About 85% of businesses in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) plan to maintain or grow their sales to the ASEAN bloc of countries in the next three years, according to a research report released by the Hong Kong Trade Development Council (HKTDC) and UOB.

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 expansion-minded GBA businesses, while Vietnam remained a top choice for procurement and production outsourcing.

The report revealed the appeal of the ASEAN market to GBA businesses.

"The sheer scale of the ASEAN market was singled out by 55.9% of research respondents as a key catalyst for their expansion plans," HKTDC said.

It added that scale was ahead of the 49.6% accorded to government incentives and investment policies and 32.8%, which cited enhanced e-commerce access.

The HKTDC-UOB survey conducted in the third quarter of last year took the form of a questionnaire completed by 671 GBA enterprises, supplemented by in-depth interviews with a representative number of GBA businesses.

More GBA companies plan to expand into ASEAN markets

The survey also found more than 70% of respondents planned to expand to ASEAN in the next three years, compared with 60% in a similar survey conducted in 2021.

HKTDC noted that the number is even higher for those already established in ASEAN, with 96% of such businesses planning 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.

Malaysia's popularity across companies in the four sectors was considerably higher than in the 2021 survey.

GBA businesses, however, regarded navigating local government policies and regulations (48.6%) as the key challenge to expanding their market share within ASEAN, followed by cultural or language barriers (38.7%) and difficulties in obtaining talent (26.4%).

This differs notably from the 2021 survey, which identified inadequate infrastructure, difficulties in finding the right local partners and the increasing cost of doing business as the top three challenges. 

"We see the strong trend among GBA enterprises to spread their wings abroad and boost long-term growth," said Christine Ip, CEO – Greater China, UOB.

Hong Kong’s connectivity with GBA and ASEAN

Meanwhile, in another key finding, the report said most GBA businesses had particularly high regard for Hong Kong's strong connectivity with both the GBA and ASEAN bloc — with more than 70% of respondents, according to 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 and also its most admired asset.

Hong Kong also scored highly for its expertise in legal compliance, cross-border infrastructure finance and logistics.

"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," said Louis Chan, deputy director of HKTDC Research.

For her part, Ip added that the partnership with the promotion of free trade agreements, technology empowerment and higher business plans, that 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, driving financial innovation, facilitating cross-border trade and nurturing economic prosperity to shape a future where business connectivity in this dynamic region knows no boundaries," Ip said.

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%).

Most respondents credited the effectiveness of RCEP in streamlining and accelerating trade between the region's most dynamic economies — including Mainland China, Indonesia, Malaysia, Singapore, Thailand and Vietnam — as the main reason for its success.

"Surveyed enterprises also believed digitalisation had been crucial for the maintenance of economic and supply chain resilience amid the unprecedented impact of the pandemic," it added.

They also viewed digitalisation as a key productivity driver, reducing operational costs and facilitating business and investment expansion in the region.

In all, 23.2% of companies saw digitalisation as a priority for their business, which was likely to boost their chances of successfully entering the ASEAN market.