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Paper Abstract: Examines opportunities, challenges & recommendations for Amer. trade & investment in context of Asian culture, growth & financial crisis. Tables. Paper Introduction: SUCCEEDING IN THE ASIAN MARKET: OPPORTUNITIES AND CHALLENGES FACING U.S. FIRMS IN THE WAKE OF THE ASIAN CRISIS Executive Summary 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 Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Importance of tactical flexibility. [37] Reid, 45. Bally, Cuong V. generates only 3% of its worldwide sales there . According to Tilghman andKnight, insulating expatriate foreign managers from the adverse effects ofcurrency devaluations can be short-sighted. [their] ability to react correctly to changing dynamics."[35] The Asian crisis has intensified competition within the region,especially in domestic markets. [11] "Dealing with the Crisis in Asia," Business America, February1998, 19. To take advantages of thoseopportunities and deal with the challenges in East Asia, American companiesmust develop sound strategies for strengthening their positions in EastAsian markets and adapt pragmatically and quickly to changes. Generally, theyinclude their different negotiating styles, which Paik and Tung pointedout, vary even among Chinese, Japanese and South Korean negotiators. "Changes in Japan's Post-Bubble Business Environment: Implications for Foreign-Affiliated Companies." Journal of International Marketing, 7, 3, 1999, 38-63.Rohwer, Jim. "Paying People in Crisis Economies." Journal of Business Strategy, March/April 1998, 34-37.Williamson, Peter J. "Internal Antecedents to the 1997 Asian Economic Crisis." Multinational Business Review, Fall 1999, 1- 12.Anandan, Rajan. Tilghman and Karla L. Kellerman, "Internal Antecedents to the 1997 Asian Economic Crisis," Multinational Business Review, Fall 1999, 6. [22] James F. "Corporate Governance in China: Explosive Growth and New Patterns of Ownership." Long Range Planning, 31, April 1998, 239-257.Tezuka, Hiroyuki. observed "the blind focus on capacityexpansion" and disregard of profitability by the chaebols, the huge family-controlled industrial conglomerates favored by the South Korean governmentwhich in 1996 owned 3 percent of the assets of the nation.[8] They said""it was only in the mid-9 s, when the South Korean market reachedsaturation and the economy slowed that the flaws in the chaebol began toshow."[9] Table 3 shows the lagging productivity of South Korean and someJapanese sectors in various global and domestic industries. [16] Ibid. It nowappears that such fears were overblown. East Asian cultures and religionsemphasize the importance of social cooperation and harmony and respect forauthority and hierarchy. [23] Henkoff, 142. Mergers and acquisitions involvingthe region rose from 1992 to 1997 from a value of 425 billion to $75billion, with more than 4 M & A transactions with a value of $35 billionbeing completed between August and December during the height of thecrisis.[18] Many more companies in the region are now available at lowerprices than before, some at bargain basement prices, and governmentrestrictions on foreign acquisitions have been relaxed in many countries.For example, banks and finance companies in Thailand can now be owned byforeign interests and the South Korean government has raised the ceiling onforeign equity ownership in most South Korean firms from 26 percent to 55percent and is expect to eliminate it entirely by 2 .[19] In addition,liberalization has led to decisions to privatize state-owned enterprises inmany countries, and, for others, such as the chaebols in South Korea,"competition . [27] Reid, 56. InMalaysia, some foreign exchange and capital controls were imposed inSeptember 1998, the only country in the region to veer back towardprotectionism. Knight. Mainland China maintainedexchange rate stability, moderated inflation and sustained continuingeconomic growth, albeit at a more modest 5-7 percent rate in 1998-1999. Henkoff pointed to the example of Microsoft which assumed someof the risk of local currency devaluations by setting its own prices inlocal currency in Malaysia, Thailand, Indonesia and the Philippines tosoften their impact on local distributors. . . 