Malaysia tops list of expansion opportunities for Chinese companies in Asean

A recent survey has revealed Malaysia as the top choice for Chinese companies looking for expansion opportunities in Asean, with the region expected to see growth over the next 12 months.

The “Borderless Business: China-Asean Corridor” survey, conducted by Standard Chartered in April, involved senior executives at 43 companies based in China.

The study found that Malaysia tops the list on expansion opportunities for 65% of Chinese companies looking to scale up their sales and production operations. Currently, 72% of the Chinese businesses sell and export to Malaysia.

Out of 43 companies, 56% agreed that having access to a large and growing consumer market in Asean is a main drivers for companies.

Other key drivers such as local government incentives and support for project sustainability/stability (54%) and the presence of a mature and reliable supplier base (51%) were also regarded as factors for entering the Asean market.

With 88% of respondents planning to increase their investments in Asean by at least 25% over the next three to five years, the Regional Comprehensive Economic Partnership (RCEP) is expected to attract more investments into the region and benefit Malaysia’s export growth.

However, the survey also found that the Chinese companies are well aware of the risks of investing in the region such as the Covid-19 pandemic or other health crises, geopolitical uncertainty and trade conflicts as well as slow economic revival and a drop in consumer spending.

More than half of the respondents considered adapting the business model to industry practices and conditions within Asean, understanding regional regulations, payment methods and infrastructure and building relationships with suppliers and adapting supply chain logistics as challenges.

The majority of the companies also considered executing digital transformation programmes (58%), driving sustainability and environment, social and governance initiatives (47%) and entering into new partnerships or joint ventures to increase market presence (44%) as the most important areas for them to focus on for resilient and balanced growth in Asean.

They were also looking for banking partners with strong cash management capabilities, extensive trade financing services, and one-stop corporate financing and capital-raising services to support their growth.

In a statement, Standard Chartered Malaysia managing director and CEO Abrar A Anwar said the bank had grown with the country over the last 146 years.

“Being the only international bank present in all 10 Asean markets, we are well-positioned to support companies to venture into Malaysia and their cross-border financing needs,” he said.

“Asean’s strong fundamentals are driving its growth and resilience. Our leading financial solutions and cutting-edge digital capabilities are what make us the go-to bank for Chinese companies with Asean growth aspirations.”