HKTDC Deputy Director of Research Louis Chan and Christine Ip, managing director and Greater China chief executive officer at UOB, give an interview to China Daily after releasing the joint report titled "Navigating Connectivity: Exploring ASEAN Opportunities for the Greater Bay Area" on Jan 9, 2024. (OSWALD CHAN / CHINA DAILY)

A survey conducted by Hong Kong Trade Development Council (HKTDC) and Singapore-based United Overseas Bank (UOB) revealed that more business firms based in the Guangdong-Hong Kong-Macao Greater Bay Area are eager to expand into the ASEAN (Association of Southeast Asian Nations) region as a burgeoning young and middle-class population is rapidly transforming the region into a huge consumer market.

The survey revealed more than 70 percent of respondents plan to venture into ASEAN within the next three years, compared with 60 percent in a similar survey conducted in 2021. The survey, which was conducted in the third quarter of 2023, interviewed 671 GBA enterprises from four sectors: consumer goods; business, professional and financial services; real estate, hospitality and construction; and technology, media and telecommunications. 

The GBA firms included in the survey also cited the importance of Hong Kong’s connectivity with the GBA and ASEAN region, while the city’s expertise in legal compliance, cross-border infrastructure finance, and logistics all scored highly in the responses

The interviewed companies all regarded Malaysia, Singapore, Thailand and Vietnam as the top sales markets, while Vietnam remains the top choice for procurement and production outsourcing.

READ MORE: HK can promote and benefit from stronger GBA-ASEAN ties

In the survey, 55.9 percent of interviewed respondents cited the huge scale of the ASEAN market as the number one reason for their expansion plans, followed by government incentives and investment policies (49.6 percent), and enhanced e-commerce access (32.8 percent).

Regarding challenges, the need to navigate local government policies and regulations was cited as the top challenge (48.6 percent), followed by cultural or language barriers (38.7 percent) and difficulties in sourcing employees with the required expertise (26.4 percent).

As for navigating the challenges ahead, 53.7 percent of surveyed enterprises agreed that regional economic integration initiatives such as the Regional Comprehensive Economic Partnership are likely to boost the chances of business success within the ASEAN bloc, followed by digitalization (51.9 percent), and cost management (40.8 percent).

“In the past, the reason why GBA companies want to enter the ASEAN market is to complement their manufacturing activities on the Chinese mainland to tackle the issue of rising production costs. The role of manufacturing relocation and sourcing may be more important,” HKTDC Deputy Director of Research Louis Chan said.

“Nowadays, ASEAN itself has evolved into a big consumer market. That is why GBA companies are eager to expand their businesses in that particular area, and definitely they will face business challenges,” Chan added.

The GBA firms included in the survey also cited the importance of Hong Kong’s connectivity with the GBA and ASEAN region, while the city’s expertise in legal compliance, cross-border infrastructure finance, and logistics all scored highly in the responses.

READ MORE: HK to 'connect, add value' to GBA-ASEAN collaboration

“Hong Kong has a unique position as a superconnector and value-adder to drive financial innovation, facilitate cross-border trade and nurture economic prosperity,” said Christine Ip, managing director and Greater China chief executive officer at UOB.

Ip urged Hong Kong to be more proactive in fortifying its niches. “Hong Kong needs to take a more proactive role in dealing with Chinese mainland regulators, to have more frequent dialogue with mainland and ASEAN regulators and trade commissions to ensure this regional flow of economic cycle can accelerate. If we just sit here and wait, definitely we (Hong Kong) will lose our relevance.”

“This survey confirms both the bold and outward-looking nature of the GBA’s overall development strategy, while highlighting the essential role that Hong Kong can play in ensuring this initiative reaches its full potential,” Chan noted.