CHINESE ENTERPRISES IN SOUTHEAST ASIA

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W
ith China’s reform and opening-up, Chinese enterprises have been
encouraged to expand their operations abroad. Many well-known Chinese brands have gradually increased their presence in ASEAN countries. According to the latest statistics from the Ministry of Commerce of China (MOFCOM), China has set up more than 4,000 foreign direct investment (FDI) enterprises in ASEAN, which have played a positive role in the economic development of both sides.Xu Ningning, executive president of the China-ASEAN Business Council, believes several reasons are behind the growing presence of Chinese enterprises in ASEAN in recent years. First, the geographic advantages for bilateral cooperation. Transportation between China and ASEAN
countries is convenient. Second, a good foundation for cooperation. Economic and trade cooperation has developed continuously over 27 years of Dialogue Relations. Third, mutually open markets. The tariff on trade of 95 percent of products between the two sides is zero. Fourth, the growing ASEAN economy. With the implementation of the Belt and Road Initiative, there are plenty of business opportunities in ASEAN.
Business Opportunities In June 1995, the Power
Construction Corporation of China (POWERCHINA) won a contract to restore Jatiluhur Dam in West Java Province of Indonesia, the largest water conservancy project in the country. To solve technical problems hindering the restoration, Wang
Xuelu, then general manager of the Bureau 11 Company, a subsidiary of POWERCHINA, led a task force to design a floating crane. On May 7, 1996, a 5-ton floating crane was built as an innovation achievement inspired by this project. In recent years, POWERCHINA has worked on projects in nine ASEAN countries as well as winning awards from ASEAN for its excellence in engineering, special contributions to disaster relief and reconstruction and other
CHINESE ENTERPRISES IN SOUTHEAST ASIA
By Wang Fengjuan
accomplishments. POWERCHINA has contracted and completed 57 large and medium-sized projects, including hydroelectric stations, rail transit, power transmission and transformation, sea bridges, urban infrastructure renovation, together valued at US$4 billion. More than 123 projects are under construction, with contracts valued at about US$10.25 billion.
As POWERCHINA was restoring the dam in Indonesia, China
International Water & Electric Corp. (CWE), a subsidiary of China Three Gorges Corporation (CTG), officially entered the Lao market to construct hydroelectric stations and power transmission and transformation projects. Cooperation has been carried out in different forms of contracting arrangement, from traditional
international engineering contracting
to EPC (Engineering Procurement
According to the latest statistics from the Ministry of Commerce of China (MOFCOM), China has set up more than 4,000 foreign direct investment (FDI) enterprises in ASEAN, which have played a positive role in the economic development of both sides.
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Construction) and BOOT (Build-Own-Operate-Transfer). Nam Leuk Hydropower Station is the first Lao hydroelectric station to be built by a Chinese company. The Nam Mang 3 Hydropower Development Project is the first export credit project between China and Laos and the first EPC
hydropower project built by a Chinese company in Laos. Nam Lik 1-2 Dam is the first BOOT hydropower project invested and operated by a Chinese company in Laos.
When Baosteel Singapore Pte Ltd. realized the prospects of the ASEAN market, it began to explore the market in February 1997. From 2002 to 2010, it was successively shortlisted as one of the Singapore 1000 (an award for top business companies). In 2005, it obtained the credit certificate issued by DP Information Group (the largest provider of credit and business information in Singapore). In 2007, it was awarded by DP as one of the 50 Fastest Growing Companies. Since January 1, 2004, Baosteel has been listed in the Global Trader Programme (GTP) by the Singapore government for a reduced corporate tax rate of 10 percent for five years.
As a well-known brand of
traditional Chinese medicine (TCM), Beijing TRT (Tongrentang) Group has exported its products to ASEAN countries since 1993, when it was first granted the import and export license. Since 2001, it has cooperated with ASEAN enterprises to build joint ventures, including TCM clinics and pharmacies in Thailand, Malaysia, Singapore, Indonesia and other countries.
As a leading enterprise of agricultural industrialization in China, New Hope Group took a step forward in Southeast Asia when it launched a cooperative project in Vietnam in 2000.
Huawei Technologies Company, as a private IT enterprise established after 1978, officially established a branch in Indonesia in 2000 as its first base in ASEAN.
Intensive Cultivation
In the new era, the Belt and Road
Initiative has created more space for cooperation between China and ASEAN countries. In a speech at Indonesian House of Representatives on October 3, 2013, Chinese President Xi Jinping said: “The Surabaya–Madura Bridge, a China-Indonesia joint project, is the longest cross-sea bridge in Southeast Asia. The cooperation project of Jatigede Dam is about to finish. Once completed, it will have an irrigation area of 90,000 hectares, which will greatly improve the living and working conditions of the local people.” On March 17, 2016,
Indonesian President Joko Widodo made an inspection tour of Jatigede Dam, where he talked about its important social benefits and its positive impact on irrigation, flood control, fishing, tourism and more fields.
