September 9, 2013 3:13 pm

Beijing woos southeast Asian traders in bid to boost poor provinces

Sufi is a brave man – he has come to Guangxi to sell tea to the Chinese.

Dressed in a traditional Malaysian tunic, Sufi – full name Faiza Sufi Zakaria – serves cups of organic herbal “Java” tea to the throngs of visitors at the 10th China-Asean Expo in Nanning, the capital of the southern Chinese province.

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Sufi’s young company is one of hundreds of southeast Asian companies seeking to sell everything from copper to bird nests (used to make Chinese soup) at the expo, as he attempts to gain from China’s efforts to boost trade with its closest neighbours.

The event itself symbolises China’s path to create a free-trade bloc with the ten members of the Association of Southeast Asian Nations following an agreement that came into force in 2010.

Over the past decade, Sino-Asean trade has jumped more than 600 per cent, rising from $55bn in 2002 to $400bn last year, according to the Chinese data provider Wind Information. While the absolute value is lower than the €434bn of goods shuttling between China and the EU last year, growth is more robust.

This was highlighted by data on Sunday showing exports to Asean members had risen 31 per cent in August, outpacing the 6 per cent rise in shipments to the US and the 2.5 per cent expansion in exports to the EU.

“We had the capabilities to create a ‘golden decade’ in the past. We also have the power to create a ‘diamond decade’ in the future,” Chinese premier Li Keqiang said at the opening of the China-Asian Expo.

Speaking to an audience that included several southeast Asian leaders, Mr Li said China wanted to increase bilateral trade to $1tn by 2020, and boost bilateral investment eightfold to $150bn over the same period.

CVT, a Guangxi-based coffee company that exports beans from Laos, is one of thousands of Chinese firms hoping to benefit from the push. Targeting sophisticated Chinese coffee drinkers who want to grind their own beans, Xie Hongxi, a company representative, says sales have reached $1m a month.

“Because Nestlé has heavily promoted its instant coffee over the past decade, Chinese consumers already have an initial impression of coffee,” says Mr Xie. “But since Chinese customers are still only familiar with instant coffee, we now need to cultivate their habit of drinking freshly brewed coffee.”

The central government hopes the expo will generate more business for Chinese companies and that the resulting growth in exports to southeast Asia will promote development in the poorer southwestern provinces of Guangxi, Guizhou and Yunnan, which border some of the Asean countries.

As part of its “West Development Strategy”, Beijing wants to boost the economies of these areas, which have long lagged behind the more prosperous coastal provinces such as Guangdong.

Worthy as this goal may be, it is not an easy one, says Fred Neumann, chief Asia economist at HSBC. He points out that it is hampered by weak transport links between China and southeast Asia.

Beijing is trying to ease such obstacles by building more transport links. Several years ago, it opened China’s sixth “free-trade port” area in Qinzhou, on the southern Guangxi coast. Qinzhou has a relatively small annual throughput but Ding Qiwen, the official who heads the port’s investment promotion department, says Asean trade has propelled annual growth to 20-30 per cent.

“The central government is very interested in developing this area,” says Simon Pun, a Hong-Kong based businessman who has gambled on the area’s prospects by opening a wine store inside the port that sells vintages from all over the world.

China faces many challenges expanding its trade frontiers with southeast Asia. But for many expo exhibitors, that concern appeared to be outweighed by the prospects of grabbing more market share in China.

Samana Srudhiprom, a Thai woman whose company, Reich Pakpanang Intertrade, sells bird nests, sold out of the dry variety – which typically fetch several thousand US dollars per kilo from China’s soup gourmands – after two days.

While the rest of the world remains anxious about a possible further slowing of the Chinese economy, Ms Samana is unfazed. Flashing a broad smile, she sums up her view on the Chinese market.

“China is the big one!”

Additional reporting by Julie Zhu and Emma Dong

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