The China Connection: Trade and Business ties with Thailand, Malaysia and Singapore

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This week a take a concise look at some of China’s southern neighbours, all of which have significant ethnic Chinese populations, which helps to account for their strong trade and political connections with the PRC.

Thailand

China has made significant inroads into Thailand, primarily investing in the light manufacturing sector, but also real estate, agribusiness and transportation. China is now the country’s second biggest trade partner with $73 billion in bilateral trade recorded in 2012. However, Thailand has seen its domestic manufacturing base suffer in the face of cheap imports from China, particularly sectors such as machinery, computers and other electronics. Thailand in comparison has exported largely unprocessed commodities such as rice, rubber and oil to China.

China is planning on working with its southern neighbour on projects such as a high speed rail link between the two countries, connecting China’s fast growing high speed network with Chang Mai in the north of Thailand and eventually to the rest of the country. This is all part of an effort to develop an economic corridor between southern China and ASEAN nations.

Malaysia

Malaysia’s economic miracle has stalled in recent years, but it is still a significant exporter of electronic goods and well as natural resources such as rubber. Trade with China is the strongest of all the ASEAN nations and the country’s companies have found it easy to penetrate the Chinese market, thanks to the large numbers of ethnic Chinese Malaysians, who play a disproportionality powerful role in the country’s economy.

Malaysia is also a major investor in Africa, led by firms such as Petronas and Sime Darby, their contribution to African investment has flown under the radar of many observers, but has led to many significant investments. Malaysian companies have been particularly active in South Africa, Mauritius, Kenya, Nigeria and Egypt have been involved in a wide range of industries, but particularly shipping, hotels & leisure, financial services and petroleum. Again thanks to the presence of ethnic Chinese businessmen, Malaysian firms are sometimes confused with those from the PRC.

This trend looks set to continue since South African President Zuma views Kuala Lumpur as an ideal trade and investment partner and plans to step up cooperation between the two nations. Trade between the two countries topped 19 billion rand in 2012 and Malaysian oil giant Petronas recently purchased 80% of Cape Town based Engen Energy.

Singapore

The city state has a majority Chinese population, which along with being one of the world’s key trade hubs has made it easy to develop strong relations with Beijing.

Singapore has not been shy about extending its own commercial interests abroad, often investing via its sovereign wealth fund (SWF) Temasek into projects overseas for both commercial and strategic needs, naturally China is an important part of their portfolio.

Chinese investors have been particularly active in the city’s real estate sector, viewed like London as a safe haven to squirrel away funds. In addition the stability of the city as well as excellent transport links, widely spoken Mandarin and a good education system are seen as major benefits for rich Chinese citizens looking for a better quality of life.



Categories: China Goes Global, Kula Ring Trade Blog

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