NANNING: Co-operation between China and members of the ASEAN will mean
opportunities for Chinese companies, but government help is still needed,
industry insiders say.
"If it materializes, the China-ASEAN Free Trade Area (FTA) will become the
largest economic entity in the world, with market size expected to reach more
than US$3,000 trillion," said Liu Yonghao, president of Sichuan New Hope Group.
"This undoubtedly creates incredible opportunities for Chinese private
firms," Liu said.
New Hope has annual sales revenues of US$2.5 billion, and Liu says it now
plans to increase the number of factories in ASEAN nations to 10.
But he would not put a figure on the investment.
"We've set up six factories overseas, including Viet Nam where we have gained
great popularity. We hope annual sales from the 10 factories will reach US$200
million, (and become) a new growth point for us," said Liu.
The company also announced this July that it will set up an "O-Park," a
trade, logistics and industrial processing centre, connecting Kunming and
Nanning in South China and Ho Chi Minh City in Viet Nam.
And it is not only privately-owned companies that are excited about ASEAN.
In 2005, State-owned multi-industry China General Technology (Group) Holding
Ltd (Genertec) began to strategically target the ASEAN market, general manager
Li Dang told China Daily.
Last April, China National Technical Import & Export Corp, a subsidiary
of Genertec, signed a US$1 billion agreement with the Philippines National
Railway Corp on construction of the first phase of the 540-kilometre-long South
Philippines Railway Project.
Last June, China and the Philippines signed a co-operation memorandum on the
construction of the railway.
Another Genertec subsidiary is involved in the bidding for a coal-fired power
plant project for Indonesia National Electric Power Corp.
Despite the proximity of China to ASEAN in both geography and culture,
Chinese companies have met challenges in laws, business regulations and
language.
"It would help if the Chinese Government could provide us with financial
support and business-friendly policies," Li said.
Liu concurred: "New Hope's experience proves that you need good knowledge of
the risks of investing in the overseas market, like exchange rate fluctuation,
finance and taxes, before you carry out a development strategy.
"Preferential government policies could save us effort by helping us reduce
or even sidestep the risks."
Preferential financial policies, according to Li, could include measures to
help Chinese companies hedge the risks from exchange rates, such as special
loans or insurance.
Li added that the government could consider simplifying investment
procedures, enlarge the policy-directed credit scale, lower loan ratios, and
improve export insurance services.
This help may be on the way, as it is reported China Eximbank will today sign
a strategic partnership framework with China Council for the Promotion of
International Trade on providing preferential rates for good-performing
companies to invest in ASEAN.
But financial support is no guarantee of success.
"You need good management and financial systems, the best people, and perfect
understanding of the local market," Liu said.
