Customers work at a cafe and coworking space in Hanoi, Vietnam, Thursday, July 20, 2023.
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Rising costs will have the biggest impact on Asian companies in 2023, a UOB survey showed, even as they continue to grapple with a global economic slowdown and rising borrowing costs.
More than 4,000 companies across Southeast Asia and Greater China were surveyed, including mainland China, Hong Kong, Thailand, Vietnam, Malaysia, Singapore and Indonesia.
Of those surveyed, 32% said they were affected by high inflation, with another 32% saying they faced increased operating costs, while 24% said rising labor costs were hurting their business., UOB 2024 business prospect survey report.
The online survey lasted from December last year to mid-January this year and surveyed a total of 4,050 small and medium-sized enterprises and large enterprises.
In addition to rising costs, 27% of respondents said they were affected by the overall economic slowdown, while 23% said the higher interest rate environment had impacted their business.
Still, about four in 10 companies said they felt “very positive” about the business environment in 2023, while 32% said they were “somewhat positive,” the survey showed. Indonesia (56%) and Vietnam (47%) are the most positive markets.
About 35% of the companies surveyed said that the business environment in 2023 will decline compared with the previous year.
In response to future headwinds, 30% of companies said reducing business costs will be their top priority in the next one to three years. Establishing new customers (26%) and digitizing business (26%) are also on the agenda.
overseas expansion
More than 80% of respondents said they were interested in expanding overseas because they wanted to increase revenue and improve profitability.
Of those looking to expand abroad, more than half (56%) said they were keen to expand in Southeast Asia, while 30% said they were looking to break into the Chinese market. Only 18% of respondents see Europe as the preferred location for future expansion.
In Southeast Asia, Malaysia (45%), Singapore (41%) and Thailand (40%) are top choices.
Companies in Indonesia and Vietnam are most willing to expand, while companies in the manufacturing and engineering or technology, media and telecommunications sectors show the strongest interest in overseas expansion.
Finding the right local partner is a top concern for those looking to grow their business overseas, with nearly 40% saying it is the biggest obstacle they face. Other factors include a lack of internal talent to guide expansion projects and a lack of funding.
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