Xu Ningning:Business with ASEAN Easy to Learn

ASEAN countries, including Brunei,Cambodia, Indonesia, Laos, Malaysia,Burma, Philippine, Singapore, Thailandand Vietnam, are friendship countrieswith China. Not only the land isconnected, but also the cultures and thecustoms are quite similar. In July, China-ASEAN Free Trade Zone was sponsored.In October, the second China-ASEANExpo was held in Nanning city, GuangxiZhuang Autonomous Region, with atrade volume of USS 1.15 billion reached.

It is reasonable to believe that withthree major advantageous elements in-cluding God's Will, Favorable Geo-graphical Position and Support of Peopleefficiently utilized, the economic andtrade relations between the two sides willbe developed greatly.省略 jointlyinvited Prof. Xu Ningning, CiybcukMember, Vice-General Secretary, Direc-tor of Secretariat of China-ASEAN Busi-ness Council to answer quiestions ofwebtizens on how to do business inASEAN countries.

Q: Would you introduce what arethe main Chinese goods exportedto ASEAN countries?

Xu: Two major categories areincluded, one is the industrial products,60% of which are machinery products,the other is the primary products.

Q: Which industry is easy to de-velop in ASEAN markets?

Xu:The 10 ASEAN countries arequite different respectively in industrystructure, economic development level,quantity of resources. China's goods,such as agriculture machinaries, light in-dustry machineries, etc.are on sales inthree countries which are land-con-nected with China, includingVietnam, Laos and Burma, becausethese countries are all agriculturecountries.

The daily commodities, agricul-ture production materials such aschemical fertilizer and insecticideare on good sales as well.

Most of the ASEAN countries,except Singapore and Brunei, arevery developed in agriculture,hence, Chinese machinery productsespecially chemical industry ma-chineries have advantages in qual-ity and price. For more, China'splastic products, electrical products andhardware products are thirstly demandedin these countries.

South-Eastern countries are the larg-est market of China's heavy machineries,it has a very rapid increase rate of 30%.

Q:Is if possble fo divide fhe ASEANmarket into several layers? Howabout the commercial opportunityin each layer?

Xu:It is possible. If we divide themarket according to the level of eco-nomic development,on the first layer areSingapore and Brunei; on the secondlayer are Malaysia, Thailand, Indonesia,Philippines; on the third layer areVietnam, Burma, Cambodia and Laos. Asfor the commercial opportunities,Singapore is the largest trade partner of China in ASEAN countries, thoughSingapore is a small and very limitedmarket in fact with only 1 millionpopulation, the trade volume has sur-passed US$30 billion in this year.However, 60% or more of the US$30 bil-

lion trade are of transferred trade, mean-ing that the trade with other internationalmarkets including European and Ameri-can markets but has to take the road ofSingapore, because Singapore has verydeveloped commercial channels and per-forms a very key role in communication bridge and international net.

Brunei is an Islamic country, it hasvery small population for only 300thousand, but the GDP per capita is veryhigh for USS10 thousand. At present,China's export to Brunei are mainly gar-ments and Islamic goods. On the otherhand, China mainly imports petroleumfrom Brunei.

On the next layer are Malaysia,Thailand, Indonesia and Philippeans,which are the second, the third, the fouthand the fifth trade partner of China.

China has big trade deficit withMalaysia, especially in electronicsproducts, because many famous Japanesebrand electronics products Chinesepeople consumed around two decadesbefore such as Panasonic and Sony weremainly processed in Malaysia, but nowthe process has been moved to China. Asfor the commercial opportunities inMalaysia, the first is the high GDP percapita, it is of around US$4000, in themeantime, with full industry categoriesand abundant production, China's prod-ucts can cater to the demand in differentlevels in Malaysia.

As an Islamic country, Malaysia hasvery extensive relations with other Is-lamic countries in the world, includingcommercial cooperations. Malaysia hasbecome a hinge for Chinese products toenter Islamic markets.

Malaysia has two advantages, one isits business channel, ther other is itsqualifications of attestation because Ma-laysia is the Chair country of Islamiccountries, only with the attestationsgranted by the Chair country can thegoods, such as beef and morton be soldin Islamic countries.

Malaysia also provides guides infood proess. Another advantage is thegarment and garnishes, the process canbe done in China.The cooperation withMalaysia in hightechs enjoys a lot ofadvantages, e.x., in Malaysia, a multi-media corridor is being constructed atpresent. Premier Mahathir has put for-ward a favorable policy to sup-port the high technology and hehopes more cooperation withChina in electronics industry.

The cooperation in palm oilprocess is another highlight. Ma-laysia is a famous palm oil ex-porter in the world.

Thailand is a friendly coun-try with China. It is the earliestin opening market and in ex-empting tariffs in the ASEANcountries. In October 1, 2003,Thailand launched an item calledForepart Harvest Plan.