2. That crisis has lowered asset values and costs in many EastAsian nations thereby presenting many attractive investment and operatingopportunities while at the same time accelerating structural reforms whichprovide the basis for more dynamic internal growth, more open competitionand transparency from which well positioned American firms can benefit.However, the Asian crisis has also intensified competition within Asianmarkets and is likely to generate more focused and stronger competitiverivals as well as the continuation of some trade and other barriers to theentry of American products and services. Reid said ". "Negotiating with East Asians: How to Attain 'Win-Win' Outcomes." Management International Review, 39, 2, 1999, 1 3-122.Pettway, Richard H. Kellerman. For many business entries in mainlandChina, joint ventures with officially-designated Chinese partners areobligatory and often there and in other countries, joint ventures are thepreferred mode of entry for foreign investors because of the complimentaryskills and entree afforded by local partners in societies in which webs ofcontacts and connections are absolutely indispensable. Korea 48 Japan 127 Processed food S. "Restructuring South Korea's chaebol. The economies of most other nations in the regiongradually began to stabilize and improved. 247). 67 67.451 -46.1Japan 3, 5 .619 2.172.973 -28.8Source: Ilan Alon, and Edmund A. The primary reason for American firms with goodopportunities in the region to move now to strengthen their marketpositions in the wake of the Asian crisis is the bright long term future ofthe region. The Chinese government's plans toprivatize its huge empire of inefficient state enterprises which it plansto pare down from over 1 , to a thousand core companies able to competeglobally threatens the job security and welfare of millions of Chinese andwill probably cause unrest. II. Each refer to pieces of the Asian puzzle whichthis paper attempts to deal with more comprehensively. Many writers comment on thespecial characteristics of Asian societies which make it difficult forAmericans and other foreign companies to do business there. They did so, said Pettway, because "it was thought that fixedexchange rates lead to a more credible monetary policy, low inflation, andpredictable exchange rates enhanced trade and investment."[6] When Japan'soveremphasis on export-led growth without sufficient regard forprofitability led to large asset accumulations and uneconomic bank loans,resulting in bank failures and an economic slowdown in 1989-1991, the valueof the U.S. The progressive reduction of trade barriers and the introductionof other structural reforms designed to improve the productivity andcompetitiveness of domestic industries plays to the comparative advantageof large multinational companies, including American-owned ones. . . [25] Peter J. New York: Warner Books, 1992.Tilghman, Thomas S., and Karla L. Lewis, Victoria Lee Nam, Vincent Palmade, and Eric Zitzewitz, "The Roots of Korea's Crisis," McKinsey Quarterly, 2, 1998, 78. According to Yongun et al., "Americans meet to make adeal while East Asians . "There areopportunities for companies that can buy poor performers, cut costs,improve processes, and improve product and service quality."[21] However,Flanagan and Saada caution that "performing due diligence in Asia has beenmade problematic by the region's economic uncertainty and politicalinstability."[22] 3. "The Challenge for Successful Joint Venture Management in China: Lessons from a Failed Joint Venture." Multinational Business Review, Spring 1999, 5 -6 .Paik, Yongsun, and Rosalie L. [18] Ranjan Anandan, "M & A in Asia," McKinsey Quarterly, 2, 1998, 65. [15] Jim Rohwer, "Asia's Tigers Why They Will Be Back On The Prowl,"Fortune, . [4 ] Philippe Laserre, and Jocelyn Probert, "Competing in Asia Pacific:Understanding The Rules of The Game," Long Range Planning, 31, 1, 1998, 49.----------------------- 22 Table 2 Current Account Deficits in Crisis Asia (in millions)Country 198 CA deficit 1996 CA deficit % ChangeMalaysia -$266 -$7362 2668Indonesia -$566 -$7 23 114 Thailand -$2 76 -$14692 6 8S. . [35] Yan, 7 -71. "Competing in Asia Pacific: Understanding The Rules of The Game." Long Range Planning, 31, 1, 1998, 3 -58.O'Connor, Neale G., and Peter Chalos. The lure of a market of 1.2 billion Chinese consumers,China's track record in more than quintupling real output since it turnedto a mixed economy after 1979 and the flow of over $172 billion in foreigndirect investment into China since 1985 all suggest that the rewards arecommensurate with the risks.