Chinese Enterprises in Southeast Asia

Wang Fengjuan

With Chinas reform and opening-up， Chinese enterprises have been encouraged to expand their operations abroad. Many well-known Chinese brands have gradually increased their presence in ASEAN countries. According to the latest statistics from the Ministry of Commerce of China （MOFCOM）， China has set up more than 4，000 foreign direct investment （FDI） enterprises in ASEAN， which have played a positive role in the economic development of both sides.

Xu Ningning， executive president of the China-ASEAN Business Council， believes several reasons are behind the growing presence of Chinese enterprises in ASEAN in recent years. First， the geographic advantages for bilateral cooperation. Transportation between China and ASEAN countries is convenient. Second， a good foundation for cooperation. Economic and trade cooperation has developed continuously over 27 years of Dialogue Relations. Third， mutually open markets. The tariff on trade of 95 percent of products between the two sides is zero. Fourth， the growing ASEAN economy. With the implementation of the Belt and Road Initiative， there are plenty of business opportunities in ASEAN.

Business Opportunities

In June 1995， the Power Construction Corporation of China （POWERCHINA） won a contract to restore Jatiluhur Dam in West Java Province of Indonesia， the largest water conservancy project in the country. To solve technical problems hindering the restoration， Wang Xuelu， then general manager of the Bureau 11 Company， a subsidiary of POWERCHINA， led a task force to design a floating crane. On May 7， 1996， a 5-ton floating crane was built as an innovation achievement inspired by this project. In recent years， POWERCHINA has worked on projects in nine ASEAN countries as well as winning awards from ASEAN for its excellence in engineering， special contributions to disaster relief and reconstruction and other accomplishments. POWERCHINA has contracted and completed 57 large and medium-sized projects， including hydroelectric stations， rail transit， power transmission and transformation， sea bridges， urban infrastructure renovation， together valued at US$4 billion. More than 123 projects are under construction， with contracts valued at about US$10.25 billion.

As POWERCHINA was restoring the dam in Indonesia， China International Water & Electric Corp. （CWE）， a subsidiary of China Three Gorges Corporation （CTG）， officially entered the Lao market to construct hydroelectric stations and power transmission and transformation projects. Cooperation has been carried out in different forms of contracting arrangement， from traditional international engineering contracting to EPC （Engineering Procurement Construction） and BOOT （Build-Own-Operate-Transfer）. Nam Leuk Hydropower Station is the first Lao hydroelectric station to be built by a Chinese company. The Nam Mang 3 Hydropower Development Project is the first export credit project between China and Laos and the first EPC hydropower project built by a Chinese company in Laos. Nam Lik 1-2 Dam is the first BOOT hydropower project invested and operated by a Chinese company in Laos.

When Baosteel Singapore Pte Ltd. realized the prospects of the ASEAN market， it began to explore the market in February 1997. From 2002 to 2010， it was successively shortlisted as one of the Singapore 1000 （an award for top business companies）. In 2005， it obtained the credit certificate issued by DP Information Group （the largest provider of credit and business information in Singapore）. In 2007， it was awarded by DP as one of the 50 Fastest Growing Companies. Since January 1， 2004， Baosteel has been listed in the Global Trader Programme （GTP） by the Singapore government for a reduced corporate tax rate of 10 percent for five years.

As a well-known brand of traditional Chinese medicine （TCM）， Beijing TRT （Tongrentang） Group has exported its products to ASEAN countries since 1993， when it was first granted the import and export license. Since 2001， it has cooperated with ASEAN enterprises to build joint ventures， including TCM clinics and pharmacies in Thailand， Malaysia， Singapore， Indonesia and other countries.

As a leading enterprise of agricultural industrialization in China， New Hope Group took a step forward in Southeast Asia when it launched a cooperative project in Vietnam in 2000.

Huawei Technologies Company， as a private IT enterprise established after 1978， officially established a branch in Indonesia in 2000 as its first base in ASEAN.

Intensive Cultivation

In the new era， the Belt and Road Initiative has created more space for cooperation between China and ASEAN countries. In a speech at Indonesian House of Representatives on October 3， 2013， Chinese President Xi Jinping said： “The Surabaya–Madura Bridge， a China-Indonesia joint project， is the longest cross-sea bridge in Southeast Asia. The cooperation project of Jatigede Dam is about to finish. Once completed， it will have an irrigation area of 90，000 hectares， which will greatly improve the living and working conditions of the local people.” On March 17， 2016， Indonesian President Joko Widodo made an inspection tour of Jatigede Dam， where he talked about its important social benefits and its positive impact on irrigation， flood control， fishing， tourism and more fields.

