sppt chapter 11

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McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies Inc! "ll rights reser#e$!

Asia Pacifc Region

Chapter 11


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Learning Objectives

LO1 The dynamic growth in the region

LO2 The importance and slow growth o Japan

LO3 The importance o the BottomothePyramid !ar"ets

LO4 The diversity across the region

LO5 The interrelationships among co#ntriesin the region

LO6 The diversity within $hina


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%ynamic &rowth in theAsia Pacifc Region

Asia has been the astest growing area in the world or thepast three decades

'tarting in ())*+ the leading economies o Asia ,Japan+ -ong.ong+ 'o#th .orea+ 'ingapore+ and Taiwan/ e0perienced a

serio#s fnancial crisis+ which res#lted in the crash o theAsian stoc" mar"et1• A tight monetary policy+ an appreciating dollar+ and a deceleration

o e0ports all contrib#ted to the downt#rn

The ())2 estimates by the 3nternational !onetary 4#nd ,3!4/that Asian economies wo#ld have 5) percent o the global

o#tp#t by the year 5666 were on target1

Both as so#rces o new prod#cts and technology and as vastcons#mer mar"ets+ the co#ntries o Asia7partic#larly thosealong the Pacifc Rim7are j#st beginning to gain their stride1


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The &reater $hina “The Greater China” reers to both the People8s Rep#blic o $hina

,PR$/ and the Rep#blic o $hina ,RO$/ or Taiwan

Aside rom the 9nited 'tates and Japan+ there is no more important

single national mar"et than the PRC

The economic and social changes occ#rring in $hina since it beganactively see"ing economic ties with the ind#striali:ed world have beendramatic1

The &reater $hina; PR$ Two major events that occ#rred in 5666 are having a proo#nd e


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Ater (@@ years o British r#le+Hong Kong reverted to $hina in()) when it became a specialadministrative region ,'AR/ othe PR$

The Basic Law o the -ong .ong'AR orms the legal basis or$hina8s one co#ntry+ twosystemsC agreement thatg#arantees -ong .ong a#tonomy

The social and economic

systems+ liestyle+ and rights andreedoms enjoyed by the peopleo -ong .ong prior to thet#rnover were to remain#nchanged or at least @6 years

The &reater $hina;-ong .ong

The &reater $hina; Taiwan ,RO$/

!ainlandDTaiwanese economicrelations contin#e to improve asboth have entered the =orld Trade Organi:ation1

Taiwanese companies haveinvested over E@6 billion in$hina

Taiwanese companies ace risingcosts at homeF $hina o


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Japan

Japan8s ast growth in the ()6s and ()G6sama:ed the world1

Japan8s economy slowed abr#ptly in the ())6s

4o#r reasons or this may be;• a#lty economic policies

• inept political apparat#s

• disadvantages d#e to global circ#mstances and

•

c#lt#ral inhibitions Hach o these o#r has their proponents+ each

their own rationale


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3ndia

'ince its independence in ()@6+ the world8s largest democracy had set apoor e0ample as a model or economic growth

3t was among the last o the economically important developing nationsto throw o< traditional ins#lar policies1

3ndia8s growth had been constrained and shaped by policies o imports#bstit#tion and an aversion to ree mar"ets

?ow however+ times have changed+ and 3ndia has embar"ed on the mostproo#nd transormation 3ndia has ta"en the ollowing steps;

• Privati:ing stateowned companies as opposed to merely sellingshares in them

• The government is now willing to red#ce its ta"e below @( percentand to give management control to socalled strategic investors

•

Recasting the telecom sector8s reg#latory a#thority and demolishingthe monopolies enjoyed by 'OHs• 'igning a trade agreement with the 9nited 'tates to lit all

