The majority of Chinese companies focusing on ASEAN expect business growth in the region over the next 12 months. This is according to a survey commissioned by Standard Chartered for 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.
Access to the large and growing ASEAN consumer market (56%), local government incentives and support for project sustainability / stability (53%), as well as the presence of a mature and reliable supplier base (51%) were regarded as the most important drivers for expansion into the region by the senior executives of the surveyed Chinese companies.
In addition, almost half (47%) of the respondents agreed that the network of Free Trade Agreements makes ASEAN an ideal base to access the global markets. 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.
In terms of target markets within ASEAN, 60 per cent of survey respondents are focusing on expanding in Singapore to capture sales and production opportunities, second to Malaysia (65%) and followed by Thailand (53%). Chinese corporates are keen to tap Singapore as a major regional procurement hub (47%) and a regional R&D / Innovation centre (44%), as they look to expand across ASEAN.
The survey also shows companies recognizing a wide range of risks within the region. The top three identified risks are the COVID-19 pandemic or other health crises (70%), geopolitical uncertainty and trade conflicts (67%) as well as the slow revival of the economy and the drop in consumer spending (67%).
Furthermore, almost 60 per cent of respondents agreed that adapting their business model to industry practices and conditions within ASEAN (58%), understanding regional regulations, payment methods and infrastructure (56%) and building relationships with suppliers and adapting supply chain logistics (56%) are 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 survey respondents consider executing digital transformation programmes (58%), driving sustainability and ESG (Environment, Social and Governance) initiatives (47%) and entering new partnerships / joint ventures to increase market presence (44%) as the most important areas for their companies to focus on.
Heidi Toribio, Regional Co-Head, Client Coverage, Asia, Corporate, Commercial and Institutional Banking, Standard Chartered, said: “ASEAN is core to Standard Chartered’ s business strategy. As the only international financial institution with presence in 10 ASEAN markets, we continue to support our clients in tapping the myriad of opportunities this region has to offer.”