Jatigede Dam was an aspiration of the Indonesian people for more than half a century. Construction of the project has brought real benefits to local communities. At a press conference on September 12, 2017 in Jakarta, BenBen Ariespendi, village head of Jatigede, told journalists that his village welcomed the changes brought by the project. “We are
grateful to the Chinese companies!” he exlaimed. “Although the project is drawing to a close, I hope that our close friendship will continue for a long time.”
In Cambodia, Ganzao Hydropower Station is a popular project with the local population that has eased power
shortages and changed lives. Ganzao is a BOT (Build-Operate-Transfer) project developed by the Cambodian government through international bidding. It’s also the first overseas BOT project that POWERCHINA has undertaken. In February 2006, POWERCHINA won the contract in a bidding competition with a number of internationally renown companies. With a total installed capacity of 194,100 kilowatts, Ganzao will be under franchise for 40 years with an annual output of 498 million kilowatt-hours of electricity. On December 7, 2011, construction on the project was completed. In August 2012, Ganzao went into commercial operation. The success of Ganzao will adjust the power and energy structure of Cambodia, ease the imbalance
between supply and demand, improve the investment environment and promote infrastructure construction. It will also have a positive and far-reaching impact on employment of
The success of Ganzao will
adjust the power and energy structure of Cambodia, ease the imbalance between supply and demand, improve the investment environment and promote infrastructure construction.
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53 the local population, transportation,
tourism and financial revenue.
Chinese companies have improved cooperation mechanisms with their partners. During construction of
the Nam Lik Hydropower Station in Vientiane Province of Laos, the CTG worked with the local government
to set up a committee for the management and development of the Nam Lik River basin, which oversees the overall planning, implementation and supervision by the company and the government. They also drew up a master plan for the management and development of the river basin
in the coming 25 years, with a total budget of US$1.83 million, which will provide protection to the river basin in agriculture, environment and tourism. This practice has proven an ideal model for capital management of hydroelectric projects in Laos.
Chinese companies have localized their operations in host countries. Baosteel has actively explored
the transformation of overseas marketing models in Singapore, vigorously promoted the localization of personnel training and constantly improved staff efficiency. In personnel recruitment, Baosteel has made decisions on merit, regardless of background. It has made great efforts to train local talents and encourage local personnel to play
a more important role. At the same time, non-critical position employees
are no longer selected in China. The
localization rate of employees in the
region is close to 90 percent.
Mutual Assistance
On the evening of July 23, 2018, as
it was under construction, the dam of
the Xe-Pian Xe-Namnoy hydropower
project in southern Laos collapsed
under pressure from rising water in
the reservoir after continuous heavy
rain. A flash flood submerged eight
downstream villages and left more
than 6,000 people dead, missing
or homeless. More than 5 billion
cubic meters of floodwater crossed
the southern border into Cambodia.
Villagers in northern Cambodia had
to be evacuated.
Chinese companies in Laos
responded rapidly and joined disaster
relief operations. They donated
money and relief materials and
sent technicians and workers to
disaster areas. “All of our work force
has been greatly concerned with
the disaster,” remarked Ji Xiaoying,
general manager of POWERCHINA’s
Asia-Pacific Region and head of
the company’s new disaster relief
task force. “It is our solemn duty
to help affected people overcome
their difficulties. We will do our
best to provide timely and effective
assistance to the disaster victims and
help the local government prevent
secondary disasters.”
With their expertise in water and
electricity, POWERCHINA’s Kunming
Institute organized an emergency
response expert team to provide
technical assistance to Laos in disaster
relief. POWERCHINA’s Chengdu
Institute sent its emergency response
team consisting of experts in earth-
filled dam design, geotechnical test and
construction to Laos on July 29 to assist
with investigation of the disaster.
Meanwhile, Chinese companies
also actively tried other ways to
support the Lao people including
technological support. The Asia-
Pacific Mobile Telecommunications
Satellite Company sent an emergency
communications team to the disaster
areas with not only basic necessities,
but also satellite television equipment
to ease anxiety among disaster
victims by helping them learn about
the situation in a wider area. The team
traveled to the worst-hit area and
helped local technicians complete
real-time video transmission via the
“Lao Sat-1” communications satellite.
China-Laos Railway Company
also participated in disaster relief.
The company’s disaster relief
team expressed willingness of all
construction teams to provide
assistance to disaster victims with
every resource at their disposal
and help the Lao government with
reconstruction of the affected areas.
The company also indicated that in
emergencies, disaster victims can
contact the company directly through
its Facebook account.
Through donations of money and
materials, disaster relief teams and
emergency response teams, Chinese
enterprises in Laos responded to
the disaster promptly and stuck
together with the local communities
at this time of trouble. They fulfilled
their corporate social responsibility,
highlighting their awareness to serve
host countries.
For more than 20 years, Chinese
enterprises have completed a number
of construction projects in ASEAN
countries and promoted economic
and trade links between the two sides.
In the new era, they will interact
even more with host communities in
pragmatic cooperation.
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