Jatigede Dam was an aspiration of the Indonesian people for more than half a century. Construction of the project has brought real benefits to local communities. At a press conference on September 12， 2017 in Jakarta， BenBen Ariespendi， village head of Jatigede， told journalists that his village welcomed the changes brought by the project. “We are grateful to the Chinese companies！” he exlaimed. “Although the project is drawing to a close， I hope that our close friendship will continue for a long time.”

In Cambodia， Ganzao Hydropower Station is a popular project with the local population that has eased power shortages and changed lives. Ganzao is a BOT （Build-Operate-Transfer） project developed by the Cambodian government through international bidding. Its also the first overseas BOT project that POWERCHINA has undertaken. In February 2006， POWERCHINA won the contract in a bidding competition with a number of internationally renown companies. With a total installed capacity of 194，100 kilowatts， Ganzao will be under franchise for 40 years with an annual output of 498 million kilowatt-hours of electricity. On December 7， 2011， construction on the project was completed. In August 2012， Ganzao went into commercial operation.

The success of Ganzao will adjust the power and energy structure of Cambodia， ease the imbalance between supply and demand， improve the investment environment and promote infrastructure construction. It will also have a positive and far-reaching impact on employment of the local population， transportation， tourism and financial revenue.

Chinese companies have improved cooperation mechanisms with their partners. During construction of the Nam Lik Hydropower Station in Vientiane Province of Laos， the CTG worked with the local government to set up a committee for the management and development of the Nam Lik River basin， which oversees the overall planning， implementation and supervision by the company and the government. They also drew up a master plan for the management and development of the river basin in the coming 25 years， with a total budget of US$1.83 million， which will provide protection to the river basin in agriculture， environment and tourism. This practice has proven an ideal model for capital management of hydroelectric projects in Laos.

Chinese companies have localized their operations in host countries. Baosteel has actively explored the transformation of overseas marketing models in Singapore， vigorously promoted the localization of personnel training and constantly improved staff efficiency. In personnel recruitment， Baosteel has made decisions on merit， regardless of background. It has made great efforts to train local talents and encourage local personnel to play a more important role. At the same time， non-critical position employees are no longer selected in China. The localization rate of employees in the region is close to 90 percent.

Mutual Assistance

On the evening of July 23， 2018， as it was under construction， the dam of the Xe-Pian Xe-Namnoy hydropower project in southern Laos collapsed under pressure from rising water in the reservoir after continuous heavy rain. A flash flood submerged eight downstream villages and left more than 6，000 people dead， missing or homeless. More than 5 billion cubic meters of floodwater crossed the southern border into Cambodia. Villagers in northern Cambodia had to be evacuated.

Chinese companies in Laos responded rapidly and joined disaster relief operations. They donated money and relief materials and sent technicians and workers to disaster areas. “All of our work force has been greatly concerned with the disaster，” remarked Ji Xiaoying， general manager of POWERCHINAs Asia-Pacific Region and head of the companys new disaster relief task force. “It is our solemn duty to help affected people overcome their difficulties. We will do our best to provide timely and effective assistance to the disaster victims and help the local government prevent secondary disasters.”

With their expertise in water and electricity， POWERCHINAs Kunming Institute organized an emergency response expert team to provide technical assistance to Laos in disaster relief. POWERCHINAs Chengdu Institute sent its emergency response team consisting of experts in earth-filled dam design， geotechnical test and construction to Laos on July 29 to assist with investigation of the disaster.

Meanwhile， Chinese companies also actively tried other ways to support the Lao people including technological support. The Asia-Pacific Mobile Telecommunications Satellite Company sent an emergency communications team to the disaster areas with not only basic necessities， but also satellite television equipment to ease anxiety among disaster victims by helping them learn about the situation in a wider area. The team traveled to the worst-hit area and helped local technicians complete real-time video transmission via the “Lao Sat-1” communications satellite.

China-Laos Railway Company also participated in disaster relief. The companys disaster relief team expressed willingness of all construction teams to provide assistance to disaster victims with every resource at their disposal and help the Lao government with reconstruction of the affected areas. The company also indicated that in emergencies， disaster victims can contact the company directly through its Facebook account.

Through donations of money and materials， disaster relief teams and emergency response teams， Chinese enterprises in Laos responded to the disaster promptly and stuck together with the local communities at this time of trouble. They fulfilled their corporate social responsibility， highlighting their awareness to serve host countries.

For more than 20 years， Chinese enterprises have completed a number of construction projects in ASEAN countries and promoted economic and trade links between the two sides. In the new era， they will interact even more with host communities in pragmatic cooperation.