Hong Kong’s super-connector role is extending across the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and many businesses seeking to connect and expand are targeting Southeast Asia.
About 85% of GBA businesses plan to maintain or grow sales to the ASEAN bloc in the next three years, according to a research report released by UOB and the Hong Kong Trade Development Council (HKTDC).
The report – Navigating Connectivity: Exploring ASEAN Opportunities for the Greater Bay Area – also indicated that Malaysia, Singapore, Thailand and Vietnam were the top sales markets for GBA businesses, while Vietnam remained the top choice for procurement and production outsourcing.
55.9% of respondents found ASEAN appealing because of its sheer market scale, while 49.6% named government incentives and investment policies and 32.8% cited enhanced e-commerce access.
The survey found more than 70% of respondents planned to expand to ASEAN in the next three years, compared with 60% in a similar survey in 2021, while 96% of those already established in ASEAN planned to maintain or expand operations in the next three years.
GBA companies across the four surveyed sectors – consumer goods; business, professional and financial services; real estate, hospitality and construction; and technology, media and telecommunications – all saw Malaysia, Singapore and Thailand as having the greatest potential to thrive in. In terms of industrial goods, GBA businesses considered Malaysia, Singapore and Vietnam their priority markets.
GBA businesses regarded navigating local government policies and regulations (48.6%) as the key challenge to expanding ASEAN market share, followed by cultural or language barriers (38.7%) and difficulties in obtaining talent (26.4%).
The 2021 survey identified infrastructure, finding the right local partners and increasing costs as the top three challenges.
In another key finding, most GBA businesses had a particularly high regard for Hong Kong’s strong connectivity with both the GBA and ASEAN bloc. More than 70% accorded the city a score of seven or more out of 10. Hong Kong’s expertise in service provision was seen as essential for sustained success in the ASEAN market. Hong Kong scored highly for its expertise in legal compliance, cross-border infrastructure finance and logistics.
Commenting on the findings, Louis Chan, Deputy Director of HKTDC Research, said: “This survey confirms both the bold and outward-looking nature of the GBA’s overall development strategy, while highlighting the essential role Hong Kong can play in ensuring this initiative reaches its full potential. It shows beyond doubt that synergy between the GBA members assures them of a better future than they could have achieved alone.”
Mrs Christine Ip, Greater China CEO of UOB, added: “In tandem with the promotion of free trade agreements, technology empowerment and higher business plans, the findings show we stand at the crossroads of burgeoning investment opportunities between Greater China and ASEAN. Hong Kong has a unique position as a super connector and value-adder.”
Overall, 53.7% of GBA companies noted that geographic economic integration initiatives, particularly the Regional Comprehensive Economic Partnership (RCEP), were likely to boost their chances of success within ASEAN, followed by digitalisation (51.9%) and cost management, including moving production to lower-cost locations (40.8%).
The HKTDC-UOB survey conducted in the third quarter of last year questioned some 670 GBA enterprises, supplemented by in-depth interviews with a representative number of GBA businesses.