[39] However, American companies in China neednot only to have a sound strategic plan for developing their markets there,but also to be prepared to adapt quickly to changed circumstances,including having as a last resort an exit strategy. Competitionand Cooperation in the Japanese Economy," Sloan Management Review, Winter1997, 89; and Alon and Kellerman, 7. . [2 ] Ibid., 67. Although itis made progress in this respect, China lacks the legal infrastructureneeded to provide stability for foreign contracts and investments. [34] Hitt et al., 13. Avoid gaining a reputation as a foreign carpetbagger.For American companies, such as Dell Computers, which uses Malaysia as alow-wage production base for export of its products which it sells fordollars, the Asian crisis, said Henkoff, "makes for a winning combination:revenues in the stronger currency, expenses in the weaker one."[23]However, given the importance Asians place on long term relationships andtheir aversion to foreign 'carpetbagging' investors, American companiesmust be careful to view the Asian crisis less as an opportunity to makequick short term profits at the expense of local laborers and businessmenthan to strengthen their strategic long term position in each nation and inthe region. The crisis exposed other weaknesses in the economies of manyEast Asian nations. Theysaid the principal shortcoming of foreign negotiators is their "failure toprepare for and properly manage negotiations" with Asians.[28] The primarydifferences in Oriental and Occidental negotiating teams has to do with themethods of decision-making, the importance of relationships and direct v.indirect styles of communication. has made local companies consider shedding their non-core businesses."[2 ] East Asian companies, post-crisis, may be attractiveacquisition targets, not only because of their low asset values, but alsobecause of overcapacity and fragmentation of local industry. [2] Ilan Alon, and Edmund A. "Understanding Strategic Intent in the Marketplace. In such areas ofvital importance to the Asian nations concerned, American companies wouldbe wise to heed Williamson's admonition: "Asian companies . Structural reforms cannot be implemented overnight. "Asia's New Competitive Game." Harvard Business Review, September-October 1997, 55-67.Yan, Rick. [3 ] Neale G. Burdened withheavy short-term debt and lagging sales, some chaebols and South Koreanbanks failed, resulting in a wave of consolidations and mergers. Competition and Cooperation in the Japanese Economy." Sloan Management Review, Winter 1997, 83-93.Thurow, Lester. Although Indonesia remains in turmoil, the currencies of Malaysia andThailand appreciated somewhat in 1998-1999. Hitt, Beverly B. When the Asian crisis erupted and spread,widespread fears were expressed about the fragility of global financialmarkets and the potentially disastrous impact it might have on the stillnascent American economic recovery from the 199 -1992 recession. Hong Kong may or may not remain a citadel offree capitalism. And in foreign policy, the ever presentpossibility of an armed conflict between mainland China and Taiwanunsettles the plans of foreign investors to make long term investments oneither side of the Taiwan Straits. [12] Ibid., 17. Governments changed handsseveral times in Japan. the losses caused by drops in Asia's currencies are mere blips on the screen.[17] Falling currency values and local costs have presented manyopportunities for American investors. [9] Akaba et al., 71. Do, Yong Sung Kim, William W. Prime Ministers were ousted in South Korea,Thailand and Indonesia. . Some of those risks are governmentaland/or political. "The Roots of Korea's Crisis." McKinsey Quarterly, 3, 1998, 76-82.Chowdhury, Neel, and Anthony Paul. Joint ventures orstrategic alliances can and have gone awry for a variety of reasons in EastAsia. [6] Richard H. DeputyUndersecretary of Commerce for International Trade, called for an end to"the closed nature of many Asian markets-the cozy buyer-sellerrelationships, corruption in government contracts, 'cronyism,' and othermarket distorting practices that led to the misdirection of economicresources."[11] Other articles in the literature deal with the actual and recommendedresponses of American business to the Asian crisis. Appendix Table 1 Market Capitalization (in U.S. [36] Tezuka, 84. Saada. Williamson, "Asia's New Competitive Game," HarvardBusiness Review, September-October 1997, 66. Knight, "Paying People in CrisisEconomies," Journal of Business Strategy, March/April 1998, 36. [31] Michael A. On July 2, 1997, the Thai government announced thedevaluation of its currency, the baht. Yan said the success of foreign firms inChina has been largely due to "their continuous learning in the market, and. . Korea 76 Japan 65 Telecommunications S. In the countries hardest hit by it inSoutheast Asia, Henkoff said the business of American owned multinationals is relatively small . Alon and Kellerman summarized theensuing economic and financial crisis, which was felt most acutely in theSoutheast Asian nations of Indonesia, Thailand and Malaysia, and in SouthKorea, but which radiated throughout East Asia and the rest of the world: within a several months, the entire region saw declining currency values, large layoffs, contracting GDPs, bank closures and consolidations, rising prices of staples, and crashing stock prices [and] an overall rise in lending rates, inflation, debt repayment problems, and cutbacks on megaprojects.