ASEAN’s Inbound Investments from China Show Strong Trends in Digital Business Infrastructure Development
China continued to pump money into ASEAN in the third quarter of this year, with the region attracting 15% of all outward investment flows from China. Tracking this data is important because it shows where Chinese investments are made, meaning state policy in areas of Chinese trade and regional development interest – China has a free trade agreement with ASEAN. – and indicating that additional and related investments may also materialize. It also has a downstream impact on businesses affected by such investments, such as increased demand for medical supplies equipment and machinery in the event of healthcare investments, or in preparations for a huge increase in regional electronic commerce.
This has an impact on the financing of additional investments and shows are opportunities for manufacturers and suppliers looking for new markets. The data provided is unique and was featured in the third quarter 2021 issue of Asia Investment Research. It can be downloaded for free here.
What Asia Investment Research showed is that there was Chinese overseas investment in several ASEAN markets, led by Singapore, followed by Indonesia, Malaysia, Thailand and the United States. Philippines. Collectively, these markets recorded about 30 investments in the third quarter, or about 15% of the total volume of Chinese releases.
Singapore was clearly the top destination, attracting nearly 20 investments, across multiple sectors including real estate (three significant acquisitions, including the largest in the third quarter), TMT renewables (telecommunications, media and technology), healthcare , finance (including crypto), industry and consumer. e-commerce.
Indonesia registered four investments, focused on TMT, fintech and minerals (lithium). Malaysia also recorded four investments in industrial social media, NEV (new electric vehicles) and fintech. There have been investments in technology in Thailand and in bitcoin in the Philippines.
The third quarter data illustrates two main points: that China is diversifying its investments in ASEAN, with a growing appetite for investment in service-related industries rather than physical infrastructure – a big part of the operational building of the Belt and Road has already been started. China is now investing in service areas that can provide a return based on this built infrastructure and increasingly doing so in the digital commerce arena.
As can be seen, a large part of these investments for ASEAN are related to trade and finance. TMT improvements go hand in hand with e-commerce. Fintech provides secure cross-border transactions without the need for constant inspections, which is important for a ten-nation bloc like ASEAN with borders to China and India. Insurtech provides the equivalent in digital commercial insurance. Investments in crypto will pave the way for new digital payment opportunities for banks and consumer-centric financial institutions. Connecting all these different investments shows a clear strategic vision – China is now investing in a digital ASEAN.
There are also investments related to manufacturing, but again, these are new technologies: New electric vehicles (NEVs), which include both battery-powered cars and driverless cars, will have a bigger impact. downstream on supply chain requirements for other automotive components, as well as for future investments. in power plants and all the accessories needed to charge the vehicle. This impacts the second and third tier manufacturers needed to supply NEV’s production line.
In addition, Chinese investors are now seeking strategic minority investments in these industries. They are smart enough to realize that local regional market expertise is needed to run new tech companies (after all, ASEAN speaks English, Filipino, Indonesian, Khmer, Lao, Malay, Putonghua, Burmese, Spanish, Tamil, Thai and Vietnamese) and are now content to invest, support and support the development of regional businesses. The dividend potential – and expansion into domestic Chinese and RCEP markets from next year is huge. Having Chinese minority investors on your board is a solid strategic strategy and we’ll discuss it, along with case studies of performance, key industries to invest in, capital investments made and return on investment. resulting in the next issue of Asia Investment Research next month. . This free number can be reserved in advance here.
Meanwhile, ASEAN is preparing to strengthen its relations with China. The bloc already has a very valuable free trade agreement with China, but at the recent ASEAN summit, China offered to transform it into a “Comprehensive Strategic Partnership” that will further strengthen regional ties between China and ASEAN in matters of trade, investment, legal mechanisms and Security.
With China and ASEAN also part of the Regional Comprehensive Economic Partnership (RCEP) free trade agreement, the future of technology and digital investments in ASEAN looks bright. The RCEP includes the ten ASEAN countries, China, Australia, New Zealand, Japan and South Korea, and will begin on January 1, 2022, when all of these countries can engage in the free trade between them under the aegis of the RCEP. It’s only six weeks away. Following Chinese money has never been a bad investment strategy in China, nor will it be in ASEAN or RCEP.
The latest issue of Asia Investment Research is now available and covers inbound investments in China and Asia in the third quarter. Please visit their website for a free download here.
ASEAN Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia and has offices throughout ASEAN including Singapore, Hanoi, Ho Chi Minh City and Da Nang in Vietnam, Munich and Esen in Germany, Boston and Salt Lake City in the United States, Milan, Conegliano and Udine in Italy, in addition to Jakarta, and Batam in Indonesia. We also have partner firms in Malaysia, Bangladesh, the Philippines and Thailand as well as our practices in China and India. Please contact us at [email protected] or visit our website at www.dezshira.com.