Challenges faced by Chinese firms and Singapore's unique role

Singapore

IT IS not all hunky dory for Chinese enterprises coming to this region, as they face challenges such as cultural differences and language issues.

The hiring of Chinese workers by Chinese firms can be highly contentious in some countries, due to misperceptions that they are taking over local jobs, according to Tham Siew Yean, visiting senior fellow at ISEAS-Yusof Ishak Research Institute in Singapore.

"Host economies would like to see increasing use of local labour but the speed of replacement with local workers depends on how fast the local workers can acquire the technical skills needed for these jobs," he said.

"That can take some time as Chinese supervisors speak in Mandarin, and manuals are in Mandarin and so local workers have to learn the language to be trained effectively."

In some parts of the region, Chinese investments in the real estate sector have also suffered as mainlanders who bought properties as second homes are now trying to sell them off, since they are unable to access their units due to travel curbs.

"Chinese regulators have also curbed outbound investments in real estate and hotels," added Dr Tham. "Chinese investments in, for example, the automotive sector have also suffered from the negative impact of Covid on auto sales in Asean."

Political upheaval is a risk as well. In February this year, the Myanmar military coup triggered anti-Chinese sentiments, and Chinese-funded companies in Myanmar were targeted.

Late last year, a subsidiary of Chinese mining firm Delong Nickle Industry was hit by violent worker protests, reportedly due to dissatisfaction over compensation and employment terms.

More recently, Indonesian President Joko Widodo launched a campaign to shun foreign goods, directed at the predatory pricing of imported goods sold on e-commerce platforms.

Although he did not name any countries, the local media had suggested that many of the goods in question came from China.

In the case of Singapore, recent investments by Chinese companies have largely come from the technology sector.

Last year, Tencent, Alibaba, ByteDance and iQiyi all announced that they were either expanding or setting up their regional headquarters here.

"These companies have chosen to grow their presence in Singapore in order to leverage our diverse talent and stable operating environment, as they seek to capitalise on the growth of South-east Asia," said Economic Development Board executive vice-president Lim Kok Kiang.

Ice Kredit marketing director Zhou Yang said that Singapore has a stable political environment and financial system, and is also the most developed economy in Asean.

These factors, as well as policy transparency, make it an ideal base for growing the firm's presence in the region.

Singapore's position as a unique blend of East and West, and a nation that is "trusted by both China and the West" is its biggest strength, according to OCBC Bank head of Greater China research Tommy Xie.

A BBC report last year noted that setting up regional offices in Singapore had become strategic for Chinese enterprises amid tensions between the US and China.

The report quoted Nick Redfearn, deputy CEO of UK-based business consultancy Rouse, as saying that regional headquarters of Chinese companies, acting as foreign investors in other countries "can help Chinese companies avoid the appearance of Chinese investment".

To this, S Rajaratnam School of International Studies associate professor Li Mingjiang said there were indeed examples of Chinese companies using Singapore as a springboard to get around the US-China trade war.

"At the same time, (they are) hoping to use their Singapore offices to make investments without having to deal with negative perceptions of Chinese investment in the destination country."

• This article is part of a collaboration on a series of features translated from Lianhe Zaobao. The original story first appeared in Lianhe Zaobao on May 9. The next article on May 24 will take a look at the rising trend of China's technology giants choosing to set up their regional headquarters in Singapore.

READ MORE: South-east Asia: A hotspot for Chinese enterprises in the post-pandemic era?