Enterprises’ International Expansion in China—ASEAN Free Trade Areas

Abstract. In 2010， China-ASEAN free trade was established. Our zone should grasp the opportunities， give full play to our region geographical advantages， and strengthen the China-ASEAN comprehensive opening-up and cooperation. This will accelerate the development of the North Gulf and the marine economy. Besides， the development of the cultural industry of our regions and the FTA promotes the economic growth.

Key words： China-ASEAN， Free trade areas， expansion

1 Introduction

China and all members of the ASEAN come to an agreement on the all-round economic cooperation in November 2002.This agreement has accelerated the process of building the free trade zone between China and the ASEAN. Since then， they have made many terms and made great progress. For example， they came to trade agreement on goods in November 2004， service in January and investment agreement in August 2009.

The cooperation between China and the ASEAN faces the new situation. In the world-side environment， the economy is recovering from the depression. At the same time， the phenomenon of trade protectionism is increasing. Besides， the regional economic cooperation in Asia is making progress. Many countries join the Free Trade Area to improve their economy .The ASEAN is developing steadily and China will change the mode of economic growth. Both of them are going to do comprehensive cooperation in the future.

2 Achievements has got in the past

2.1 The tariff level declines continually and the trade in goods develops rapidly

Since they came to an agreement on the all-round economic cooperation in 2002， the trade value has increased by 20% for six years continually between China and the ASEAN. Bilateral trade volume exceeded $200 billion in 2007.This is three years ahead of the planned target. The bilateral trade growth slowed down in 2008 due to the world financial crisis. Meanwhile， the bilateral trade value reached $2311.2 billion which is 13.9% increase. The export value of China is $1141.4 billion and the import value is $1169.7 billion. Though the bilateral trade growth slowed down in 2009， the value reached $2130.1 billion with 7.9% declined. China exported $106.3billion to the ASEAN with a decrease of 7%.China imported $106.71 billion from the ASEAN with a decrease of 8.8%.Now the ASEAN has become the fourth largest trading partner of China， the fourth largest export market and the third largest source of importing. The ASEAN has also become the third largest trading partner of China. In the past ten years， bilateral trade and investment has a great development.（See Fig 1）

Figure1 Development of trade between China and ASEAN

2.2 The trade in services is opening up steadily

China and the ASEAN came to trade agreement on services in January 2007 and announced to pen their services markets to Each other. This agreement effected on July 1st 2007.Based on the commitments to the World Trade Organization， China made the commitments to open market to the ASEAN. The countries from the ASEAN have also made commitments to open their markets. In recent years， the trade in services of China and the ASEAN has developed rapidly and the trade volume is rising. According to the statistics of the Ministry of Commerce of China， The total imports and exports volume of the trade in services between China and the ASEAN is $233.6 billion with a increase by 30.4% to last year， which is 7.7% of the trade volume in services. The services trade volume of China’ exporting to the ASEAN is $10.4 billion with a increase of 31.5%， which is 7.1% of the export trade volume in services. The services trade volume of China’ importing from the ASEAN is $129.6 billion with a increase of 29.6%， which is 8.2% of the import trade volume in services. China has a trade deficit of $2.56 billion to the ASEAN. At present， ASEAN is China's largest trading partners of trade in services and China's fifth largest export market and source of imports trade in services. It just follows Hong Kong， the US， EU and Japan. The ASEAN has cooperated with China in the maritime， shipping， financial services， construction services， computer and information services， etc. which becomes one of the most important parts of the export trade in services. Besides， the cooperation in the service sector investment， project contracting and labor becomes one of the most important parts of the import trade in services.

2.3 Constantly expanding of mutual investment

As China and the ASEAN accelerated the pace of FTA building， the mutual investment is expanding recent years. The ASEAN has investment in China about 3.2286 million projects. This made the foreign contract amount of $111.9 billion and the actual investment of $52.01 billion， which is 6.08% of the foreign investment. The actual investment the ASEAN has done to China increased from $29.3 billion to $56.4 billion between 2003 and 2008.The average growth rate reached 31.1%.Even in 2008， the investment growth still reached 24.4% in the financial crisis environment.

