High machine industry dilemma - credit is not high overseas Southeast Asian market

Liu Hui, head of global legal compliance and risk management of Hongxin Construction and Development, suggested in the Southeast Asia Branch of the 2025 high-level "Going Out" Conference of Chinese enterprises that enterprises should conduct a comprehensive and in-depth demonstration of local laws and regulations, compliance regulatory environment and market practices before entering the market of the target country.

When Chinese enterprises enter Southeast Asian countries, as foreign enterprises, we must first solve the problem of foreign access." Liu Hui, head of global legal compliance and risk management of Hongxin Construction and Development, said that this mainly involves two aspects: first, whether there are restrictions or prohibitions in the industry, and whether there are special requirements for shareholding ratio, entity structure and operation form; Second, different countries may have different business qualification requirements for different industries. It is necessary to pay attention to the differences of foreign access in different countries in Southeast Asia from these two aspects. For example, some regions or industries do not allow 100% foreign ownership, which needs to be adjusted through joint ventures, special equity structures or alternative transaction modes.

Liu Hui suggested that in the early stage of demonstration, enterprises must conduct a careful study of the foreign access policy of the target country, fully assess the possible risks and challenges, and achieve the strategic objectives of enterprises under the premise of ensuring compliance with local regulations.

"In terms of land purchase, site leasing and factory construction, it is difficult for enterprises to meet 100 percent regulations because overseas countries have unclear regulations on land ownership, use, fire protection, environmental protection, construction and safety management." "Companies need to balance compliance costs and risks, take compliance costs into account in their overall business plan, including the calculation of costs, profits, gross margin and future development prospects, and continue to focus on compliance issues over the life span," Liu said.

Liu Hui also mentioned that some countries in Southeast Asia have special labor markets, and enterprises need to deal with compliance problems in terms of wages and labor conditions when hiring foreign workers. "In the process of localization operation, enterprises should fully understand the local labor laws and regulations and market characteristics, and formulate labor solutions that meet the actual local conditions." It is important to ensure compliance and meet business needs, while also focusing on the rights and welfare of employees and building a good corporate image." Liu Hui said.

"Unlike the domestic market, overseas markets such as Southeast Asia lack perfect credit information systems and third-party information platforms, making it difficult for enterprises to conduct effective risk assessment and screening of customers." Once credit risks occur, the local judicial system and third-party dispute resolution institutions differ greatly from the corresponding domestic mechanisms in terms of cost and enforceability, and risk disposal is more difficult." Liu Hui suggested that enterprises must establish new customer risk models, such as introducing third-party insurance methods, and explore localized and personalized risk disposal measures to deal with possible risks. At the same time, we should also pay attention to strengthen the management of customer credit and improve the awareness and ability of risk prevention.