The news from this year's annual session of the National People's Congress, China's Parliament, was not exactly what the world has come to expect. Indeed, headlines that might have once focused on China's rise centred instead on a "new normal" of slower economic growth - down to about 7 per cent. The decision to ban a Chinese documentary on pollution called "Under the Dome", which had gone viral attracting tens of millions of online Chinese viewers, also underscored mounting concerns among China's citizens about persistently polluted air and water.
Indeed, is the Golden Age of investment in China over as the nation confronts the consequences of once unbridled growth?
As the world's No 2 economy continues to slow, even international businesses once enamoured of China's more than a billion consumers are rethinking the market. Most recently, Microsoft's mobile phone division - acquired from Nokia - announced the closure of production facilities in Beijing, as well as in Dongguan, in southern China, eliminating roughly 9,000 jobs. Some of that employment and investment will move to Vietnam. Japan's Citizen Holdings closed a watch factory in February in China's Guangdong province, and Panasonic has announced that it will cease LCD television production in China.
As questions are also raised over whether China is unfairly targeting foreign companies in a bid to protect its own state-owned enterprises, businesses may well find it is time to refocus on new opportunities for growth and returns beyond China. On Asia's frontiers, whether Mongolia to the North, Sri Lanka further southwest or in the heart of Southeast Asia, there are returns to be made.
Whether in energy-rich Timor-Leste, or re-emerging Myanmar (Burma), however, investors must beware and be wary of economic and geopolitical risks. The findings of the World Bank "2015 Doing Business" survey make clear, for example, that not all is well in many parts of the Asia and Pacific region, including Southeast Asia, despite much of the region's overall solid growth rates.
While Singapore continues to rank No 1 in the world for ease of doing business, many so-called frontier economies continue to be characterised by pervasive corruption and weak governance and rule of law. Such developing markets also often lack the regulatory and financial institutions found in other more economically developed destinations in the region such as Malaysia and Thailand.
Yet, signs, literally, that opportunity exists even on Asia's frontiers are easy to find. In Cambodia, for example, billboards from multinational businesses and brands dominate streetscapes. Ford and Coca-Cola are just two of the consumer brands that US first lady Michelle Obama is likely to notice during her upcoming, March 18-22, visit to Japan and Cambodia as part of a trip focused on girls education. Overall, according to the US-Asean Business Council, US investment in Southeast Asia surpasses that in Brazil, Russia, India and China - the much touted BRIC nations - combined.
Six best practices
So, how does one conduct business in countries lacking in rule of law and transparency? As Southeast Asia in particular moves toward greater cooperation via the Asean Economic Community, investors are looking forward to the promise of greater opportunities and returns. Yet, under the AEC umbrella will be a diversity of countries, from a resurgent Philippines to the tiny sultanate of Brunei, each with its own unique challenges and rewards.
As we have shared in media, including the Straits Times of Singapore, and discussed in forums across the region, there are lessons to be learned. Here are six best practices gleamed from business professionals who have found success in some of Southeast Asia's frontier markets.
l First, be realistic about your timeline for success. International brands have succeeded in part by taking a longer-term view of networking and of developing relationships with local partners.
Granted, relationships are important in every country, but this can be particularly true in many parts of Asia. As with marriage, trust needs to be built over time before a commitment is agreed to, and just as in a marriage, the hard work begins when the signing ceremony ends.
l Second, leverage local talent. This can include local nationals who work with locally based business organisations such as chambers of commerce. They, and other organisations, as well as law, accounting and consulting firms with local expertise, can help with introductions and provide valuable insight into the nuances of the local business environment.
l Third, recognise you are not alone. There is strength in numbers. Businesses that have done well in nations where corruption is endemic have often partnered in efforts to change the environment in their favour by together refusing to take part in illegal business practices.
l Fourth, educate your local partners of the consequences in violating anti-graft laws. Local business partners may be unaware that foreign laws, such as the United States' Foreign Corrupt Practices Act or the United Kingdom's Bribery Act, apply to multinationals outside their own country. Local partners may well assume that because you are doing business in their country you are not required to abide by the laws back home.
l Fifth, understand and address the challenges of corruption's close cousin: cronyism. Many businesses entering Asia's frontier economies seek to do so in partnership with the family and friends of the political elite. Companies that follow this approach must be aware of both the benefits and the potential for extreme downside. The power imbalance in the relationship, along with deficiencies in the regulatory environment, can make it difficult to fairly resolve any disagreement should the partnership go bad.
l Finally and most importantly, don't hesitate to walk away from a deal. Or, as in the case of Nokia in China today, to shift and to adjust as one market opportunity closes and another opens.
Curtis S Chin served as US ambassador to the Asian Development Bank (2007-2010) and is a managing director with advisory firm RiverPeak Group, LLC.