Asean Firms Squeezed at Home, Undercut Abroad, by Chinese Rivals

There are no easy solutions, but the region needs to engage China and guard against its surging exports.

- Vikram Khanna

During the period January to September 2024, an average of 274 food and beverage (F&B) businesses in Singapore shut down every month, according to the consultancy Knight Frank. That number was more than 60 percent higher than even in the Covid-19 year of 2020, when 170 F&B businesses closed on average per month as eating out all but stopped in the face of pandemic restrictions.

One of the reasons for the high attrition rate last year—which may well continue—was the spread of F&B establishments from China, which are now ubiquitous across food courts and even entire streets, such as Mosque Street and Pagoda Street in Chinatown. Many of these have displaced local eateries.

The mainland Chinese coffee chain Luckin Coffee, which opened its first store in Singapore in March 2023, now has some 60 outlets which compete with the likes of Starbucks and other locally-owned franchises and coffee shops.

The Chinese car company BYD entered Singapore's passenger car market in July 2022, but by the end of 2024 it was already the largest-selling brand in the country, overtaking long-standing players such as Toyota, BMW, Mercedes Benz and Honda, whose dealerships are coming under increasing pressure.

The Chinese e-commerce site Taobao, which is now available in English, sells millions of made-in-China products at discounted prices—as do other sites like Shopee and Lazada—raising the stakes for local retailers, who have a new, formidable competitor.

For consumers, all of this is good news—more competition means more choices and cheaper prices. But many producers and sellers are being displaced as a result.