Int’l businesses target ASEAN for supply-chain connectivity versus consumer market
, Southeast Asia
323 views
Photo from Pixabay

Int’l businesses target ASEAN for supply-chain connectivity versus consumer market

Growth in sales for the region is expected to climb 23.2% in the next 12 months.

International businesses from nine major economies are increasingly optimistic about their growth prospects in Southeast Asia (SEA), but are more likely to dive into the market due to its supply-chain connectivity.

Global businesses anticipate that sales in the region will grow by 23.2% over the next 12 months, up from 20.1% in the previous year, research commissioned by HSBC Commercial Banking showed.

This growth rate is significantly higher than the anticipated gross domestic product growth in Southeast Asia, reflecting growing confidence in the region among international companies.

The HSBC Global Connections survey also reveals that businesses from countries geographically closer to SEA, such as those in the rest of Asia Pacific (APAC) and the Middle East, have a more advanced presence in SEA and greater ambitions for regional expansion compared to their European and American counterparts.

Respondents from APAC, especially China, are more likely to significantly increase inorganic growth in SEA by 2024 compared to respondents from Europe, such as Germany (45%). 

While there are regional differences, overall, respondents from all markets expect increased M&A activity in SEA over the next four years.

Companies already present in SEA plan to prioritise growth in the markets they are familiar with.

Singapore (36%) is the top choice for growth among current markets, followed by Malaysia (27%) and Thailand (24%). Singapore's enduring appeal as a regional business hub and the financial centre continues to attract businesses.

ALSO READ: Hong Kong’s business scholars target top finance employers for work-life balance

Indonesia and Malaysia are the most popular choices for companies planning to expand into a new ASEAN market over the next two years. A significant number of firms without a presence in Indonesia or Malaysia plan to enter these markets during this period.

Businesses primarily see ASEAN as a supply chain connectivity hub. Key attractions include a skilled workforce, a growing digital economy, and competitive wages. 

However, talent is both an attraction and a challenge, with the cost of training and the lack of skilled personnel identified as top challenges for businesses seeking to digitise their operations.

“The cost of training (36%) and lack of skilled personnel to drive implementation (also 36%) are identified as top challenges for businesses seeking to digitise their operations in ASEAN. Also, the ability to hire talent with the right level of expertise is the top challenge to becoming more sustainable in the region,” said the report.

Further, respondents identify e-commerce (31%) and digital payments (28%) as technologies in which ASEAN is leading the way, reflecting the widespread adoption of digital platforms and mobile wallets in the region.

Companies from APAC and the Gulf Cooperation Council countries are ahead of their European and American counterparts in terms of organic growth, supply chain development, and pursuing M&A activity in ASEAN. 

They also make greater use of Free Trade Agreements (FTAs) to increase trade with ASEAN.

The survey was conducted online between 25 July to 2 August with 3,509 businesses from nine different markets namely China, India, UK, France, Germany, US, Australia, Hong Kong, and GCC countries.

 

Follow the link for more news on

Join Asian Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Top News

Asia's First Social Wellness Club to open in Singapore
Asian Business Review’s Simon Hyett speaks with social wellness thought leader Diana Kraemer on why the island nation represents the perfect social wellness incubus.
Asia bears $17b of Q1 natural disaster economic loss
Less than half of the global economic losses were insured during Q1’24.
Insurance

Exclusives

How women in power are the key to business success
Industry experts share their thoughts on how women in business can be the ultimate growth driver.
Pupuk Kaltim CEO takes pride in SNI-quality products
The Indonesian leader in fertiliser manufacturing says it’s a company and industry commitment.