Q: Will Chinese goods encounterany protectionism or limitationregulations in ASEAN countries?

Xu: No protectionism nor limitationcan be seen in Singapore, but in otherASEAN countries, there are. Forinstance, some ASEAN countries setlimitation on the industries and the pro-portion of the shares, regulating thatsome proportion of the shares must be

held by the domestic firms. But gener-ally saying, the restrictions and the bar-riers in investment are decreasing.

ASEAN countries have never set anybarriers on the import of Chineseproducts. Some tariffs are a little bit high,for instance, in Thailand, the tariffs of automobile components are high becauseit is a main industry in the country.

According to the situation of the tradedevelopment, the China-ASEAN FreeTrade Zone has began to reduce the tar-iffs of 3400 commodities since July 20.Those products which will affect thecountry's economy and the people's lifewill be listed into the high sensitivecategory.

Q: The goods demanded byASEAN countries are in which class?

Xu: As for the neighbor countriessuch as Vietnam, Laos, Burma which areland-connected with China, the middleand law class of goods are OK; the goodsto Singapore and Malaysia should be ofhigher class.

Q: Would you put forward any sug-gestions to domestic SMEs in busi-ness cooperation with ASEANcountries?

Xu:Comparing with largefirms, SMEs naturally has some dis-advantages especially in businesschannels, products and talents.However, the China-ASEAN FreeTrade Zone is an area quite good forthe development of Chinese SMEsbecause of the law expenses due tothe close geographic locations, e.x.,the double way flight from Beijingto Singapore is only 3000 yuan; an-other reason is that the South-EastAsian countries are an area wherethe overseas Chinese merchants arevery concentrated, they are an importanteconomic pillar of that area.

Many ASEAN countries has the samelaguage and the similar cultures withChina. The ASEAN countries are goodmarkets for Chinese goods. The South-East Asian countries in fact are in the low-est in costs and in travelling expenses.China-ASEAN Free Trade Zone will pro-vide huge commercial opportunities toChina's SMEs.

Q: Is it a quickway for Chinesegoods to enter malaysia market bytag?

Xu: Not very sure. Made In China isa very bright brand in ASEAN countries.

Q: How about the market of com-puter displayer?

Xu: In the South-Easter countrie:such as Singapore, Malaysia, Thailamand Philippeans, the electronics industr,is very developed, the export of electronics products are 40% or more.

Q: What is the position of China irthe Free Trade Zone? What kind ofrole will China perform in the zone

Xu: The construction of China ASEAN Free Trade Zone is the greatestmeasure after China's Accession to WTO.China will perform a very vital role inthe zone. On October 29,2004, China andASEAN reached a free trade agreementon goods trade. This is an important mea-sure of China to promote the economicintegration in the area.

China and the ASEAN countries con-struct the Free Trade Zone basing on theguiding concept of Equal and MutualTrust, Cooperation and Mutual Benefit. Iam sure that the construction willsucceed.

Q: Will the next China-ASEAN Expobe more open and break the geo-graphic limitation and attract morebusinesspeople?

Xu: The China-ASEAN Free TradeZone has never been closed, it is opened.The Free Trade Zone is helpful for thegovernments to attract developed coun-tries to invest in this area.

The developed country has strength-ened the investment in China, and evenhas moved the headquaters and the pro-duction bases from South-East Asia toChina. Hence, we think that there is nolimit between China and the ASEANcountries, the trade threshold is law in thezone, without any tariffs, it is easy to at-tract foreign investment. China-ASEAN Expo is an important platform forcooperation.

We welcome either the developedcountries such as America and Japan orother developing countries to participatein the construction of the free trade zoneand share the fruit of economic opening.

Q: In the second China-ASEANExpo, what gives you the deepestimpression? Would you introduceany commercial opportunities youhave found in the expo to the Chi-nese enterprises?

Xu: I think the Chinese governmentand ASEAN countries have attached greatimportance to the expo. The expowill perform a key role in enhanc-ing the trade relation betweenChina and ASEAN countries andthe cooperation between theenterprises.

The South-East Asian coun-tries are different in the level ofeconomic development. InSingapore, the GDP per capita isUS$20000, China's high-techproducts will be very advantageousin Singapore, in Malaysia, there isa multi-media corridor where thehigh-tech brand products have avery good market. China Ministry of Science and Technology has made anexhibition area in the expo, which wasthe first of this kind in the expo.

Q: What is the key should we payattention to when we do businesswith Singapore people?