I#antitative restrictions on imports• !aintaining moment#m in the reorm o the petrole#m sector• Planning the opening o domestic longdistance phone services+

ho#sing+ and real estate and retail trading sectors to oreign direct

investment


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The 4o#r Asian Tigers

The most rapidly growing economies in this regiond#ring the ()G6s and ())6s were the gro#preerred to as the Four Asian Tigers ,or 4o#r%ragons/; -ong .ong+ 'o#th .orea+ 'ingapore+ and

Taiwan Oten described as the Hast Asian miracle+C they

were the frst co#ntries in Asia+ ater Japan+ tomove rom a stat#s o developing co#ntries to

newly ind#striali:ed co#ntries1 Hach has become a major in#ence in trade and

development in the economies o other co#ntries


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Kietnam

Kietnam8s economy and inrastr#ct#re were inshambles ater 56 years o socialism and war+

-owever+ this co#ntry o more than GG million peopleis poised or signifcant growth1

A bilateral trade agreement between the 9nited'tates and Kietnam led to ?TR stat#s or Kietnam

This will lower tari


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Bottom o the Pyramid !ar"ets,BO!/

$1 .1 Prahalad and his associates introd#ced anew concept into the disc#ssion o developingco#ntries and mar"ets7 bottom-o-thep!rami" mar#ets $%OP&s' 7consisting othe billion people across the globe withann#al incomes o less than E(+566

These mar"ets are not necessarily defned bynational borders b#t rather by the poc"ets opoverty across co#ntries1

These billion cons#mers are+ o co#rse+concentrated in the L%$s and LL%$s1


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!ar"et !etrics

H0hibits ((12D ((1@ display the#ndamental mar"et metrics or the eightmost pop#lo#s co#ntries o the Asia Pacifc

region H0hibit ((1@ briey en#merates

cons#mption patterns

Japan stands o#t and there is a noticeabledi


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Asia Pacifc Trade Associations

The Asia Pacifc region is preparing or the ne0teconomic leap driven by trade+ investment+ andtechnology+ aided by others in the region

Tho#gh ew in n#mber+ trade agreementsamong some o the Asian newly ind#striali:edco#ntries are seen as movement toward aregionwide+ intraAsian trade area

Once a so#rce o ine0pensive labor or prod#ctsshipped to Japan or to third mar"ets+ theseco#ntries are now seen as viable mar"ets1


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Association o 'o#theast Asian?ations ,A'HA?/

Li"e all m#ltinational mar"et gro#ps+ A'HA? has e0periencedproblems and alse starts in attempting to #niy the combinedeconomies o its member nations1

!ost o the early economic growth came rom trade o#tside theA'HA? gro#p1

4o#r major events acco#nt or the vigoro#s economic growth oA'HA? co#ntries;• the A'HA? governments8 commitment to dereg#lation+

• liberali:ation+ and privati:ation o their economiesF

• the decision to shit their economies rom commodity based toman#act#ring basedF

• the decision to speciali:e in man#act#ring components in which they have acomparative advantage ,which created more diversity in their ind#strialo#tp#t and increased opport#nities or trade/

• Japan8s emergence as a major provider o technology and capital necessaryto #pgrade man#act#ring capability and develop new ind#stries 1


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AsiaPacifc Hconomic $ooperation,APH$/

The other important gro#ping that encompasses the AsianPacifcRim is the AsiaPacifc Hconomic $ooperation

4ormed in ()G)+ AP(C provides a ormal str#ct#re or the majorgovernments o the region+ incl#ding the 9nited 'tates and$anada+ to disc#ss their m#t#al interests in open trade and

economic collaboration 3t is a #niI#e or#m or promoting trade liberali:ation and

economic cooperation

APH$ has as its common goals a commitment to;

• open trade

•

increase economic collaboration• s#stain regional growth and development

• strengthen the m#ltilateral trading system

• red#ce barriers to investment and trade witho#t detriment to othereconomies


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%iversity =ithin $hina


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%i


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!ar"eting Opport#nities in The &reater $hina

There are e0treme di

sppt chapter 11

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