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Deepening integration within the Association of South-east Asian Nations (ASEAN) is driving new approaches to corporate strategy, according to a report from The Economist Intelligence Unit. Visit "ASEAN Insight" to find out more about this report.
“Re-drawing the ASEAN Map”, sponsored by Baker & McKenzie and CIMB, is based on a survey of 171 business leaders at large multinationals (MNCs). The results show that companies are increasingly managing the ASEAN region as one economic entity rather than 10 separate economies.
Some 76% of MNCs operating in South-east Asia now have a strategy that is specifically tailored to the ASEAN bloc. And while the countries of South-east Asia remain deeply diverse and different, they are gradually growing more alike. This is enabling companies to be more regional in their strategy. The survey reveals that 64% of companies believe their customers across ASEAN are becoming more similar. As a result, 62% of companies are standardising the products and services they offer across ASEAN.
As the ASEAN bloc becomes more integrated, companies are reorganising their investments and their strategy in order to pursue economies of scale, and to reduce business complexity. The survey reveals, for example, that 81% of manufacturers are consolidating their manufacturing. As cross-border trade in ASEAN becomes easier, it makes sense for companies to centralise their manufacturing into fewer factories. Similarly, companies are streamlining their approach to sales, marketing, branding, and decisions over which products and services to offer.
Much of this drive to take a regional approach in ASEAN is happening naturally. But the imminent unveiling of the AEC in 2015 is adding urgency to the strategic re-think. The survey shows that 32% of companies believe the AEC is “extremely important” to their strategy in the region, with 57% saying it is “somewhat important”. These results show a marked change from 18 months ago. Back in 2012, a survey of the same companies showed that only 23% considered the AEC to be “extremely important”.