Xu: When I was a visiting scholar toSingapore in 1992, I contacted the localpeople from the Minister of Commerceto the enterprises' leaders, hence, I havegot some knowledge in how to deal withthe Singapore people. There is a slang inSingapore "be scared of loss", meaningthat Singapore people are very afraid offailure, they have a desire of decent face,this is the feature of their culture. If yougive them enough appreciation, you willmeet green lights and get everythingsmoothly in Singapore. Singapore is No.8 investor in China and the largest inves-tor of the ASEAN countries in China.

Q: How about the market prospectof biotic pesticide in the ASEAN countries?

Xu:South-East Asia is an area withagriculture mainly developed. China'spesticide has very good market in thatarea. In order to find an ideal export channel, you should contact local com-mercial chambers or Chinese Embassiesand let them introduce reliable coopera-tive partners.

Q: Are there any credibility crisisfor doing business in South-EastAsian countries? Which country is

the most reliable in creditability?

Xu: Singapore is the most ideal onefor doing business because of her bestcredibility in South-East Asia. But insome other countries, the condition isdifferent, for instance, in Burma, overseascompanies, including Chinese enterprisesdo not enjoy civil treatment, hence, the expenses and taxes including registrationand investment are very high. So, somelocal businessmen put forward sugges-tions to Chinese firms to register withtheir names so as to lower the costs.However, when you face disputes withthem, it is hard to win the lawsuit.

Q: What issues must be paid at-tention to when do settlement withthe ASEAN countries?

Xu: The letter of credit are alwaysavailed in trade settlement with theASEAN countries, but in the frontier tradesettlement cash are always used. In fact,in the trade with Vietnam, Laos, Burma,the banks have communiqué ofcooperation, hence, the bank settlementshould be available when the transactionis big.

Q: In what way can textile prod-ucts enter the ASEAN marketssmoothly?

Xu:In some ASEAN countries, suchas Vietnam, Cambodia, Thailand, Laos,etc., textile products are main productsfor export. However, most ASEAN coun-tries do not produce cotton, the textile ma-terials mainly rely on import from China.

China's garment enterprises shouldcooperate with Laos' garment enterprises.We transport materials to Laos and doprocessing in Laos to make the products'value added, and then, through Laos, theproducts can be exported to Europe andAmerica.

Q: China's autos will face up witha great deal of problems such ashigh tariffs, how long can theseproblems be resolved?

Xu: Auto is a sensitive product, it willface up with a lot of barriers. For instance,in Malaysia, after a decade can it be ex-pected to reduce the trade tariffs to zero.

Q: China-ASEAN Free Trade Zonehas been launched for four months,would you give your points of viewon the current situation of the zone?

Xu: The government's promotion ispowerful, the construction of the zone isquick. This is the third economic entityin the world in which there are 1.8 bil-lion population and the largest free tradezone in the world.

However, a lot of Chinese enterprisesin the zone do not understand the relevantregulations of the zone, as well as the timetable of mutual market open, they havemissed a lot of business opportunities. FromApril 1,2004 when the Early Harvest Planbegan to be implemented, only 17% ofChinese products under the category of theplan had been exported to ASEAN.

A very key element always neglectedis 80% of Chinese businessmen alwaysforget to fill in the certificate of originalproduction place and do not enjoy thebenefits of mutual market opening be-cause their products are not recognizedas Made in China. However, 60% of theASEAN products have been filled in thecertificates of original production place,

meaning that their sense of free trade zoneare stronger than us.

From July 20, it is very rare to find Chinese products to be signed in the cer-tificate of original production place andto enjoy the reduced tariffs. Despite thelowered tariff, they add tariffs to the busi-ness costs when negotiate with theASEAN businessmen, no doubt, it willreduce the competitiveness of Chinese products in South-East countries.

Q: China's agricultural productsare very famous in the world, canthese products be exported toASEAN countries?

Xu: Thailand is very famous of riceexport, the next is Vietnam. But someother agricultural products such as corn,apple, pear, Chinese date, apricot can notbe grown in South-East Asia because theclimate doesn't adapt to these products.

Q: Which language is the official language in ASEAN countries?

Xu: There are three major official languages in Singapore, English, Chineseand Tamil

Q: How to find agent in ASEANcountries?

Xu: The best way is by means ofEmbassies, commercial officies.

Q: How about the market pros-pects for the construction materi-als in ASEAN countries?

Xu: The china made in Canton prov-ince is very welcomed in three neighborcountries such as Vietnam. China has seta cement plant in Laos.

Q: Is the tariffs reduction in theFree Trade Zone conducted in mu-tual ways, is it for all of the products?

Xu:It is for most of the products butnot for all, you can find the timetable oftariff reduction in the website of the FreeTrade Zone.

Q: Are there any special regula-tions in ASEAN countries on the im-port and export of products?

Xu:It is different in differentcountries, for instance, in Singapore, theregulations on medicines are very strict,Vietnam has limits on the import ofmotorcycles. You can get the informationof supply and demand from the ChineseEmbassies in the local countries.