Exploring the China-SEA Business Relationship

China and Southeast Asia (SEA) are at a pivotal stage in their relationship. Against an increasingly complex backdrop of rapid global geopolitical change, shifting power dynamics, new partnerships, and old tensions, both entities continue to play a vital (and evolving) role in each other’s economic fortunes.

Fully unpacking the nature and importance of this relationship would be an exhausting task. Besides, the moment you had “finished” your analysis, it would almost certainly be time to review it all again from scratch to factor in new developments. Viewing such a broad and dense concept through a series of small windows, however, can help shed at least a little light on the subject, providing a useful (albeit limited) snapshot of the China-SEA business connection today, and how it is changing.

Providing these insight “windows” today are five of CEIBS’ Global EMBA alumni, all from the class of 2022. While they have diverse professional backgrounds, they all have experience working and living in both China and at least one SEA country. Across a series of short interviews, all five alums shared their thoughts on the China-SEA relationship and its relevance to their current role and career path.

The companies of all five alumni have significant connections between China and one or more SEA countries: either maintaining a physical presence (through manufacturing, distribution, etc.) and/or a sizeable client base on both sides. This makes the China-SEA relationship central to their current and future business strategies.

We asked all five participants to explain what, in their view, SEA and China have to offer one another, and why their respective organisations decided to expand or deepen their footprints there.

Peiyi: China and SEA have so much to offer one another right now. China’s economic growth has been largely due to getting low-cost, scalable solutions right in areas like infrastructure, energy and logistics. Having trodden that path, a lot of these approaches are transferrable to SEA, to the benefit of both sides. This is why so many Chinese companies are looking in this direction for their next wave of expansion. The cultural and geographical closeness makes this prospect even more appealing.

Peiyi Han（fourth from the left）with her Global EMBA classmates

James: China was our predominant focus, but now we’re expanding into Vietnam and Indonesia, while our regional HQ is here in Singapore. Both countries are poised for explosive growth and their governments are encouraging this with a sense of urgency. They want to catch up, and who better to learn from than China about rapid economic development.

Jean: Vietnam is a huge opportunity market and a growth machine. There’s almost 100 million people and it’s a very young population that’s driven to succeed. That represents a significant population dividend that’s going to keep on giving benefits to the economy for decades to come.

Kelvin: Singaporean real estate developers like ours have been looking to China throughout its economic boom period of the last few decades to satisfy its burgeoning demand for high-quality commercial and residential developments. That’s a major advantage for us; Singapore has a reputation for being very quality conscious, for honouring contracts and delivering quality products. That’s how we build healthy long-term relationships with discerning Chinese clients.

CY: ASEAN collectively makes up the 5th largest economy in the world. Its middle classes are expanding with the right income levels to create demand for Chinese goods, tech and services. Meanwhile, it offers great offshoring opportunities for labour and manufacturing. For us, SEA is very important; we have R&D and manufacturing facilities in Singapore and Thailand (for our China+1 strategy), and we’re present in medical device markets across the region.

CY Wong

Besides longstanding political and economic ties, China and SEA maintain strong cultural links from decades or even centuries of cross settling and business collaboration. But how close are these bonds today, and how much bearing do they have on modern business relations at the company level?

Our alumni share their experiences on navigating cultural gaps as well as bridges between the two regional entities.

CY: China’s business culture has changed massively in the 20 years I’ve been working here. Throughout those two decades, China has become steadily more open to the world and more accommodating of other cultures and business partnerships. The culture gap between China and SEA is closing all the time; today, in our industry, it’s very narrow. Multiculturalism is much stronger and genuinely accepted today, compared to the early 2000s.

Jean: In Vietnam, employees have been operating in a growth market for a generation, and that has perhaps made them less instinctively loyal to their current company. They will pursue higher salaries more readily than Chinese employees, who are more likely to stick with an employer if it offers them job security. However, Vietnamese employees care deeply about company performance; they want to work for a “winning company”, and it makes for a motivated, dynamic workforce.

Kelvin: There’s a strong cultural affinity between Singapore and China, given the ancestral link and shared language. That’s a major plus point for engendering trust, as we’re starting from common ground. There’s also a shared appreciation for technological innovation and a willingness to take on new ideas. 

Kelvin Ng

James: Architecture in China is all about getting things done as quickly as possible, focus on cost effective measures prioritising efficiency. “Standard” working hours do not apply; you’re expected to be available day and night to ensure projects go smoothly. Coming to Singapore, the culture is more Westernised, or perhaps globalised; the rules-based systems and expectations are more familiar to professionals with international experience.

James Chow Hoon Lew at the Global EMBA 2022 Opening Module

Peiyi: We have around 40,000 employees spread across six SEA countries, and a broad mix of clients, so the business culture differences and general ways of doing things can be very challenging. We try to simplify processes wherever possible through SOPs, while regular communication and relationship management are also key to ensuring everyone is on the same page.

Countries are a lot like people – relationships between them are never set in stone. As time progresses, China and respective SEA nations are constantly refining their relations based on their long-standing ambitions and the more pressing needs of the day.

Eager to better understand how the China/SEA relationship stands today, and how it can influence the fortunes of individual companies or entire industries, we asked the alums to share their thoughts on the relative positions of both entities, and whether one needs the other more.

Kelvin: Most SEA countries, Singapore especially, have the advantage of not being ‘in anyone’s camp’; we’re free to go our way, to look after our own interests and take advantage of geopolitical changes. Of course, we need China because the majority of our trade and investments flow to and from it. However, China also needs friendly relations across SEA for a host of economic and “soft power” reasons. I’d say the balance is more even now than in the past few decades.

