Wellspring of opportunities in China's untapped heartland

Wellspring of opportunities in China's untapped heartland
PHOTO: Wellspring of opportunities in China's untapped heartland

SINGAPORE - China's relatively untapped heartland in the central region offers a wellspring of opportunities for Singapore companies in the consumer and logistics industries.

A report released on Sunday by International Enterprise (IE) Singapore said urbanisation and improved transport links are drawing more investors to the region.

The report said Singapore companies looking to central China should set their sights on four of the region's major cities - Wuhan, Hefei, Zhengzhou and Changsha.

Comprising six provinces - Anhui, Henan, Hubei, Hunan, Jiangxi and Shanxi - China's central region accounts for 27 per cent of its population and 22 per cent of its gross domestic product (GDP).

Mr Foong Kah Keong, regional director for South China at IE Singapore, said the country is shifting away from external demand and towards domestic growth, as part of the new government's economic reforms.

"Central China is not an export story, but a domestic consumption story... The consumer market there is in the early stages of development, making this a good time to enter the market and win over consumers to your brand," he said.

Demand for logistics services in the region will grow in tandem with rising consumer demand for finished goods - there are opportunities for Singapore companies in warehousing and cold-chain logistics, among other sectors.

Mr Foong said cities in the central China region might well develop into the "Shanghais of tomorrow" and Singapore companies hoping to ride on that should move in now while costs are still relatively low.

However, as it is less developed than China's eastern coastal region, foreign investors will face different challenges.

For example, government officials in the central region might be less familiar with international norms and top talents tend to be drawn away to the bright lights of cities such as Shanghai and Shenzhen, he added.

One company that has reaped the rewards after venturing into China's central region is clothing chain Mphosis, which set up stores in Hunan and Wuhan last year. It currently has 15 stores in China, mostly in Beijing and Shanghai.

"We would like to open more stores in the central region, but at the moment our location options are limited," said Mr Tay Chee Khiam, Mphosis' director in China.

Despite that, its central China stores are meeting or even exceeding sales targets, he said.

"The response has been good... Over time we will open more stores as more suitable locations become available," he added.

chiaym@sph.com.sg


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