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Chinese firms with ‘China+N’ strategy looking into prospects in Malaysia, Indonesia: OCBC China CEO

Jovi Ho
Jovi Ho • 3 min read
Chinese firms with ‘China+N’ strategy looking into prospects in Malaysia, Indonesia: OCBC China CEO
China is a very dynamic market, says Ang Eng Siong, CEO of OCBC China. “When one door closes, another door opens. That's our experience so far.” Photo: OCBC
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As part of its brand and strategic refresh last July, OCBC laid down a target to capture fund flows from Greater China towards Asean and log $3 billion in cumulative incremental revenue between 2023 and 2025. 

Speaking in Hong Kong last year, OCBC’s head of global wholesale banking Tan Teck Long said Chinese companies seeking to diversify their supply chains have entered Penang in Malaysia and Batam in Indonesia. “The China-plus-one (China+1) strategy and Asean have a lot to offer.”

One year on, that buzzword has evolved into “China-plus-N (China+N)”. Instead of a number, “N” symbolises a variety of alternative sourcing and manufacturing hubs within Asia that extends beyond the “re-shoring” strategy that corporations were said to have employed to mitigate supply chain risks. 

OCBC achieved the first part of its three-year additional revenue target by logging $500 million in FY2023. But has the bank’s other wish on capturing fund flows out of Greater China materialised?

China is a very dynamic market, says Ang Eng Siong, CEO of OCBC China. “When one door closes, another door opens. That's our experience so far.”

Speaking at a May 29 briefing in Hong Kong, where OCBC unveiled a $1.5 billion investment into modernising its Greater China operations, Ang acknowledged a slowdown in China’s domestic consumption. “But on the other hand, we are also seeing the emergence of new industries; we’re also seeing a pick-up in exports.”

See also: OCBC to invest HK$1.5 bil into tech and facilities across Greater China, hire 300 software engineers in China

Ang, who was promoted to the top job in November 2023, says his team joined him on a trip to Malaysia and Indonesia last month, where they discussed the “China+N” phenomenon. “Some of it is for friendshoring or to mitigate the risk of geopolitical tension.”

According to Ang, many Chinese corporates are considering the suitability of expanding into Malaysia and Indonesia — where OCBC has a “much bigger presence” — and not just Vietnam and Thailand, their immediate neighbours to the south.

A May 29 report by OCBC's economists says foreign direct investment (FDI) inflows into the Asean-6 economies of Indonesia, Malaysia, the Philippines, Thailand, Singapore and Vietnam have been gaining traction and rose to US$236 billion ($318.58 billion) in 2023 compared to annual average of US$190 billion between 2020 and 2022. 

See also: Hong Kong market second-largest contributor to OCBC’s sustainable loan commitments after S’pore

According to OCBC's Asean economists Lavanya Venkateswaran, Ahmad A Enver and Jonathan Ng, the greatest FDI inflows into Asean in 2022 came from the US, Japan, the European Union, mainland China and Hong Kong. 

"This was underpinned by global factors such as a diversification of global and regional supply chain as well as the adoption of ‘China+1’, ‘friend-shoring’, ‘offshoring’ and related strategies. Strong domestic reform momentum and improving macroeconomic fundamentals are adding to the attractiveness of the region," note the economists. 

Ang claims that his team will soon collaborate with local authorities “to promote Chinese investments into these countries”, without specifying any of the four Asean countries in particular. 

“It will be a win-win for our Chinese customers, as well as for these other countries in Asean, [an] important network for us,” says Ang, who joined OCBC in 2009. “I think there will always be opportunities, but it’s really how we partner, not just our customers, but other stakeholders with [a] similar mind and interest to chase this opportunity.”

Shares in OCBC closed 11 cents lower, or 0.80% down, at $14.39 on May 29. 

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