Many analysts believe the current events shaping Asia are the most significant developments in the world today. John Naisbitt, a leading trend forecaster and author of Megatrends Asia, wholeheartedly agrees.

As we move toward the year 2000, “Asia will become the dominant region of the world: economically, politically and culturally,” he writes. This trend presents exciting and profitable opportunities for you.

Growth Projections Are Explosive

International organizations and governments alike have offered their own predictions — all indicating explosive growth for the region. The World Bank estimates that from 1990 to 2000, Asia will account for half of global growth.

The U.S. Department of Commerce predicts that by 2000, East Asian economies will account for one-third of total world GNP — an astounding jump from only 4% in 1960.

Asian economies are expected to grow by 7.5% this year — the fastest rates in the world. By comparison, the G-7 countries are expected to grow by 2.5%. With this growth comes a huge increase in Asia’s purchasing power — and greater opportunities for you. More and more, these economies will be fueled by consumer spending by an emerging middle class.

Rising Exports Reflect Greater Profit Opportunities for You

Thousands of U.S. businesses are already capitalizing on lucrative Asian opportunities. In fact, more U.S. trade already crosses the Pacific Ocean than the Atlantic, and it’s rising at a rapid pace. Over the past ten years, U.S. exports to Asian Pacific Economic Cooperation (APEC) economies increased at nearly double the rate of exports to the rest of the world.

The World Bank estimates that developing APEC members will spend $1 trillion for power, telecommunications, water and sanitation infrastructure. Much of the equipment and services needed to complete these projects will be imported from the United States. And that’s not all.

“By the year 2000, Asia will have almost a half billion people who are what we generally understand as middle class,” Naisbitt predicts. And they will be in a financial position to buy more of your products — an opportunity that could significantly increase your bottom line.

Investment Is Skyrocketing

U.S. investors are increasingly looking East for strong returns. U.S. direct investment there jumped by 74% from 1991 through 1995 — almost 43% higher than the growth rate in U.S. direct investment globally.

China, where economic growth exceeds 11% annually, received over $38 billion from global investors in 1995 — a favorite Asian destination. According to the Journal of Commerce, a trade newspaper published in New York City, the scale of Asian investment under consideration may dwarf the already substantial levels seen in recent years.

Direct investment in Asia is not just a factor of rising opportunities there. Asian governments have become more open to foreign direct investment and now even compete for it.

According to the Journal of Commerce report, foreign direct investment approvals in 1994 grew by 186% in Indonesia, 190% in Thailand, and 329% in the Philippines. And by mid-1995, pledges of investment in Vietnam — a country that only recently opened its doors to foreign investment — was an astounding $16.2 billion.

Many of these investment opportunities have already paid off handsomely for U.S. companies. And greater investment in Asia will result in a more developed region capable of importing more of your goods and services.

Also, if Japanese influence in the region grows, it may pressure its neighbors to limit outsider’s market access. Investing in the region is one way around this.

The Impact of Asian Economic Integration

The changes taking place in Asia today are contributing to the region’s economic integration. At the recent APEC meeting held in Manila, Philippines, the members reconfirmed their commitment to free trade by the year 2020, potentially creating the world’s most economically powerful bloc. Other regional groups, such as the Association of Southeast Asian Nations (ASEAN), are also becoming more cohesive.

Appreciating currencies, increasing wages, rising land costs in capital-surplus countries (Japan, Taiwan, Hong Kong, Singapore and Korea), and economic reforms in the capital-deficit countries (especially China and Indonesia) have accelerated regional integration.

Other driving forces underlying this process include democratization, stricter pollution controls, and the liberalization of trade and investment throughout Asia. Competition from an expanding European Union and North American Free Trade bloc is also further pushing Asia toward economic integration.

A Greater Level of Competition Lies Ahead

All factors combined, the level of Asian national competitiveness will undoubtedly rise. And through trade diversion, Asian bloc members will have a tendency to buy more goods from each other — due to preferential access — and less from you. This may force you to reduce your prices or improve quality.

To protect domestic industries, many Asian countries resort to non-tariff barriers as a means of keeping your products out. And analysts see piracy of intellectual property as a greater obstacle to doing business there, especially in China.

Should you encounter this, request the U.S. International Trade Commission or the U.S. Trade Representatives office to investigate the matter. Both agencies are located in Washington, DC.

Position Yourself to Succeed

With an understanding of what lies ahead, U.S. firms of all sizes have taken the initiative and begun positioning themselves to enter or expand in Asia. Many have already benefited tremendously.

As global competition heats up, new strategies will be required not only to increase market share — but to hold onto what you’ve got.

This article appeared in January 1997. (PN)
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the ManzellaReport.com, is a world-recognized speaker, author of several books, and a nationally syndicated columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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