U.S. Firms in the Asian Market

SUCCEEDING IN THE ASIAN MARKET: OPPORTUNITIES AND CHALLENGES

FACING U.S. FIRMS IN THE WAKE OF THE ASIAN CRISIS

The Asian economic and financial crisis of 1997-1998 presents American international business firms with a unique set of opportunities and challenges. That crisis has lowered asset values and costs in many East Asian nations thereby presenting many attractive investment and operating opportunities while at the same time accelerating structural reforms which provide the basis for more dynamic internal growth, more open competition and transparency from which well positioned American firms can benefit. However, the Asian crisis has also intensified competition within Asian markets and is likely to generate more focused and stronger competitive rivals as well as the continuation of some trade and other barriers to the entry of American products and services. No single formula for American business success applies to the variegated markets of East Asia. The keys to success or failure are likely to be found in the ability of American firms to develop long term strategies to penetrate Asian markets and to sustain themselves there, to accommodate to the distinctive characteristics of the business and investment climate in each nation and to adapt their strategies and operations to a rapidly changing competitive environment. Special attention will need to be given to modulating the high political and other risks associated with doing business in certain

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bright long term future of the region. According to Rohwer, the expected annual average GDP growth of the region is 6.3 percent, as compared with 2.5 percent in the United States and 2.6 percent in Europe. He said East Asia is going through the transition to a new phase in the Continent's rise that, if it is handled correctly, should begin building the modern commercial and financial structure that will allow East Asia to continue growing up to three times as fast as the rich world for another generation. 2. Steadfastness pays off in the long run. The harm suffered by American companies doing business in East Asia during the crisis has been relatively small, and has been largely offset overall by the advantages produced for them by the crisis. In the countries hardest hit by it in Southeast Asia, Henkoff said the business of American owned multinationals is relatively small . . . Procter & Gamble . . . generates only 3% of its worldwide sales there . . . total GDP [of the region] is just $800 billion, about half that of France . . . the losses caused by drops in Asia's currencies are mere blips on the screen. Falling currency values and local costs have presented many opportunities for American investors. Mergers and

Category: Economics - U