Understanding the Chinese Diaspora: Key to Entering the 'Asia New 7' Market

The Sudirman Central Business District (SCBD) is often called the Gangnam of Jakarta, Indonesia. Spanning over 367 acres, this towering skyscraper district boasts global corporate offices, residential apartments, and upscale shopping malls. It's common to encounter young individuals donning designer attire adorned with luxurious accessories, a local trend known as the 'SCBD style.' Interestingly, the government did not spearhead the development of SCBD. Instead, it was initiated by an overseas Chinese businessman who acquired the land, crafted a master plan in 1987, and oversaw the entire development process.

As the U.S.-China conflict persists and China's economic growth slows down, Southeast Asian nations such as Indonesia, Vietnam, Thailand, and the Philippines have emerged as alternative markets for Korean exports. However, the Southeast Asian economy has long been influenced by Chinese dominance. In Indonesia, for instance, ethnic Chinese, constituting less than 3% of the population, wield control over 70 to 80% of the economy. Similarly, Thailand's three major conglomerates, including CP, TTC, and Central, are all owned by overseas Chinese families.

The success of the Chinese diaspora can be attributed to the cohesive network built upon blood ties, regional affiliations, and business connections. Within this network, ethnic Chinese have forged closed circles centered on common interests and trends. For instance, those hailing from Fujian province have excelled in various sectors such as trade, finance, distribution, and transportation. In contrast, individuals from Guangdong province have made their mark in industries like gold and silversmithing, glass manufacturing, construction, and hospitality. Chinese communities exhibit a culture of mutual support and collaboration. Chinese banks such as OCBC and Singapore Dialogue Bank (UOB) are often leveraged to secure investment funds and distribute profits among stakeholders when undertaking large-scale projects, including developing shopping malls.

Moreover, Chinese immigrants have embraced thorough localization efforts. For instance, many Chinese settlers have adopted Thai names in Thailand, showcasing their commitment to assimilating into the local culture. Over generations, there has been a growing trend of assimilation and integration into the broader society. Notable figures such as Minnie from the girl group (G)I-DLE, BamBam from the boy group GOT7, and Nichkhun from 2PM, all raised in Chinese families, proudly identify with their Thai heritage. This phenomenon extends to politics as well, with former Philippine President Rodrigo Duterte tracing his lineage to Fujian, while the paternal ancestors of former Cambodian Prime Minister Hun Sen and former Thai Prime Minister Thaksin Shinawatra hailed from China.

What steps should individuals take to establish themselves in the Southeast Asian market? Firstly, they can target sectors with fewer overseas Chinese competitors. Companies like Toyota and Mitsubishi set up factories in Thailand and dominated the automobile market since the 1960s. Partnering with established overseas Chinese firms can also be beneficial, as they excel in finance, distribution, and real estate but lack strength in manufacturing or digital fields. Although they strongly desire to expand, they readily form strategic alliances when interests align. For instance, Aeon, a Japanese distribution company, collaborates with Sinarmas, a Chinese firm, to operate a shopping mall in Jakarta. Additionally, targeting regions with less Chinese influence can offer advantages. Successful Korean businessmen, such as Kolao (LVMC) Chairman Oh Se-young, began their journey in untapped markets such as Laos.

Another noteworthy example is Korindo, which remained in Indonesia despite political unrest and succeeded through vertical integration in sectors like logs, plywood, and paper. Looking ahead, we anticipate more companies such as Korindo and Kolao surpassing overseas Chinese competitors in Southeast Asia.