Chinese companies focus on ASEAN countries for business growth: Report


FE REPORT | Published: May 28, 2021 13:51:27 | Updated: June 02, 2021 14:52:29


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Majority of Chinese companies are focusing on ASEAN (Association of Southeast Asian Nations) region countries for their business growth over the next 12 months.

This was revealed by the Standard Chartered in its 'Borderless Business: China-ASEAN Corridor', a strategic report that explores high-potential opportunities for cross-border growth in this trade corridor.

The survey also revealed that these Chinese companies consider Singapore and Malaysia as the best markets for expansion opportunities in the region.

Accesses to the large and growing ASEAN consumer market (56 per cent), local government incentives and support for project sustainability / stability (53 per cent), as well as the presence of a mature and reliable supplier base (51 per cent) were attributed to be the most important drivers for expansion into the region by the senior executives of the surveyed Chinese companies.

In addition, almost half (47 per cent) of the respondents agreed that the network of Free Trade Agreements makes ASEAN an ideal base to access the global markets, revealed the survey on Thursday.

The Regional Comprehensive Economic Partnership (RCEP) is also expected to attract more investments into the region, with 88 per cent of respondents planning to increase investments by at least 25 per cent over the next 3-5 years, it mentioned.

In terms of target markets within ASEAN, 60 per cent of the respondents focused on expanding in Singapore to capture sales and production opportunities, followed by Malaysia (second) with 65 per cent and Thailand with 53 per cent.

Chinese corporates are keen to tap Singapore as a major regional procurement hub (47 per cent) and a regional R&D / Innovation centre (44 per cent), as they look to expand across ASEAN, it revealed.

The survey also shows companies recognise a wide range of risks within the region.

It, however, identified the Covid-19 pandemic or other health crises (70 per cent), geopolitical uncertainty and trade conflicts (67 per cent) as well as the slow revival of the economy and the drop in consumer spending (67 per cent) as top three risks factors.

Furthermore, almost 60 per cent of respondents agreed that adapting their business model to industry practices and conditions within ASEAN (58 per cent), understanding regional regulations, payment methods and infrastructure (56 per cent) and building relationships with suppliers and adapting supply chain logistics (56 per cent) would be the most significant challenges in the next 6 to12 months.

To drive resilient and rebalanced growth in ASEAN and mitigate these risks and challenges, more than half of the respondents consider executing digital transformation programmes (58 per cent), driving sustainability and ESG (Environment, Social and Governance) initiatives (47 per cent) and entering new partnerships / joint ventures to increase market presence (44 per cent) as the most important areas for their companies to focus on.

To support their growth, these companies say they are seeking banking partners with strong cash management capabilities (60 per cent), extensive trade financing services (56 per cent), and one-stop corporate financing and capital-raising services (56 per cent).

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