Most Chinese companies focusing on the Association of Southeast Asian Nations (Asean) expect to see their businesses grow in the region over the next 12 months, according to a survey commissioned by Standard Chartered.
The survey, conducted in April among senior executives at 43 China-based companies, revealed that the same companies consider Singapore and Malaysia as the best markets for expansion opportunities in the region.
Around 60% of respondents say they are focusing on expanding in Singapore to capture sales and production opportunities, second to Malaysia at 65%, and followed by Thailand's 53%.
About 47% of Chinese corporates are also keen to tap into Singapore as a major regional procurement hub, and 44% of them indicate that they are looking to build a regional research and development or innovation centre in the country, as they look to expand across Asean.
Also, 56% of the companies prioritised access to the large and growing Asean consumer market as the most important drivers for expansion into the region.
Around 53% of companies found local government incentives and support for project sustainability and stability to be important, while 51% saw a reliable supplier base as one of the key reasons to look into expansion in the Asean region.
Also, 47% of the companies said the network of free trade agreements (FTAs) make Asean the ideal base to access the global markets.
The Regional Comprehensive Economic Partnership is also expected to attract more investments in the region with 88% of respondents planning to increase investments by at least 25% over the next three-five years.
Also, the same companies identified the risks within the region, with 70% citing the Covid-19 pandemic or other health crises.
Around 67% of companies consider the region's geopolitical uncertainty and trade conflicts, while another 67% view the slow revival of the region's economies and drop in consumer spending as areas of concerns.
However, to mitigate the risks and challenges, 58% of respondents say they have considered executing digital transformation programmes, while another 47% have looked at driving sustainability and environmental, social and governance initiatives.
Another 44% of companies say they are looking into the possibility of entering new partnerships and joint ventures to increase their market presence when entering the region.
The survey was conducted for Standard Chartered's "Borderless Business: China-Asean Corridor" report, which explores potential opportunities for cross-border growth between both regions.