[4] Table 1 shows the overall decline in market capitalization amongcountries in the region between June 1, 1996 and August 1, 1998, whichranged from 83.7 percent in Indonesia to 28.8 percent in Japan. The harm suffered byAmerican companies doing business in East Asia during the crisis has beenrelatively small, and has been largely offset overall by the advantagesproduced for them by the crisis. [4] Ibid., 1. McKinsey Quarterly, 4, 1998, 68-79.Alon, Ilan, and Edmund A. Avoiding pitfalls in partnership arrangements. It experienced arecession and a massive credit crunch in 1996-1998.[14] Japan's slowness inmoving ahead on needed reforms has afforded American business an excellentopportunity to consolidate and expand its position in mainland China andother East Asian markets. "Asian Financial Crisis: The Role of China and Japan in the Post-Asian Crisis (or Solution)." Multinational Business Review, Fall 1999, 13-21.Reid, David M. Many domestic industries were non-competitive in worldmarkets, because of protectionism, government bailouts, uneconomic anddiscriminatory credit practices, cronyism and corruption, the promotion insome countries of uneconomic infrastructure projects, discrimination andrestrictive government policies toward many domestic service sectors, thedespoilation of raw materials, and the overall low productivity ofindustry. Opportunities 1. "Asia's Tigers Why They Will Be Back On The Prowl." Fortune,Rohwer, Jim. . The worst is over. From the 196 s and through theearly 199 s, most nations in East Asia rapidly developed their economies.According to Thurow, Japan, largely because of its penetration of Americanexport markets, which had a GNP of only 5 percent of U.S. Korea -$5273 -$23 61 337Philippines $19 4 -$198 4Source: Ilan Alon, and Edmund A. The rapid spread ofthe crisis proved that no nation can prosper in the long run in today'sglobal interdependent economy if it disregards the imperative of keepingits industries and economy internationally competitive. The opening of East Asianmarkets to foreign trade and investors will take time and will never becomplete. In South Korea, Akaba et al. no longerneed to play second fiddle in joint ventures."[25] More wide open are the hitherto relatively neglected and largelyinefficient domestic industries serving domestic markets for goods andservices. [38] Reid, 53. . Tung, "Negotiating with East Asians:How to Attain 'Win-Win' Outcomes," Management International Review, 39, 2,1999, 1 4. . Do, Yong Sung Kim, William W. [13] Ibid. Chowdhury and Paulsaid the lessons of the "Asian financial meltdown" were clear: "governmentsshould focus more sharply on what has made the region so successful in thepast-including honest administration, prudent use of debt, and a respectfor market forces."[5] The NICS in the region pegged their currencies to the Americandollar. $) 6/1/97 8/1/98 % ChangeCountry ($ millions) ($ millions)Indonesia $76.53 $12.497 -83.7Malaysia 177. [24] Thomas S. They said the multinationalcorporations are "less likely than local companies to freeze wages andreduce staff during local economic crises," but they do use them tointroduce performance based compensation systems.[24] 3. [or] lack of trust between partners, and thedesire to control rather than to collaborate."[31] Some companies with verypowerful leverage, for example, Coca Cola in China, made the decision tobuy out its joint venture partners in 1988 and proceed without them as soonas the Chinese government permitted it to do so. In South Korea, Akaba et al. Theuncertain hold of the regime on power over the long term casts a pall overall foreign business in China. [32] Rick Yan, "Short-Term Results: The Litmus Test for Success inChina," Harvard Business Review, September-October 1998, 61. reported that the "economic crisishas accelerated deregulation, which has opened up opportunities inretailing, consumer goods, banking, and many other industries."[26] The Japanese domestic market is changing, expanding and graduallyopening up to foreign investment. Theeconomies of Singapore and Hongare basically healthy. Fewgeneralizations hold true for long. Challenges and Solutions 1. During the period 1986-1996, South Korea increased its per capita income by ten times, Thailandfive times and Malaysia four times. Political conditions in Indonesia remain unsettled. 