The Chinese corporates are eyeing the Association of Southeast Asian Nations (ASEAN) with increasing focus on Singapore and Malaysia as these two countries are all set to witness significant growth and opportunities in business and investment over the next year.
Approximately 43 per cent of companies surveyed echoed their confidence in Singapore company incorporation and company registration in Malaysia as leaders of future growth and expansion in the emerging ASEAN economy and a majority of Chinese corporates hopeful on ASEAN economic potential expect to see their businesses grow in near future.
The survey was conducted for the bank’s Borderless Business highlighting the China-Asean Corridor report and exploring prospects and opportunities for the future cross-border growth between both regions.
All the 43 China-based companies surveyed during last April considered Singapore and Malaysia as the most potential markets for growth and expansion opportunities of their businesses in the ASEAN.
While the highest number of China-based companies to the tune of 65% voted in favour of Malaysia, 60% of participants from the surveyed companies emphasized their future business focus on expanding in Singapore for increased market share by promoting sales and production opportunities. Thailand too figured in the list with 53% China-based companies expressing faith in the ability of this emerging ASEAN economy to do well during the post-covid period.
Singapore is being considered by the China-based corporations as a major regional procurement hub and 44% of these companies expressed their willingness to build a regional Research and Development (R&D) centre, an innovation centre basically in the country, as these companies plan to expand across ASEAN.
The survey observed that 56% of the companies have been focusing on the ever-increasing vast consumer market access as the most critical success factor while some 53% of similar companies considered government support and business incentives by the ASEAN as critical for business viability, stability and long term sustainability.
51% of the company participants mentioned that the availability of a reliable supplier base in the ASEAN is also one of the most significant rationales behind their business expansion in the ASEAN region while 47% of the companies were found in agreement with the fact that the presence of the Free Trade Agreements (FTA) network in the ASEAN is crucial for the world market access.
88% of companies noted that the Regional Comprehensive Economic Partnership (RCEP) in this region is one main reason for attracting foreign investments and even the China-based companies are seriously considering increasing their investments in the region by a minimum of 25% in the coming three to five years.
Chinese business houses were also seen to be aware of the risks and challenges within the ASEAN with 70% stressing upon the Covid-19 pandemic or other health issues. A good number of respondents, some 67%, considered ASEAN’s geopolitical instability and trade conflicts as business risks when another 67% of corporates raised concerns over the muted revival of the economies in this region along with a decrease in consumer spending.
One of the most important challenges cited was the way the Chinese business entities would align their business model to the existing ASEAN business environment and trade practices while initiating new business ventures in this region over the next six months and a year.
The survey revealed 56% of corporates strongly evaluating other business risks and challenges such as regional regulatory aspects, monetary transactions and payment methods and infrastructure besides relationship building with prospective suppliers. 56% of respondents have also been found strategizing on getting along with the regional supply chain and logistics.
During this survey, a sizable number of respondents comprising 58% of the China-based companies were found interested in executing digital transformation programmes and another 47% were seen looking for long term growth and sustainability driven by environmental, social and governmental (ESG) initiatives. Another 44% of the surveyed companies have been found eager in exploring new partnerships and joint ventures to enhance market share during business engagement in this ASEAN region.
Chinese companies have been seen seriously considering strategic support for business growth and expansion in the ASEAN. Approximately 60% of these Chinese companies were found desirable for suitable banking partners with a strong repute of finance and cash management potential and 56% of these companies also wanted to foray into trade financing services widely. Fundraising and corporate financing services projects are also being eyed upon by 56% of the corporates.