America rolled out its welcome mat this week for the 10 Asean leaders at a first-ever such summit hosted by US President Barack Obama at the historic Sunnylands estate in Rancho Mirage, California.
US attention is rightly turning to what remains one of the most dynamic regions in the world. As economic growth in and consumer demand from Asia's traditional powerhouses of China and Japan continue to slow, and the promise of India is still yet to be realised, a deeper partnership between the United States and Asean will benefit entrepreneurs, businesses and consumers on both sides of the Pacific.
This relative rise in Asean's attractiveness for foreign firms comes as China's falls. Inconsistent regulations, murky laws and perceived growing anti-foreign sentiment in China in particular have led businesses to look beyond the Middle Kingdom for growth prospects.
A recently released annual survey of members of the American Chamber of Commerce in China makes this all too clear.
According to the Wall Street Journal, of the nearly 500 companies that responded to the survey about China's business environment, some 77 per cent felt less welcome than they did a year ago. This compares with 47 per cent last year, and 44 per cent the year before that. One in 10 had already moved or planned to move a portion of their business outside of China due to regulatory obstacles.
And while 68 per cent of the companies responding to the survey said they will still increase investment in China, 32 per cent say they have no plans to do so - the highest level expressing such a sentiment since the global financial crisis.
Foreign businesses ranging from Apple to Qualcomm have been the targets of state-run Chinese media reports and government investigators. And foreign car and auto parts makers, tech companies and infant milk powder businesses have all incurred fines under China's anti-monopoly law.
It is no wonder that there is already more US investment in South-east Asia than there is US investment in the so-called Bric nations - Brazil, Russia, India and China - combined.
What a welcome contrast Asean offers. With the launch of the Asean Economic Community (AEC), the hard work of leveraging what promises to be a world-leading single market formally begins and US business can be very much part of that. The opportunity, stemming from freer if not yet fully free trade of goods, services and skilled labour, provides a wealth of potential new business for South-east Asian entrepreneurs and start-ups willing to take advantage of them, including American companies and individuals already established in the region.
Indeed, as a driver of economic growth, the AEC's growing business benefits need not go simply to the region's largest and oldest companies. Much as the United States has benefited from the power of innovative start-ups - some headquartered not so far from the site of the Sunnylands summit - so too can the Asean nations transform and grow as trends are identified and new businesses emerge in areas from information technology to consumer goods.
Mr Ernie Bower, chair for South-east Asian studies at the Centre for Strategic and International Studies in Washington, D.C., and chief executive of BowersGroupAsia underscores the opportunity.
"The AEC opens doors for entrepreneurial small and medium-sized companies within South-east Asia to access nearby markets that are in some cases more dynamic than their own and offer up a larger market segment for their goods or services than ever before," he says.
One clear benefit of the AEC is a market that goes well beyond one's own borders. With more than 620 million people, Asean's population now exceeds that of either the European Union or North America. There is ample scale for significant growth even if one is based in Brunei or Singapore instead of the region's most populous nations of Indonesia and the Philippines.
That is an experience and an opportunity we are already seeing in our own work with Equator Pure Nature, a Thailand-based manufacturer of natural household cleaning products sold under the Pipper Standard brand. It is also a case study for others looking to the path to AEC success.
So, what lessons do our experiences offer others eager to expand in the AEC based on the rhetoric and reality that were highlighted at the US-Asean Summit?
First, recognising that production inputs are only half of the equation for success. The other is identifying a specific opportunity based on Asean data and trends. Rapid urbanisation and economic growth across the region has produced a host of needs that can be identified through an entrepreneur's eyes. Asean's environmental challenges, burgeoning allergy and asthma rates and persistent food security and nutrition needs are just some examples.
Second, understanding that success in Asean and now the AEC is not instantaneous. Research and development over several years is critical to developing an appropriate solution to an identified need.
Identifying and investing in local human capital is also essential to steady growth.
And third, establishing a firm foundation in a single Asean market - in our case Thailand - allows for better understanding of the regional market and can serve as a hub for expansion. Multinational firms big and small would be wise to plant operations in one of the 10 Asean countries to have better access to new markets and to establish rapport with regional consumers.
Symbolically, the site of this first landmark US-Asean summit in California is the same venue where President Obama met his Chinese counterpart Xi Jinping some 21/2 years ago. Perhaps at last, the US-Asean and US-China relationship will now be viewed in Washington at the same level of importance.
The South-east Asian welcome mat has long been out for American businesses and entrepreneurs. With the window to the AEC now open, significant investment by the region's largest firms is set to follow. But, the size of a firm need not dictate the size of the opportunity.
For businesses, big and small, a healthy business in one South-east Asian market can now lead to more opportunity and strengthened growth across all 10 Asean markets - and from there, opportunity across Asia and the Pacific.
Curtis S. Chin, a former U.S. ambassador to the Asian Development Bank, is a member of the advisory board of Equator Pure Nature and Asia Fellow of the Milken Institute. Peter N. Wainman is CEO and chairman of Equator Pure Nature.
A version of this article appeared in the print edition of The Straits Times on February 18, 2016, with the headline 'US looks to Asean for growth as China's star dims'. Print Edition | Subscribe
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