CY: At this moment, China probably needs SEA a little more due to global trade tensions. SEA is essential for maintaining viable supply chains to the US and Europe, and the current difficulties in the Chinese economy make SEA even more important to China for new markets, offshoring options and general ‘breathing space’ economically. However, China still holds huge influence across SEA, and that isn’t going to change.

CY Wong（second from the left）with his Global EMBA classmates

Jean：China has a lot to offer Vietnam in terms of FDI, tech transfer and partnerships on infrastructure. Vietnam has a great labour pool, and its economy is a growth engine right now. Both sides need each other; it can be a win-win scenario if there is political appetite on both sides to collaborate in good faith.

Jean Gan

James：In terms of economic power, China is still dominant in the relationship. SEA countries depend on China for accelerating their economic growth through infrastructure development. Building materials, technology, investment, favourable policies – China is willing to extend all of these to its friends in the region, and that’s always a very tempting offer. However, SEA nations understand that they cannot rely wholly on China, so they continue to find ways to better stand on their own two feet.

Each of our five alums’ companies have achieved successful market expansion into China, several SEA nations, or both. While the opportunities are extensive in both directions, so are the risks of failure for the underprepared. Our alums have the following advice for companies to consider before they make their move.

Jean: Don’t rush to market; don’t blindly follow the hype; do your homework. Both China and SEA are big, diverse markets, so it pays to take your time to find the right place for an easy landing. Having the right local partners in place ahead of your expansion is also essential – it is always worth the time you put into searching for them.

Jean Gan（third from the left）with her Global EMBA classmates

James：Don’t make the mistake of thinking of SEA or China as a homogenised block. Build a viable strategy that’s attuned not just to the country you plan to enter, but the region or city. For all the cultural links and familiarities between them, they are unique prospects and should be approached with the right level of flexibility based on conditions on the ground.

Kelvin：Understand your target audience and potential partners in the new territory, but also don’t neglect your own core strengths and ethics. Don’t try to compete against local companies on their terms; demonstrate the unique offering you’re bringing over, and don’t compromise on it. So basically: be respectful and integrate, but don’t integrate so much that you lose your sense of self!

Kelvin Ng（second from the left）with his Global EMBA classmates

Peiyi: Analyse the local market carefully. Be honest about whether it is relevant to your business and whether you can reasonably expect to win there. It’s not all about the size of the opportunity; it’s about applicability. Indonesia will probably become one of the largest economies in the world, but its stringent business rules and regulations means it requires a very high level of localisation to break into. So, it may not be the best initial SEA market to enter.

CY: Be open and accepting of the country’s culture. Fully utilise the local talent; they will have a better understanding of local business practices. It is crucial to adapt to the local market; Learning from consumer behaviour patterns, leveraging regional strengths, and respecting cultural nuances while maintaining your company’s core values. Successful expansion involves finding a balance between local practices and preserving what makes your business unique.

Peiyi：Professionals moving from China to SEA will find a lot of their skills and experiences are transferrable, because they will have already learned how to operate in a fast-paced, dynamic and growing economy. SEA also offers a great lifestyle; it’s a vibrant region with so many cultures and travel opportunities to explore. In terms of work/life balance, SEA may well have the edge over China!

Peiyi Han

CY：China is an excellent testing ground for your ability to deal with time-sensitive challenges. High competition, fast technology changes, supply chain disruptions – China puts you to the test. Just when you think you’re comfortable, it throws something new at you. Plus, China gives you a little more scope to explore things your own way, compared to a lot of SEA or Western business cultures. This is useful for discovering what kind of leader and businessperson you really are. 

Kelvin：Singapore is a comfortable place to work, live and play, but it’s a very small nation. When you come from a 700-square-kilometers country of 6 million people, China represents new opportunities on a much larger scale. Its size as well as its speed of growth and innovation is an excellent place for young professionals who are hungry and eager to learn and develop their career. 

James：The experience I’ve gained from working in China is incredible. Where I might have built one or two buildings in England by now, I have built seven or eight in China during the same span of time. Working in China is all about speed; you learn fast, you experience your failures and successes quickly, you see more, and you can apply that to new markets and regions. That’s why I’ve moved over to SEA now, to experience that new wave of economic development, apply the lessons I’ve learned, and take on new ones in an exciting new context.

James Chow Hoon Lew（first from the left）with his Global EMBA classmates

Across all their answers, these GEMBA alums demonstrate that the relationship between China and SEA is nuanced, fluid and full of opportunities for organisations and individuals on both sides.

China, despite its current economic challenges (and partly because of them) is looking towards SEA with increasing interest, hoping to inject its investment, expertise and technological prowess into these dynamic economies, tapping into growing markets and building stronger ties as a result.

For its part, SEA sees China’s development as an economic example to learn from and, ideally, replicate. While its respective nations have their own agendas, strengths, weaknesses and ambitions to manage, they all have plenty to gain from stronger links with China. How they manage this delicate balancing act, benefiting from the relationship while not becoming over reliant, will greatly impact the speed and shape of their future economic development.

For business leaders like our alums, the current atmosphere of deeper China-SEA economic collaboration has created a pull for strong talent in both directions, relative to the individual’s skillset and background. This makes it an exciting time to consider one’s options, and play a small but important part in a new chapter of regional history.

For a deeper exploration of the ever-evolving China-SEA relationship, look out for our post-event analysis articles of the first two events in our new Building Bridges series. This is an ongoing event series that aims to unpack the economic, political, social, and general business relationships between China and its most important allies, trading partners and rivals. The first two editions were hosted in Shenzhen and Singapore.