2. Lung. Nevertheless, certain important themes emerge: 1. Thehardest industries for Americans to crack will be the large, modern export-oriented industries although joint ventures to introduce new technologiesor productivity enhancing techniques may be possible. "More Malaise in Malaysia." Fortune, November 24, 1997, 1 2.Scholes, Eileen, David Clutterbuck, Thomas Clarke, and Du Yuxing. "Success As The Source of Failure? [33] Eileen Scholes, David Clutterbuck, Thomas Clarke, and Du Yuxing,"Corporate Governance in China: Explosive Growth and New Patterns ofOwnership," Long Range Planning, 31, April 1998, 242. Traditionally, Japanese consumers havebeen encouraged to save, not spend, their money but during the 199 s, thedecline in paper wealth following the burst of the speculative financialbubble of the early 199 s has led, according to Reid, not only to adeficiency of domestic demand which the Japanese government is trying tostimulate with its Big Bang policies but also to changing consumerpreferences.Some of these trends include renewed emphasis on quality and price, adesire for greater speed and customization of products and service, andshifting consumer allegiances but strong brand loyalty whenever companiescan position "their brands creatively to justify premium price."[27] WhileJapanese consumers are unlikely to mimic the spending habits of theirWestern counterparts, a huge largely untapped potential demand awaitsAmerican consumer goods companies who can design products and serviceswhich correspond to Japanese tastes and wants. Reid, "Changes in Japan's Post-BubbleBusiness Environment: Implications for Foreign-Affiliated Companies,"Journal of International Marketing, 1999, 7, 3, 4 . Saada, "Buying in Asia: BargainPrices With Strings Attached," Mergers and Acquisitions, , 39. Steadfastness pays off in the long run. "Asia: Why Business Is Still Bullish." Fortune, October 27, 1997, 139-142.Hitt, Michael A., Beverly Tyler, Camilla Hardee, and Daewoo Park. Asians tend to view negotiations inrelational contexts. Implications of the Asia Crisis for American Business I. In 1996, East Asia accounted for1/3 of American exports.[12] Despite a considerable short-term decline inAmerican exports to East Asia, other than to China and Taiwan, the Americaneconomic engine has continued to show remarkable strength throughout the199 s. Kellerman, "Internal Antecedents to the1997 Asian Economic Crisis," Multinational Business Review, Fall 1999, 3. Local partners can be of critical assistanceto American companies because of their contacts and web of connections, butunless that is all the American partner expects of them, they must intend,and be capable of, contributing their fair share to the venture's success.According to Hitt et al., Japanese companies often do a better job thanother foreigners in sizing up and understanding "the motives and intentionsof [local] government, customers, competitors, partners, andemployees."[34] 3. "Buying Asia: Bargain Prices With Strings Attached." Mergers and Acquisitions, , 199 , 38-4 .Henkoff, Ronald. [14] Edmund Desmond, "Japan: A Model For What Not To Do," Fortune,November 24, 1997; and David M. The International Monetary Fund(IMF) extended multi-billion dollar emergency loan packages to Thailand,Indonesia and South Korea. [5] Neel Chowdbury, and Anthony Paul, "Where Asia Goes From Here,"Fortune, November 24, 1997, 1 4. O'Connor and Chalos said that as of 1995, only 44 percent of foreign-Chinese joint ventures had met their profit objectives.[3 ] Joint ventures often go astray because, according to Hitt et al., of"failure to agree in advance on how to run the business and inflexiblecontractual agreements . . However, it clearly provides the basisfor encouraging American trade and investment expansion in the region whileat the same time flashing caution lights. The American trade deficit, however, still remains high, $11 billion in 1999.[13] Japan, which appeared to many to be about to take overa dominant position in many East Asian markets in the late 198 s, has hadonly average annual GDP growth of one percent in the 9 s. Academy of Management Executive, 9, 2, 1995, 12-19.Laserre, Philippe, and Jocelyn Probert. "Short-Term Results: The Litmus Test for Success in China." Harvard Business Review, September-October 1998, 61-75.