S'pore firms 'can gain from China reforms'

Workers making soft toys at a factory in Lianyungang, in eastern China's Jiangsu province. SCCCI president Thomas Chua says the challenge for Singapore firms is to devise a business model to match China's changing economic landscape. He also sees opp
Workers making soft toys at a factory in Lianyungang, in eastern China's Jiangsu province. SCCCI president Thomas Chua says the challenge for Singapore firms is to devise a business model to match China's changing economic landscape. He also sees opportunities for Singapore firms and foreign investors to partner with Chinese firms as they expand their reach.PHOTO: AGENCE FRANCE-PRESSE

Economic reform in China is creating a wealth of opportunities for Singapore firms.

And the development of economic corridors, including the "One Belt, One Road" initiative, will boost growth in the world's second-biggest economy, said Singapore Chinese Chamber of Commerce and Industry (SCCCI) president Thomas Chua.

"China is growing at this stage, compared with other advanced countries, and China still has room to grow," he said in an interview with The Straits Times last week.

"What China needs to do is to continue to transform, based on its highly educated manpower, and the talent it has, as well as the good infrastructure in the country."

He added that the challenge for Singapore firms is to devise a business model to match China's changing economic landscape.

"China is in the process of transformation - from a labour-intensive to a capital-intensive market, with an emphasis on innovation. Singapore businesses have the experience to anticipate market trends and find solutions."

Mr Chua is also the chairman and managing director of Teckwah Industrial Group, which is involved in packaging in Jiangsu province and logistics services in Shanghai.

Identifying opportunities to develop a niche product is vital for growth, Mr Chua said. "As long as there is a product, you'll need some sort of packaging. Now, we're talking about environmentally friendly packaging, how to reduce packaging size, and recycle. So, we need to pay attention to trends."

Mr Chua's firm moved into the logistics sector in recent years, with the growth of e-commerce.

China's services industry grew 7.5 per cent year on year in the second quarter, outperforming the 6.3 per cent expansion in manufacturing.

Mr Chua said he also sees opportunities for Singapore firms and foreign investors to partner with Chinese firms as they expand their reach. Chinese firms would be looking to Asean countries that have a more competitive labour market, such as Cambodia, Vietnam, Indonesia and the Philippines, to establish production bases.

German firms are also looking to strengthen their market share in China. Germany Trade and Invest, the government agency tasked with boosting international trade and investment links, was in Shenzhen earlier this month to lure investors to Germany by offering high-tech solutions to Chinese firms that want to enhance product quality.

Germany Trade and Invest chief executive Jurgen Friedrich, who was on a visit to Singapore last week, said: "Many Chinese firms now have to make sure that they have a more sophisticated competitive advantage than just lower costs.

"It's about advanced technology, branding and market access.

German firms are mainly targeting partnerships in China's automotive, chemical and advanced manufacturing sectors.

"China has developed its industrial base to reach a more advanced stage," Dr Friedrich said.

"Suppliers in Germany can play a role in this. Healthcare is a sector where German companies are very active, successfully doing business in China.

"But one of the fastest-growing sectors is food production, especially with consumers paying more attention to the quality of food."

Dr Friedrich said he is bullish about China's medium- to long-term growth potential.

"Even growth at one-digit rates - maybe 5 per cent or 6 per cent - is adding a market each year the size of Norway or Switzerland. And an export economy like Germany appreciates access to a fast-growing market such as China, and more importantly, a market that is going to change," he added.

A version of this article appeared in the print edition of The Straits Times on July 20, 2016, with the headline 'S'pore firms 'can gain from China reforms''. Print Edition | Subscribe