ASEAN steel demand surges; overseas Chinese leaders hope to build bridges for Chinese steel companies to expand globally.
“At present, three major railway projects are under construction or have been slated for development in Southeast Asia, generating substantial demand for steel. China’s steel industry enjoys both technological and financial advantages, making it a viable option to ‘go global’ by investing in and establishing manufacturing facilities within ASEAN. Meanwhile, overseas Chinese and ethnic Chinese communities are eager to play a bridging role, facilitating partnerships between Chinese enterprises and local stakeholders,” said Deng Lianghui, president of the Lao-Guangxi Hometown Association, in a recent interview with a China News Service reporter in Nanning.
From January 12 to 16, the Fifth Session of the 11th CPPCC Guangxi Zhuang Autonomous Region Committee was held in Nanning. Deng Lianghui and several other prominent overseas Chinese leaders from ASEAN countries attended the session as non-voting delegates.
According to data recently released by the Southeast Asian Iron and Steel Association, steel consumption in ASEAN countries has grown robustly since 2016. In particular, demand in Vietnam, the Philippines, Indonesia, Thailand, and Malaysia has exceeded expectations, with year-on-year growth in consumption exceeding 20%. As the leading importer of steel within ASEAN, the region imported 28.36 million tonnes of steel from China in the first three quarters of 2016, a 20% increase compared with the same period the previous year.
“The China–Laos Railway has now entered full-scale construction. The railway’s development, along with the construction of stations and future commercial real estate projects, will require substantial amounts of steel. Although Laos already has a few small‑scale steel plants established through joint ventures with foreign partners, most of its steel still relies on imports,” said Deng Lianghui. “For a long time, China’s overseas infrastructure projects have largely sourced both technology and steel from within the country, resulting in high material‑transport costs. Rather than continuing this approach, why don’t Chinese steel companies consider setting up production facilities directly in ASEAN?”
Chen Hongbing, vice president of the All-China Federation of Small and Medium-sized Metallurgical Enterprises, previously told a China News Service reporter that China’s steel production capacity currently stands at 1.25 billion tons, with overcapacity, and that over the next five years, the country plans to cut crude steel capacity by 100–150 million tons. “The ASEAN region continues to enjoy robust economic growth, offering enormous potential for steel demand. As China’s largest steel export market, it is highly necessary for China and ASEAN to strengthen cooperation in the steel industry.”
Tang Jianxiang, president of the Cambodia–Guangxi Chamber of Commerce, echoed this view. He stated that Cambodia is currently implementing its “2015–2025 Industrial Development Policy,” and Chinese steel companies should seize this opportunity to invest in and establish factories in ASEAN member states. “Overseas Chinese associations and overseas Chinese communities have been rooted abroad for many years, possessing extensive experience and a unique understanding of local social conditions, public opinion, and the business environment and institutional framework. When Chinese enterprises invest overseas and set up operations, overseas Chinese can serve as an important channel for gaining insights into the host country, acting as both a platform and a bridge.”
Deng Lianghui also noted that ASEAN countries themselves possess relatively abundant iron ore resources. Chinese steel companies investing in ASEAN can both make effective use of local resources and help foster the development of the region’s steel industry. “As overseas hometown associations and chambers of commerce, we can assist Chinese enterprises with preliminary work and market research, helping them gain a deeper understanding of the investment environment in their target countries.”
Deng Lianghui believes that Guangxi itself enjoys certain advantages in the steel, industrial manufacturing, and automotive sectors. “Southeast Asia is a vast market with a population of 650 million—half that of China. Relevant enterprises in Guangxi should further leverage their geographical advantages and proactively engage in cooperation with ASEAN countries across related industries.”
According to reports, in recent years, China’s steel industry giants have stepped up their efforts to expand overseas, investing in and establishing plants in countries such as Nigeria. However, in ASEAN nations, Chinese steel companies have been somewhat slower to pursue international expansion.
“China and Thailand enjoy inherent advantages in forging cooperation in the steel sector,” said Li Mingru, president of the Thailand–Guangxi General Association, who was attending the Guangxi CPPCC conference. He noted that China and Thailand have maintained diplomatic relations for 41 years, with their geographical proximity and shared history fostering close ties and extensive exchanges. Today, the Chamber of Commerce under the Thailand–Guangxi General Association has begun to focus on developments in the steel industry, while staff from the Guangxi Construction Engineering Group are also actively advancing related initiatives.
Regarding the prospects for cooperation between China and Thailand in the steel sector, Li Mingru believes that “the outlook is very promising, and collaboration is just around the corner.” She advises Chinese entrepreneurs to venture abroad more frequently, strengthen interactions with overseas Chinese and Chinese nationals, gain a deeper understanding of foreign investment environments, and seek out additional opportunities for partnership.
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