2.4 The co operations on economic and technology are going on smoothly

By now， the ASEAN has become an important overseas project contracting market and labor market for China. The Chinese enterprises signed the labor service contracts totally reaching $69.23 billion and the turnover was $42.93 billion up to the end of 2008. Singapore， Indonesia， Vietnam， Malaysia， Myanmar and Thailand are the main market where China cooperates with the ASEAN in labor services.

2.5 Sub-regional economic cooperation vigorous development

Since the FTA of China-ASEAN officially opened， China has also cooperated with the GMS and the Pan-Beibu Gulf sub-regions on economic. These co operations will improve the infrastructures of the sub-regions and facilitate the trade investment. China and the developing ASEAN will cooperate well and make common development. In March 2008， China and Vietnam， Laos， Cambodia， Myanmar， Thailand came to agreement on the Plan for GMS Development Vientiane from 2008 to 2012.The six countries will cooperate with each other deeply and accelerate the integration. They will make progress at transportation， energy， telecommunications， agriculture， environment， tourism， human resource development， trade facilitation and investment.

At the eleventh meeting of China-ASEAN in November 2007， Premier Wen Jiabao proposed to establish an expert group who will do research on the economic cooperation in the Pan-Beibu Gulf. The ASEAN supports this proposal. China and the ASEAN have establish the group and made plans. What’s more， the report about the feasibility research on economic cooperation in the Pan-Beibu Gulf is being made.

2.6 As China trades with the ASEAN more frequently， the domestic provinces seize this opportunities to develop

They cooperate with the countries actively. In early 2008， Chongqing， Sichuan， Yunnan， Guangxi， Shandong， Hainan， Guangdong and other provinces referred to do economic cooperation with the ASEAN. And this decision has become their target in the five years. In the same year， Hubei， Guangdong and Shanxi came to an agreement on the memorandum of cooperation with the ASEAN. The domestic provinces give a great regard on the cooperation with the ASEAN. In the period of the international financial crisis， the traditional export markets of Europe and America were attacked. The FTA of China-ASEAN made a positive contribution to the export steadily. For the first ten months of 2009， the trade volume between Yunnan and ASEAN has achieved $ 2.43 billion with an increase of 5.3%， which is accounting for 41% of the total trade in Yunnan. The trade volume between Guangxi and ASEAN has achieved $3.58 billion with an increase of 4.8%， which is accounting for 34.3% of the total trade of Guangxi. Then export reached 2.53 billion with an increase of 10%.The trade volume which Guangdong trading with the ASEAN reached $49.44 billion， of which the value of export is $20.99 billion with an increase of 4.4%.

3 Benefits for China

The Free Trade Area of China and the ASEAN began to operate on January the 1st 2010.This area consists of China and ten countries from the ASEAN. It is involved with nineteen billion people， nearly $60000 billion of GNP and $45000 billion of trade. This brings in the times of zero tariff which influences the Asia and the world organizations deeply. Companies should take advantage of this situation and cooperate with the ASEAN. All these can make benefits for the development of companies.

3.1 The position advantages are as follows

Cuiping is the central area of Yibin City. It locates at the south of the Sichuan Basin， where the Jinsha River， the Min River and the Yangtse meet. The Cuiping area is also the traffic sign and business center of the combination of Sichuan province， Yunnan province and Guizhou province. Its frustration is perfect and the traffic is convenient. People can reach Beihai of Guangxi province and the border of Yunnan province by Chuanyun Road and Neikun railway.

3.2 By now many companies have done business with the ASEAN

For example， the Huimei thread Ltd， the Sifang nail factory， Hengkang industry and Yibin paper making machine shop and so on. According to this， many kinds of goods are exported to countries of the ASEAN as Vietnam， Philippines and Singapore. The gross export value reached 1130000 dollars from January to September this year. This is only 2.05% of all the export value. The market potential of ASEAN is great. For example， according to Chinese customs statistics， the import and export value of textile and costume has a great increasing.（see table 1）

Table1 China's textile and apparel exports to major markets in the first half of 2011 （unit： billion $）

