Integrity Legal

2nd September 2013

In a recent China Daily news article the impact of growing trade between China and the countries which comprise the Association of Southeast Asian Nations (ASEAN) was discussed. It would appear that trade between China and ASEAN is having significant ramifications for merchants and businesspeople within China. The article points out that a Chinese candy manufacturer moved its operations to Guangxi, once considered something of a backwater, in an effort to better capitalize upon the benefits of ASEAN’s rise economically. In the article Wu Jinpei, the owner of the aforementioned candy manufacturer, points out that gaining access to the ASEAN market is an important issue for his business “We invested in Guangxi because the region is a gateway to the ASEAN, which provides great geographic advantages and potential markets.”

In a previous posting on this blog, it was pointed out that China-ASEAN trade has increased exponentially in the past 10 years. As of 2012, trade between ASEAN and China exceeded $400 billion. This number is roughly five times larger than the same figures in 2003. Clearly ASEAN is proving to not only be a major factor to be taken into consideration by those doing business within Southeast Asia, but also by those trading in Greater Asia as well. The previously cited article went on to point out that as trade has flourished between China and ASEAN the business dynamics within China have transformed as well. “When I first came here [Guangxi] in 1996, there were only a dozen businessmen from Fujian and the market was small,” said Wu. “But now more than 1,000 Fujian merchants have gathered in this tiny city and the number is growing.”

Recent comments from the Thai Prime Minister pointed out that high speed rail systems linking Thailand to China via Laos is a priority in the long term and many other ASEAN jurisdictions have been moving towards developing similar projects. These remarks, coupled with the information cited in the above article are reminiscent of the period in the United States when so-called “rail heads” created boom-towns across the American frontier. As the railroads continued their drive westward and as new territories became more integrated into the overall economy trade flourished and prosperity increased.

Could the growth of ASEAN-China trade and once small Chinese business communities becoming significant trade centers catering to ASEAN demand combined with the prospect of further economic integration through connection of ASEAN countries with China herald a new boom-town era for East and Southeast Asia? It seems quite likely that as China’s economy continues to become more sophisticated and as ASEAN moves toward economic integration, in the form of the ASEAN Economic Community (AEC), the world could see staggering economic growth in once obscure geographic areas in Asia.


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