“TOO BIG TO IGNORE”
Other Asian companies shared similar sentiments.
Mr Hyuk-Tae Kwon, co-founder and CEO of Singapore-based venture capital firm Pine Venture Partners, said China remains the nearest market, and one of South Korea’s largest import and export partners.
“It’s too big to ignore,” he added, even as geopolitical concerns drive some companies to redistribute their assets to the region.
Mr Kwon said China’s emphasis on AI and innovation sends a promising signal to investors.
“There are a lot of opportunities I also see in China regarding ageing population, healthcare, food tech,” he noted.
“And so if you have the right technology and business models that have worked in smaller markets, like South Korea and Singapore, there’s a lot of relevance that can be ported over to China.”
Nevertheless, he acknowledged that operating in China is a whole different ball game, as each region could have different regulations.
“I think the level of complexity in terms of operating in China has gone up significantly. I would recommend many of my clients to find a capable and trustworthy partner as a new strategy, instead of trying to do everything on your own in China, because the changes are too fast, too drastic,” he said.
“With the right distribution partners, you may have a higher chance of success in today’s business environment.”
As for those who got through Beijing’s strict curbs during the COVID-19 period and remained in China, Mr Kwon said they will reap the benefits of China’s eventual economic recovery.
ADAPT TO CHANGING RULES, TRENDS
While waiting for the tide to turn, overseas partners have had to adapt to changing rules and trends.
Thai Wah Public Company CEO Ho Ren Hua said this was most telling as China emerged from COVID-19.
He told CNA that China has increased the emphasis on food security, for instance, all the way down to the quality and design of the supply chains.
“That refers to traceability in terms of source and origin. And we’ve been working a lot with our procurement teams, our supply control, all the way to the farm,” Mr Ho said.
His Thailand-based food company, which exports tapioca to China, currently has operations in Shanghai, Qingdao and Guangzhou.
Mr Ho noted that Chinese consumption habits have also changed, especially as digitalisation accelerated during the pandemic.
“We look at different types of trade channels, starting with modern hypermarkets to direct to consumer platforms, to food retail brands,” he added.
“Food ultimately is an industry of taste, texture and preference. The Chinese consumer becomes more picky about different types of tastes, texture, flavouring. So there’s still a lot of opportunity for food in China in the long term.”
With these trends on the rise, Mr Ho believes the deep connection between Southeast Asia and China will withstand any geopolitical storm.
His Thailand-based food company exports tapioca to China.
“We don’t foresee in the near future (that there will be) significant tariffs or trade barriers between Southeast Asia and China, because there’s really a strong mutual dependence between the Chinese economy and Southeast Asian economies,” Mr Ho said.
“The flow of food products will continue to grow both ways.”
