Chinese companies are deepening their footprint in Southeast Asia, lured by market growth and lower production costs, but remain wary of policy uncertainty and operational hurdles, Hong Kong’s Standard newspaper reports – citing a new survey published by PwC and the University of Hong Kong’s Executive Education unit.
The study surveyed 30 Chinese firms with operations in the 10-country Association of Southeast Asian Nations (ASEAN). While nearly two-thirds of the companies were manufacturers, the sample also covered transport, finance, energy, agriculture and other sectors.
Overall, 80 percent of firms said they were satisfied with their business in ASEAN, and more than 60 percent reported turning a profit. Manufacturers highlighted three key drivers: access to fast-growing markets, cheaper costs compared with China, and the ability to hedge against trade frictions elsewhere. Almost all – 95 percent – entered ASEAN via wholly owned subsidiaries rather than joint ventures.
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Indonesia, Malaysia and Thailand emerged as the top investment destinations, attracting 67, 47 and 40 percent of surveyed companies, respectively. Respondents said Malaysia, Thailand and Vietnam had shown the greatest improvements in the business environment over the past two years.
Still, optimism was tempered by risks. Eighty percent of companies flagged policy stability as their biggest investment concern (alongside complex government approvals and rising operating costs), while 73 percent highlighted recruitment and talent management as their main challenges in daily operations.
Looking ahead, more than 80 percent of surveyed firms said they planned to expand their ASEAN presence within the next three years. They also called for stronger government support on taxation, talent flows and cross-border capital, alongside greater transparency and efficiency in local administration.