----------------------- [1] Lester Thurow, Head to Head The Coming Economic Battles AmongJapan, Europe, and America (New York: Warner Books, 1992), p. SUCCEEDING IN THE ASIAN MARKET: OPPORTUNITIES AND CHALLENGES FACING U.S. [8] Yuji Akaba, Florian Budde, and Jungkiu Choi, "Restructuring SouthKorea's chaebol, McKinsey Quarterly, 4, 1998, 69. In just 27 years, 196 -1987, EastAsia's percentage of world GDP increased from 13.7 percent to 18 percentand was predicted to increase to 22 percent by 2 .[2] Alon and Kellermansaid "such success led to acclaim for the Asian 'miracle' andrecommendations [for the rest of the world] to adopt the 'Asian model.'[3]An Asian millennium in the 21st century seemed at hand. inJapan, everything happens faster than in any other country."[38] The barriers and risks associated with doing business in East Asiavary greatly from country to country and change over time. Much of the rapid economic growth of the region was achieved atthe expense of a more balanced approach to development. Korea 31Sources: Yuji Akaba, Florian Budde, and Jungkiu Choi, "RestructuringSouth Korea's chaebol," McKinsey Quarterly, 4, 1998, 74; and Martin N. No single formula for Americanbusiness success applies to the variegated markets of East Asia. Literature Review The bulk of the scholarly literature on the Asian crisis has beendevoted to analyzing its causes and manifestations and the needed reformsits outbreak calls for. It has done very wellsince in China which Yan said is due to "its extraordinary ability to reactin a timely and accurate way to changing market dynamics."[32] According toScholes et al., joint ventures with Chinese partners accounted for morethan 2/3's of the foreign investment projects approved by the Chinesegovernment in 1995; however, because of the new emphasis it places onimproving the productivity of such enterprises, "there is a growingpreference for investment in wholly foreign-owned enterprises, rather thanthe equity or cooperative joint ventures which overseas investors wereguided into in the past."[33] The selection of the appropriate local joint venture or strategicalliance partner is essential. [21] Ibid., 69. The inefficiency and low productivity of much of East Asianindustry are deep-seated in culture and politics and cannot be reformedovernight; nevertheless, the pressures for reform are great because of theimperatives of the global economy. These values are reflected in the Japanesetradition of lifetime employment, favoritism in lending practices, thereluctance of governments to allow companies to fail and the overridingimportance of contacts, connections and relationships in business dealings.These cultural values are a source of strength in international competitionwhere Japan's Tezuka said "they [the Japanese] cooperate as a team againstoutsiders," but paradoxically also a source of long term weakness because,as Alon and Kellerman put it, they lead to "abuses of collusion, lack oftransparency, poor banking practices, and corruption."[1 ] IMF and the American government, concerned about its large tradedeficit with East Asia, demanded that East Asian governments implementreforms to make their economies more competitive and more open andtransparent to outside competitors and investors. Introduction Rapid Economic Growth in East Asia. In themeantime, American companies must remain vigilant and react quickly whenunforeseen obstacles develop. Table 2shows the increase in the current account deficits of Southeast Asiannations (and South Korea) between 198 and 1996, which ranged from 4 percent in the Philippines to 2,668 percent in Malaysia. . "Japan: A Model For What Not To Do." Fortune, November 24, 1997, 97.Flanagan, James F., and Robert D. . [1 ] Hiroyuki Tezuka, "Success As the Source of Failure? . . FIRMS IN THE WAKE OF THE ASIAN CRISIS Executive Summary The Asian economic and financial crisis of 1997-1998 presentsAmerican international business firms with a unique set of opportunitiesand challenges. Korea 46 Japan 48 Retail banking S. primarily to establish and develop arelationship."[29] Much more could be said but these problems are present,regardless of the Asian crisis. Tyler, Camilla Hardee, and DaewooPark, "Understanding Strategic Intent in the Marketplace," Academy ofManagement Executive, 9, 2, 1995, 13. total GDP [of the region] is just $8 billion, about half that of France . Flanagan, and Robert D. [26] Akaba et al, 77. Procter & Gamble . [28] Yongun Paik, and Rosalie L. [17] Ronald Henkoff, "Asia: Why Business Is Still Bullish," Fortune,October 24, 1997, 14 -141. . Lewis, Victoria Lee Nam, Vincent Palmude, and Eric Zitzewitz. Selections from some ofthem are referred to below. 