Nation Total amount yeartoyear Textile Costume

EU 24.28 28.9% 5.91 18.37

America 16.19 14.2% 4.43 11.76

Japan 11.85 23.2% 3.55 8.3

ASEAN 9.3 41.4% 7.11 2.19

4 International expansions of enterprises in Free trade areas

4.1 Enlarge export of our zone to ASEAN

We should organize enterprise to participate in “The ASEAN-China Exposition”， “Kunming Trade Fair” every year. Based on terrace of the trade show，the enterprises can search customers and it can help them obtain order for goods in turn. Developing the capacity about export to ASEAN sufficiently， for example， we can develop the capacity of export to ASEAN of MJ Group，SiChuan YiBin LiYuan Electric Motor Co.，Ltd. and so on. Because those enterprises have its advantages of their own， it is well known.

4.2 Increasing the attract investment to ASEAN

Although the members of ASEAN invest in China has a great increasing （See table 2）， We should do efforts to make them invest in China more and more. Singapore and Malaysia have advantages in financial and trade， their economy is relatively developed， we can do efforts to attract their investment in our zone. The first is to continue to hold the policy "go global" with "bring in" combination， and innovation the manners of capital attraction， in many ways and various forms to carry out investment. Second is to improve the work mechanism of the investment promotion. Efforts to the aspect that enhance the attractive of the investment environment and upgrade service level， transformation of government functions， create a "pro-business， security business， wealthy business" government investment environment.

Table2 The countries in ASEAN invest in China （Unit：Billion $）

2004 2005 2005 2007 2008 2009 2010（1-9Month）

Indonesia 0.1 0.0.9 0.11 0.13 0.17 0.11 0.07

Malaysia 0.39 0.36 0.45 0.4 0.2.5 0.43 0.23

Singapore 2.01 2.2 2.46 3.18 4.44 3.6 3.75

Philippines 0.23 0.19 0.14 0.1.9 0.13 0.11 0.08

Thailand 0.18 0.09 0.15 0.09 0.13 0.05 0.04

4.3 Implementing the "go global” strategy positively

（1） Encouraging our strength enterprises to invest in ASEAN countries to creative factories. The government should guide and promote our strength enterprises to catch the opportunities which bring about by “China-ASEAN Free Trade”， so that they can join the ranks that invest in ASEAN. The four new members of ASEAN， Vietnam， Laos， Myanmar， Cambodia， which economic development is lagging behind， but with resource-rich ， low level of industrialization and resource utilization. Meanwhile， the member countries of ASEAN have abundant labor resource， so they are suitable for investing labor-intensive industries. After the “China-ASEAN Free Trade Area” was constructed， it can eliminate investment barriers and create a good condition for our enterprises to go to Southeast Asia. If our enterprises set up a factory in one country， they can sell their products to other ten countries with “zero tariff”. It brings about opportunities for our enterprise to export products to ASEAN countries.

（2） To achieve new breakthroughs on contracted projects in overseas. The construction enterprises with a qualified construction should catch the opportunities to apply foreign project contracting qualification actively， obtain the right of foreign contracted projects. We go to ASEAN countries to contract work with promoting labor export. Achieving foreign economic cooperation and strive to achieve new breakthroughs in our region， to promote open type level of economic development.

（3） Government support and service enterprises "going global" actively. The government should change work styles advanced to improve business administrative efficiency， so than it can support enterprises to "go global" to be better， which can promote the healthy development of cooperation between our enterprises and ASEAN’s. Firstly， the government should improve the coordination mechanisms of each department. Strengthen communication with customs， inspection and quarantine， the outer tube， tax， business， foreign affairs， finance and other departments， so we can construct an effective support and service system of “go global” strategy to help enterprises solve difficulties and problems. Secondly， the government must maximum the effects of policy. We should Issued support policy to enlarge the support to enterprises so that it can create a financing platform for enterprises. Thirdly， the government should create a training system to support the training of person with ability. It can meet the need of human resources of enterprises "going global" strategy， develop enterprise management talents with multi-channel， sub-level， large-scale， and build an international experience and innovation with international talents.

5. Summary

In this paper we simulated the effects of the China-ASEAN free trade area with a recently developed global trade， and we discussed the achievements of China-ASEAN and its important meaning to China. On this basis， we also discussed how to expand the trade development， our guidelines for development of trade has certain directive significance.

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