engineering, and advanced software platforms (BYD, 2023; Zhang et al., 2025). The BYD SEAL, for example, integrates the battery as part of the vehicle’s structure, enhancing torsional rigidity and safety (Hasan et al., 2023). Its e-Platform 3.0 consolidates powertrain, battery management, and advanced driver assistance into a single AI-driven architecture. These features represent firm-specific assets that are costly to outsource, thus reinforcing BYD’s reliance on internalization.

Through internalization, BYD avoids joint ventures and instead opts for direct production and sales in Thailand. This strategy ensures intellectual property protection, supply chain control, adaptation to local standards, reduced trade barrier risks, and operational efficiency (Cao, Zhang, & Antony, 2018). Ultimately, BYD’s internalization strategy enables rapid responsiveness to local market dynamics and strengthens its competitive position in Thailand’s EV industry.

The main motivation for BYD to invest directly in Thailand is to access, serve, and expand its local market share. According to Dunning and Lundan (2008), market-seeking FDI occurs when multinational enterprises (MNEs) invest abroad with the primary objective of maintaining or expanding the sales of their products or services in the target market. In the context of the automotive industry, particularly electric vehicles (EVs) which heavily rely on local adaptation, after-sales services, and charging infrastructure, a physical presence in the market through factory construction (as BYD did in Rayong, Thailand) is a strong indicator of a market-seeking strategy.

The OLI model is relevant to explain BYD’s strategic decision because Ownership Advantages explain why BYD can compete in a new market (e.g., battery technology and cost efficiency). Location Advantages explain why BYD chose Thailand (e.g., EV-friendly regulations and competitive labor costs). Internalization Advantages explain why BYD prefers establishing its own plant rather than forming a joint venture (avoiding risks of technology leakage).

and clear regulations provide certainty for long-term investment.

BYD’s FDI in Thailand’s electric automotive industry is market-seeking in orientation because a combination of interrelated and mutually reinforcing factors collectively push BYD to establish a direct presence in the Thai market. The market-seeking orientation is based on Thailand’s growing domestic demand and its strategic role as an ASEAN manufacturing hub. On the other hand, BYD’s strong ownership advantages serve as the foundation that drives its confidence to surpass competitors’ capacity and quality in the Thai market. By establishing production facilities in Thailand, BYD can integratively meet the rising domestic demand. This allows BYD to compete more effectively with brands like Tesla and MG while also building a strong brand image in the local market. This is supported by Thailand’s fiscal and non-fiscal policy schemes, which provide strategic location advantages. In this context, BYD and Thailand create a mutualistic synergy through internalization. A market-seeking orientation requires BYD’s ability to adapt to local preferences. Thus, BYD’s internalization advantages enable it to adjust to local standards, manage risks, and respond to market dynamics with efficient mitigation strategies.

Based on the conclusions outlined, this research is not yet fully comprehensive and may contain gaps. Therefore, further research is needed that requires more in-depth analysis. A comparative study with other brands or variables should be conducted to better understand competition and collaboration patterns in regional and global markets. Since this research is qualitative and based on secondary sources from previous studies, future research should adopt other approaches or perspectives to measure the direct contribution of BYD’s FDI to Thailand’s economic growth.