83 43.443 -75.5Thailand 47.893 16.337 -65.9Philippines 58.762 22.444 -61.8South Korea 87.98 44.483 -49.4Hong Kong 428.195 229.72 -46.4Singapore 125. The keysto success or failure are likely to be found in the ability of Americanfirms to develop long term strategies to penetrate Asian markets and tosustain themselves there, to accommodate to the distinctive characteristicsof the business and investment climate in each nation and to adapt theirstrategies and operations to a rapidly changing competitive environment.Special attention will need to be given to modulating the high politicaland other risks associated with doing business in certain areas especiallyhard hit by the Asian crisis, such as Indonesia, and the unpredictabilityof developments in mainland China. According to Rohwer, the expected annual average GDP growth ofthe region is 6.3 percent, as compared with 2.5 percent in the UnitedStates and 2.6 percent in Europe.[15] 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.[16] 2. . [7] ibid., 14. . Minimizing cross-cultural conflicts. In China, joint ventures approved by the government enjoy specialprivileges and are somewhat insulated from competition. dollar rose in relation to the yen, "reducing the previouslyfavorable price advantage of non-Japanese Asian goods."[7] The exports ofSouth Korea and Southeast Asian nations declined, which helped precipitatethe crisis. Kellerman, "Internal Antecedents to the 1997 Asian Economic Crisis," Multinational Business Review, Fall 1999, 1. "M & A in Asia." McKinsey Quarterly, 2, 1998, 64-75.Baily, Martin N., Cuong V. The same commentsapply to joint venture relationships. BibliographyAkaba, Yuji, Florian Budde, and Jungkui Choi. Tezuka said that in Japan "in virtuallyevery industry, approximately four to eight firms compete fiercely formarket position."[36] Reid commented that the principal obstacles Americanfirms face in the domestic Japanese market are "not invisible tradebarriers but rather the high costs of operating in Japan and the extremecompetitiveness of the market."[37] This is manifested in ruthless pricecutting and discounting, quick copying of new ideas and techniques ofrivals, and rapid changes in consumer preferences. The effects of thecrisis were political as well as economic. Table 3 Productivity comparisonsIndex: United States 1993-1995= 1 Industry Country Productivity Automobiles S. However, governmentpolicies can change overnight and be implemented arbitrarily. Asian Crisis. David Aaron, U.S. Negotiations should be entrusted byAmerican companies to experienced persons well-versed in, and sensitive to,the customs, needs and habits of mind of their local Asian counterparts. Pettway, "Asian Financial Crisis: The Role of China andJapan in the Post-Asian Crisis Era (or Solution)," Multinational BusinessReview, Fall 1999, 13. [39] Scholes et al., 242 and 249. GNP in 197 , hadby 1991 become the world's largest creditor nation and seemed poised tobecome its wealthiest economy.[1] Even more remarkable was the economicgrowth of East Asia's tiger economies, the newly industrializing countries(NICs) of South Korea, Singapore and Taiwan, followed soon after byIndonesia, Malaysia, the Philippines and Thailand. In the meantime, incountries where government interference is perceived to be particularlystrong, such as China, Indonesia, South Korea and Vietnam, Laserre andProbert suggest that "Western managers must understand the logic, theconstraints and the language of government in order to align their businessstrategies with the industrial policies of the individual countries."[4 ] Conclusion The full implications of the Asia crisis will be debated for years,and should continue to be studied. "Where Asia Goes From Here." Fortune, November 24, 1997, 96-1 4."Dealing with the Crisis in Asia." Business America, February 1998, 16-19.Desmond, Edmund. O'Connor, and Peter Chalos, "The Challenge For SuccessfulJoint Venture Management in China: Lessons from a Failed Joint Venture,"Multinational Business Review, Spring 1999, 5 . . [3] Ibid. Korea 69 Japan 51 Retail (consumer goods) S. Head to Head The Coming Economic Battles Among Japan, Europe, and America. [29] Yongsun et al., 115. Those studies are relevant to this research paperonly insofar as they help American businesses plan and manage their affairsin the region. The specific objectives of this research paper are to explain whatlessons can be drawn from the experience of the not yet over Asian crisisfor American business and to ascertain its implications for their futuresuccess or failure in East Asia markets. [19] Ibid., 66. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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