OCBC eyes Chinese firms expanding outside home market

Companies are rethinking supply chains as the global economy becomes less connected – a process that will carry on despite the upcoming change of government in the US, said a senior banker.

- Prisca Ang

Mr Tan Teck Long, OCBC's head of global wholesale banking, said businesses will likely continue diversifying their operations and beefing up logistics to guard against geopolitical uncertainties.

"Deglobalisation will still be a big theme, and therefore it requires a change in investment," he told The Straits Times.

Singapore's second-largest bank is especially focusing on a growing number of Chinese companies that are expanding outside their home market. Mr Tan said: "I think we will see that trend accelerate over the next few years."

OCBC has already been ramping up investments in Greater China – mainland China, Hong Kong, Macau and Taiwan – in recent years, and considers the area a core market alongside Singapore, Malaysia and Indonesia.

The bank said in 2023 it aimed to lift its revenue from Greater China clients doing business in Asean by more than 50 per cent by 2025. It has already surpassed this target. More firms are building capacity outside of China to serve various markets, partly due to lower costs, said Mr Tan, adding: "That means you make in China for China, and make elsewhere for elsewhere."

Natural resources are a big draw for firms growing their presence overseas. This is behind Chinese investments in Indonesia's nickel industry. China is the world's largest maker of EV batteries, of which nickel is a raw material.

"Many customers want to tap the South-east Asian market as part of their growth strategy," said Mr Tan.

A key part of OCBC's Greater China strategy is its partnership with its associate company Bank of Ningbo, a Zhejiang-headquartered commercial bank. The Singapore lender holds a 20 per cent stake in BON, and in 2017 inked a 10-year strategic cooperation agreement with it.