ASEAN: An Investment Priority of Chinese Enterprises

Written by Li Yizhi / Translated by Zheng Enmei, Gao Jing

ASEAN: An Investment Priority of Chinese Enterprises

Written by Li Yizhi / Translated by Zheng Enmei, Gao Jing

White ware produced by Sanhuan

ASEAN had been the focal point of investors throughout the world before the establishment of ASEAN Economic Community due to its abundant natural resources and labor forces, cheap costs of investment, numerous consumers with certain spending power, as well as various preferential investment policies. According to the statistics, ASEAN’s FDI exceeded that of China for the second consecutive year in 2014.

Vietnam and Thailand are considered as two investment destinations preferred by Chinese enterprises. As investment cooperation steadily forges ahead, enormous business opportunities have been brought to Chinese enterprises, particularly in terms of manufacturing, connectivity, infrastructure, tourism, finance and energy. On May 25, 2016, China-ASEAN Expo Secretariat held the Orientation on Investment Climate of Vietnam & Thailand in Nanning, the provincial capital of Guangxi Zhuang Autonomous Region of the P.R.C., boosting Chinese enterprises’ confidence in investing in ASEAN countries.

Chinese enterprises to invest more in ASEAN

During the period between 2008 and 2009, when confronting the global financial crisis, ASEAN had been maintaining a stable economic development while the developed economies including the United States, European countries and Japan continued to register a negative rate of growth. Specifically,the growth rate of trade volume between ASEAN and Guangxi continued to remain over 24 percent during 2008-2009; in the meantime, both Vietnam and Indonesia kept their economic growth rate at 5 percent.

In addition, ASEAN’s integrated market and regional infrastructure are being progressively improved, so are China-ASEAN Free Trade Area (CAFTA), Regional Comprehensive Economic Partnership (RCEP) as well as Trans-Pacific Partnership (TPP) Agreement, thus to inject vitality into the development of ASEAN’s import & export trading enterprises and enhancing the international competitiveness of ASEAN’s hot-spot investment destinations.

Under this backdrop, more Chinese enterprises are inclined to explore the ASEAN market, including Guangxi Sanhuan Enterprise Group Holding Co., Ltd., which is focused on the production of household china. Since 2008, as revealed by Ms. Zhou, Assistant to General Manager of “ASEAN+China” Marketing Centre of Sanhuan, the strategic focus of Sanhuan has been transferred to the ASEAN region. “We are aimed at extending our businesses from Malaysia and Vietnam to other ASEAN countries like Thailand,”said Zhou. Currently, Sanhuan’s tableware has been sold to a number of department stores and wholesale markets in the ASEAN region, thus providing more purchasing choices for the local consumers. Moreover, the marketing strategies aimed at the cultural differences among ASEAN countries have been formulated by Sanhuan. According to the statistics, the sales volume in the markets of China and ASEAN has now reached about 600 million yuan, accounting for 35 percent of a total.

Zhou also indicated that two standard exhibition booths of 2016 China-ASEAN Expo (Vietnam Exhibition) have been rented to further tap into the potential of ASEAN market.

Chinese high-tech enterprises to serve ASEAN

At present, Chinese IT enterprises are comparatively superior to those in the ASEAN region in terms of talents and technologies; moreover, continuing to carry out “Internet Plus” will make high-tech manufacturing industry accessible to a signifi cant role in the development of Chinese economy.

As economy continues to develop, ASEAN consumers are having higher demands for technologies and services. For instance, the number of mobile users, according to the statistics released by Vietnam in 2015, increased by 8 times; besides, 44 percent of Vietnamese netizens preferred surfi ng on the Internet via computer; meanwhile, the proportion of mobile users even reached 93 percent. However, as for some under-developed ASEAN countries, the penetration rate of such high-tech products still remains at a comparatively low level.

Moreover, there is a considerable gap of IT services between ASEAN and China, which brings a large number of opportunities to the bilateral cooperation. For example, considering the undesired popularity of English in the ASEAN region, Guangxi’s Emindsoft has designed a free translation software aimed at serving the translation between Chinese and languages of ASEAN countries, gaining a wide range of popularity in the region.

Strong support from fi nancial institutions

Ms. Bi Xiuhua, Deputy General Manager of Finance Department of Bank of China (Guangxi) (BOCG), said that the full and accurate introduction of ASEAN’s relevant policies will provide a good reference for business expansion in the ASEAN region; the settings of BOCG’s fi nancial products and the building of management channel will be carefully studied, etc. Thus, BOCG is full of confi dence in its business expansion in the ASEAN region.

In addition, Ms. Bi said that BOC had established eight financial service institutions in eight ASEAN countries respectively. Moreover, BOCHK was officially approved to establish its branch in Brunei in April 2016, since when BOC’s business scope has covered all ASEAN countries. Currently, remarkable progress has been made in BOC’s cross-border RMB settlement aimed at ASEAN countries.