HONG KONG, April 24 (Xinhua) — As economic activities in the U. S. and Europe remain in the doldrums, more and more businesses and investors are shifting their focus to Asia.
Southeast Asia, a region with multi-faceted economies, diverse culture and huge population, is also a region that has been drawing increasing attention in recent years, particularly given its largely untapped market potential and cheap labor costs.
Hong Kong businessman Jonathan Choi, who has decades of experience in doing business in Southeast Asian countries including Vietnam, Cambodia, Myanmar, Indonesia, Singapore and Thailand, shared his experiences and lessons learnt in doing business there in a recent interview with Xinhua.
MAKE FRIENDS FIRST
Choi’s initial involvement with Southeast Asian countries dated back to the 1970s, when his company Sunwah Group established subsidiaries in Vietnam to process and export frozen and dried marine food products. He then ventured into other countries, accumulating over 30 years of business experience in Myanmar and 20 years in Cambodia. He said it is always important to get familiarized with the country and build local connections before expanding the size of business.
“We must remember when investing in these countries, we’re foreigners,” he said, adding that language, culture, the way of doing business, and mentality are all important factors to consider when investing in ASEAN countries.
He also stressed the importance of social responsibility when doing business overseas. “If you have been there for a long time, being friendly with them, showing your responsibility and care to the local people, you would have a better return and better cooperation with the local community and government,” he said.
Choi’s usual strategy of expanding business abroad is to start with the most familiar industry, in his case, sea food processing and trading. After getting fully accustomed to the business environment, he then dabbled into other types of business such as property and finance.
He cited business in Vietnam as a successful example of diversifying operations. With decades of experience on sea food processing and trading, he embarked on new business projects in real estate, becoming one of the largest property developers in the country.
Ten years ago, he seized an opportunity to venture into the financial sector and founded VinaCapital, thereby establishing his conglomerate’s asset management business in Vietnam. VinaCapital has three listed funds in the AIM market of the London Stock Exchange.
Leaping at the opportunity is also crucial for business expansion. Prior to Myanmar’s opening-up to foreign investors, Choi stayed for sea food businesses only in the country. “Now the time has come,” he said. “I’m now looking into property and financial business.”
Unstable business environment and unexpected political and social changes are some of the biggest difficulties during the years of his business operations in Southeast Asia. “Things may just happen suddenly,” Choi said, recalling some unrest in Indonesia, Vietnam and Cambodia which caused him to shut down factories and draw back investment.
When unrest broke out in Cambodia in 1997, Choi had to leave the plants idle for five years. Yet, he did not move out completely. “When everything recovered, we resumed the production and had a really good business,” he said.
“Confidence in the country is very important. You should have a long-term strategy, so you work together and grow together with the country and the people.”
NUMEROUS BUSINESS OPPORTUNITIES
Economic links between Hong Kong and the ASEAN countries are historically strong, and ASEAN now is Hong Kong’s second largest trade partner after the Chinese mainland, with 94.1 billion U.S. dollars trade value in 2012. The average trade growth between Hong Kong and ASEAN for the past 10 years is around 7 percent, with a particular big increase of 10 percent last year.
Choi noted that business opportunities in ASEAN nations are not just limited to trade, but also investment and service industries.
As the land price and salary costs are surging for Hong Kong companies operating in South China’s Pearl River Delta, Choi suggested that they could consider relocation in Southeast Asian countries like Vietnam, Myanmar, Cambodia and Indonesia.
ASEAN boasts a combined population of over 600 million, nearly half of China’s or Indian’s population. According to International Market Assessment, the hourly wage rate in China is 1.56 U.S. dollars, compared to 0.81 U.S. dollars in Vietnam and 0.51 U.S. dollars in Indonesia.
Another strength of the region is affluent natural resources. Many Southeast Asian countries, including Malaysia, Thailand, Indonesia, Myanmar and the Philippines, have vast natural gas reserves.
As developing nations, ASEAN countries also manifest huge untapped potential for infrastructure investment. Airport, toll roads, bridges, railways, to name but a few, are all in need of development, particularly given the trend of greater integration within ASEAN member states and more trade connections between China and the bloc. Choi said such infrastructure investments are not only business opportunities for Hong Kong enterprises, but also for state-owned enterprises (SOEs) in Chinese mainland.
In Choi’s opinion, the concept of Hong Kong companies should be a broad one, including those mainland enterprises listed in Hong Kong with a business operation base in the city.
When then-vice-premier Li Keqiang visited Hong Kong in August 2011, he said the Chinese mainland and Hong Kong companies should work hand-in-hand to “go out” and make foreign investment. Choi sided with this idea and said this would allow companies from both sides to demonstrate their own distinctive strengths.
“Many Chinese enterprises are strong in manufacturing, mining and power supplying, whereas Hong Kong companies have more experience in the service sector, such as financial service, professional service, management and human resources,” Choi said. “Therefore, we should work together and go to ASEAN side by side.”
A WIN-WIN DEAL
Choi has been ardently advocating Hong Kong’s access to ASEAN-China Free Trade Agreement (ACFTA) for the past few years. He said this is not just beneficial to Hong Kong, but would also spur growth and development within the region and bring benefits to all ASEAN members.
Hong Kong is widely known for its expertise in the financial service sector, such as in company mergers, fund raising, consultancy, auditing and logistics. Hong Kong’s role as a premier offshore renminbi center also helps in meeting ASEAN businesses’ financial needs, said Choi, citing that 92 percent of the Chinese mainland’s cross-border renminbi trade were settled in Hong Kong in 2011.
According to a research report from the Asia Strategy and Leadership Institute, Hong Kong’s participation in the ACFTA is projected to further enhance the city’s bridging role between the Chinese mainland and ASEAN, bringing about a 28 percent increase in the regional bloc’s exports to the Chinese mainland. It will principally benefit the ASEAN’s food processing, electronic industries, finance, insurance, construction and business services.
Hong Kong expressed its interest in joining the ACFTA to the ASEAN Secretary-General in November 2011. Acknowledging that the final decision would require consent from all 10 members of ASEAN, Choi said, “It takes time, but we hope that they will understand our wish to participate and I think it will be beneficial to both parties.”
By Jennifer Pan | 25 April 2013 | English.news.cn