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China is top choice for Asian enterprises to expand business, report says
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CHINA is the top destination for Asian enterprises to expand their business thanks to its rising middle class, a private report said today.
The United Overseas Bank said in a survey that enterprises in the food and beverage, tourism, leisure and travel services sectors are focusing on capturing the increased spending power of Asia’s middle class.
By 2030, Asia is expected to account for two-thirds of the world’s middle class consumers, or about 3.2 billion people, while a majority of them will live in China, the Singapore-based lender said in the report citing Brookings Institution.
Frederick Chin, head of group wholesale banking at UOB, said that the survey reaffirmed that rising incomes create opportunities for those businesses that can cater to the higher expectations and consumption patterns that come with increased affluence.
“Companies that can create the services and products to meet the rising expectations of Asia’s middle class have a unique opportunity to build sustainable and strong regional businesses. They will be able to tap into a closely-integrated and increasingly interconnected Asia for abundant and sustainable growth opportunities,” Chin said.
Suan Teck Kin, senior economist at UOB said, “Production and labor costs in developed cities in China and Singapore are inching upwards. As a result, Asian enterprises are now exploring lower-cost cities within China or are relocating their labor-intensive operations to less expensive Southeast Asian countries. This allows businesses to trim their costs and remain connected to Asia’s large middle class consumer base.”
According to the report, 40 percent of the Chinese enterprises surveyed said they were considering moving from recent growth hotspots in the Pearl River Delta and the Yangtze River Delta to emerging consumer markets in lower-cost areas in southwestern and central China such as Nanning, Chongqing and Chengdu.
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