The 2015 Free Trade Agreement will soon kick in. Is your China business ready?
Op-Ed Commentary: Chris Devonshire-Ellis
May 22 – The term “ASEAN” is cropping up more often these days, yet still many businesses in China are unaware of what it is and why it is gaining in importance. The basic answer is fairly simple – free trade across Asia. That means reduced or zero customs duties across a space that includes the 10 ASEAN nations in Southeast Asia, and includes China, India, Australia, New Zealand, Japan and South Korea.
But let’s step back a bit from that weighty statement and examine exactly what ASEAN is and how it will impact upon all businesses in China, Asia and beyond. ASEAN – the Association of Southeast Asian Nations – was formed in 1967 and comprises 10 Asian countries as an economic trade bloc. It includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Collectively, ASEAN represents a market of some 600 million people, with a combined GDP of about US$1.8 trillion. If it were a country, in economic terms it would be the ninth largest in the world. Effectively a trade bloc situated between China and India, ASEAN is the third Asian dragon in terms of its development as an emerging economy. The OECD has projected growth within ASEAN to be about 6 percent per year for the period 2011-15.
Because of that, and its developing wealth, China has specifically targeted ASEAN as a bloc for Chinese companies to be doing business with. It makes sense; Chinese companies need to expand overseas, ASEAN is right next door, and it represents a fast growing opportunity for growth in sales and trade. Indeed, ASEAN overtook Japan last year to become the third-largest trade partner with China with trade figures reaching US$362.3 billion, only behind the European Union (US$567.2 billion) and the United States (US$446.6 billion).
