Today on the International Trade Resources Podcast, our host Kim Kirkendall is joined by Art Dicker, a senior counsel at R&P China Lawyers and host of the Asia Business Podcast, to discuss expanding into the South East Asian emerging supply base, comparing countries like Vietnam and Indonesia with China. 

To begin, Art and Kim talk about some of the concerns around Supplier management and how that differs between SE Asia and China. One theme that reoccurs in this podcast is how China has a built-out infrastructure - not only physical infrastructure but in the services companies rely on to manage suppliers, customers and subsidiaries. They talk about some of the challenges of managing suppliers in SE Asia, including inspections, qualification, and more.  

Another major issue both Kim and Art often speak about is the importance of Supplier Agreements - and here they talk about the different legal environments in SE Asia that can cause you to modify your standard agreement to fit that country.  Wrapping up the issues with suppliers we talk about payments, how currency controls affect some countries and not others, how import / export taxes can impact the transaction, etc. 

Switching gears to subsidiaries, Art talks about finding a corporate director when setting up a company in Vietnam, which is similar to the process in China.  How some countries still require local ownership or locals in key positions.  Indonesia also imposes higher capital requirements and employs a risk-based system for industry categorization. Like China, regulatory environments in Vietnam and Indonesia often favor local companies, in certain sectors.

Of course they talk about repatriating funds - always an issue - and Kim reminds listeners it’s important to plan for this before incorporation highlighting the need for careful planning from the outset. Both Kim and Art also touch on the crucial nature of compliance with US regulations concerning trade and forced labor, especially for companies operating in countries like Vietnam and Malaysia. The US government closely monitors supply chains for transshipment and COO (Country of Origin determination).

Lastly, Kim and Art discuss leveraging experience from China. Companies experienced in navigating China's regulatory landscape may find themselves somewhat familiar with the challenges posed by other emerging markets. Drawing on this experience can be invaluable when expanding operations.

Listen now and start exploring the similarities between SE Asia and China manufacturing!

KEY TAKEAWAYS:

• SE Asia offers significant growth potential for international businesses, but not without challenges.
• Navigating regulatory landscapes, favoritism towards local companies, and capital repatriation complexities require careful planning.
• Adhering to US regulations regarding trade and forced labor is essential, as scrutiny extends to supply chains in emerging markets.
• Success in these markets requires proactive planning, comprehensive supply chain mapping,

 

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