ZHEJIANG - One is a Chinese behemoth, with its regional headquarters in Singapore. The other is a homegrown outfit, which today has a presence in China and across the Asia Pacific.
Instead of competing, the two logistics firms, Forchn Holdings and Singapore firm YCH Group, see complementary strengths in teaming up to expand across South-east Asia. They hope to leverage on China's Belt and Road Initiative to link up Asia with much of the world through massive infrastructure projects.
To underscore the potential benefits, Zhejiang province has named Singapore as one of its first three overseas stations to help its companies expand abroad.
The move, recognising Singapore firms' potential to unlock South-east Asia for Chinese companies looking to go international, was announced on Wednesday (Nov 29) here at the Fourth World Zhejiang Entrepreneurs Convention, a gathering of more than 33,000 Zhejiang business people.
Singapore is the first station for the e-commerce-focused province that major Chinese firms such as Alibaba and Net Ease call home, with the other two stations being in Poland and the Czech Republic.
Mr Zhang Guobiao, who will lead the Singapore station, said the city state provides a face that is "easier for all to accept" for a Chinese firm looking at overseas expansion. Singapore's good global reputation and wide network of relationships also make it an attractive springboard to go international from, he added.
"If I collaborate with an Australian or a Japanese partner, I know it is a two-way partnership, but if I work through Singapore, I know I can grow it into a multi-partner investment should I later want to venture into the Middle East or Africa," he said. "These things make Singapore a good platform for Chinese companies to tap on."
As chairman of Forchn Holdings Group, the Chinese logistics giant, Mr Zhang is putting his money where his mouth is. Forchn Holdings and Singapore firm YCH Group said on Thursday they will join hands in developing South-east Asia's logistics sector.
For starters, they are looking to launch next year a fund of more than S$100 million to acquire and develop warehousing and other logistics assets, starting with markets projected to see an explosion in e-commerce sales such as Indonesia and Thailand.
A study by Google and Temasek Holdings last year predicted that e-commerce in South-east Asia will grow 16-fold in the coming decade, , reaching US$88 billion (S$119.7 billion) in 2025.
Online retail sales are already taking off in places like Thailand, growing more than 100 per cent last year compared to brick-and-mortar sales, which grew 10 per cent.
YCH's executive chairman Robert Yap said the tie-up shows that Singapore can serve as more than just a financing and project-management hub for Chinese companies looking to go international with the momentum of the Belt and Road Initiative, and that local firms can also get a slice of the cake by bringing their expertise to the table.
For instance, Forchn cut its teeth handling China's meteoric consumer e-commerce market and heavy volumes, and is adept at providing multi-channel logistics where it also serves direct retailers and minimarts from the same warehouse. YCH is known as a technologically advanced logistics player, whose space-efficient, automated warehouses make use of radio-frequency identification tags and drones.
A Chinese partner also opens access to the Chinese marketplace and a Chinese customer base, said Dr Yap, who noted that the Belt and Road Initiative has made financial institutes more confident in underwriting large-scale projects in the region even as the Chinese government supports highly its firms venturing abroad.