The day before the annual exposition co-sponsored by China and the Association of Southeast Asian Nations (ASEAN) opened in Nanning, Donny W. Nagasan, a 29-year-old Indonesian, and his father were busy at the exhibition center, decorating their booth with posters and sorting out everything for the show.

They are chief executive officer and chairman, respectively, of an Indonesian food company, Landkrone, which manufactures oil and fat products from the country's abundant palm and coconut oil. Having just signed a contract with a Chinese agent, they appeared in high spirits. "Everything is going well; we may set up a factory in China," said Nagasan.

For Landkrone, a firm that employs some 200 people with an annual turnover equivalent to about $129 million, building up a sales network in China is only the first step in penetrating the potentially huge market of the world's most populous nation.

Ip Cho Yuk, the company's adviser, said Landkrone now exports its butter to Europe and Africa but the demand for butter, an important ingredient in making bread and biscuits, in China can be even greater than in Europe.

"We are eager to establish a presence in China so that the Chinese can share our first-class products," said Ip. He added that he can feel the Chinese Government's enthusiasm to attract foreign investment, adding that Nanning is a good place to get started since it is geographically closer to Indonesia and has a good investment environment, such as easy access to seaports.

At present, the company's biggest concern is the tariff. Ip said the 25 percent tariff, plus the 17 percent value added tax severely reduce the products' competitiveness in the Chinese market. He indicates it is his hope that China will scrap the tariff on ASEAN products as the two sides intensify their efforts to establish a free trade area by 2010.

Landkrone is among the 3,000 companies that had displays at the four-day China-ASEAN Expo from October 31 to November 3. The expo, which has been held annually since 2004, is designed to offer business people a platform for exploring opportunities in China and ASEAN, two large and growing markets. The high-profile event this year was jointly inaugurated by government leaders from China and the 10 ASEAN member countries in a display of determination to cement trade and economic ties between China and ASEAN.

A consistent policy

Statistics show that bilateral trade volume between China and ASEAN reached $130.37 billion in 2005, with each being the other's fourth largest trading partner. In its rapidly growing trade with ASEAN, China has posted a deficit, which hit $19.6 billion by 2005. However, Premier Wen Jiabao sought to reassure ASEAN countries when he addressed the opening ceremony of the Third China-ASEAN Business and Investment Summit in Nanning on the day the China-ASEAN Expo opened. He said despite China's deficit, it is willing to open its market to ASEAN countries and will continue to increase its imports from ASEAN.

Chia Tai Group, the first foreign-invested company in China after the country adopted the reform and opening-up policy in the late 1970s, has benefited from China's uninterrupted openness. Founded by Thai investors of Chinese origin, it entered China via Shenzhen, the first special economic zone in China, in 1979.

Today, the group has over 200 companies across the country, with a total investment of nearly $5 billion and a staff of more than 80,000. It is engaged in a wide range of businesses with agribusiness as the core.

Like the executives of Landkrone, Prasertsak Ongwattanakul, President of the Shanghai-based E.C.I. Group, Chia Tai Group's industrial wing, has his eyes set on China's huge market of 1.3 billion prospective customers. Moreover, he noted that the ever-strengthening relations between China and ASEAN countries have brought great opportunities to both sides.

Reviewing Chia Tai's history in China, he said China's greatest credibility is that its policies have remained stable through the years. "Since China opened its doors some 30 years ago, Chinese leaders have all been committed to the policy."

However, he said he believes that China will play a more proactive role in the region with its economy revving up. China used to rely on foreign-invested companies like Chia Tai to fuel its economy, but today these companies have introduced China to the world, he said, adding that Southeast Asia now counts on China to achieve economic growth.

In an interview with Beijing Review, he repeatedly emphasized that Chia Tai is a Chinese brand rather than Thai. For one thing, the company is registered in China; for another, its Thai investor has a different name-Charoen Pokphand Group, he said. As a Chinese company, Chia Tai wants to participate in China's "going global" strategy, a slogan that inspires Chinese firms to establish an international presence. According to him, Chia Tai currently exports motorbikes to some other countries, including Bangladesh, and in the future it may even set up subsidiaries in ASEAN countries as a Chinese investor.

Investment gap

However, the campaign to go global is still at a fledgling stage. By the end of 2005, ASEAN countries had made actual investments totaling $38.5 billion in China in nearly 30,000 projects. Compared with these figures, China's investment in ASEAN countries remains small, standing at $1.08 billion by 2005. "But you should look at the trend and the development," said Wan Jifei, Chairman of the China Council for the Promotion of International Trade (CCPIT), told Beijing Review.

Wan explained that in past years China gave top priority to utilizing foreign investment. As the investment environment has continued to improve, companies from the ASEAN countries, which came to China rather early, have enjoyed rapid development, he said. It was not until two or three years ago that Chinese firms began to eye foreign markets.

It is only in the last few years that the Chinese Government has accumulated adequate foreign exchange, that the firms have grown competent enough to leap into the cutthroat international market and that the government has adopted policies in this regard, he noted. However, the trend is growing fast. In the first six months of 2006 alone, China invested $152 million in ASEAN countries.

Wan predicted that China's investment in ASEAN countries is bound to rise dramatically in the next few years, especially in fields such as natural gas, petrochemicals and offshore oil exploration.

One such deal was unveiled by Malaysian Prime Minister Abdullah Ahmad Badawi and Wen on the sidelines of the Commemorative Summit in Nanning on October 30 marking the 15th anniversary of the dialogue partnership between China and ASEAN. Under the deal, Malaysia's state-owned oil and gas firm Petronas will supply China with liquefied natural gas worth $25 billion over 25 years.

Abdullah said at a press conference that the Malaysian Government would keep encouraging Chinese investment in Malaysia, while identifying energy and biotechnology as key areas of cooperation between the two countries.

Wan said the Chinese and ASEAN economies are highly complementary, with China enjoying competitive advantages in sectors such as manufacturing, high technology and agriculture. At the same time, he noted that ASEAN countries see great value in China's stable, rapidly growing economy, hoping to cash in on China's development.

Given these factors, he said the Chinese Government as well as the CCPIT are expected to pave the way for Chinese firms to expand internationally. The CCPIT, for its part, will provide useful information for the firms seeking ASEAN markets while establishing a platform of communication between them and their prospective partners in ASEAN countries.

Working contacts

Wan said the CCPIT has extensive contacts with chambers of commerce in the ASEAN countries. For example, he said the CCPIT created the China-ASEAN Business Council in 2001 together with the ASEAN Chamber of Commerce and Industry, national chambers of commerce and industry in ASEAN countries and entrepreneurs. Within this framework, the CCPIT is also seeking to establish bilateral business councils with ASEAN countries to further facilitate trade and investment.

Li Ruogu, Chairman and President of China Exim Bank, pointed out that while being capable of operating projects in foreign countries, many Chinese firms simply lack the funds. Unable to make use of many financing instruments at present, they mainly depend on banks to finance their overseas operations, he noted. In this context, China Exim Bank, a Central Government-owned bank tasked with supporting economic and trade cooperation between China and other countries, is obligated to offer strong financial support to the Chinese companies seeking to invest in ASEAN countries.

According to Li, the bank offers preferential loans as well as regular loans to sponsor infrastructure construction in ASEAN countries such as power plants, expressways and railways.

He also said the bank would implement the commitment made by Premier Wen last year to offer $5 billion in preferential loans to ASEAN countries as soon as possible.

According to Wan, the CCPIT will sign a landmark agreement with China Exim Bank to development strategic cooperation between the two trade promoters so that they can make the most of their respective advantages in a bid to strengthen economic and trade links between China and other countries.