Asian Emerging Markets and Development Peter Enderwick Professor of International Business Auckland...

Asian Emerging Markets and Development

Peter EnderwickProfessor of International BusinessAuckland University of TechnologyNew Zealand

Visiting Professor CIBUL, University of Leeds

Introduction

• Focus – Asia, but particular focus on the large emerging markets (LEMs) of China and India.

Importance of Asia

• As well as its numerical importance (population, GDP, trade etc) Asia has been one of the most exciting regions for the past 60 years.

• Only region to see consistent and broad based economic development i.e. Japan, NIEs, ASEAN, China and India.

Structure

– Rise of LEMs– Evolution of Research on LEMs– Areas of Research– Management Issues– Asia and IB– Asia in the Longer Term

Rise of Asia and LEMs

• The economic rise of Asia and in particular China and India, has fundamentally affected many aspects of world economic and business activity:– GDP– Trade– Labour markets/job security/income– Foreign reserves– Migration– Resources and commodity prices

Importance of LEMs

• From an IB perspective, LEMs are important in an number of ways:– As markets – more than 2 billion consumers– As lower cost production sites– As learning opportunities

Competition Forms and extent

New business models -Music-Online gaming- Adaptation of models e.g-Dell-Tata and the Nano

Importance of LEMs

• The breadth of these impacts and the multiple benefits offered by LEMs make them amenable to the multidisciplinary and holistic approaches favoured by IB,

• i.e. more than international marketing, production or strategic management.

Evolution of Research on LEMs

• Size/scale/growth/broad implications• Internal focus – markets/sourcing/business

systems/FDI• Regional/global impacts• Outward FDI/competitiveness of LEMs• Upgrading of LEM competitiveness and

accommodation of advanced economies• Emulation of growth model/management• Catch-up versus industry leadership

Focus of Research

• The challenge of LEMs (infrastructure, inequality, inflation, democracy etc);

• Risks in LEMs (informational, volatility, nationalism etc);

• Global bads – SARs, Bird flu etc;

Focus of Research

• China and India and their interaction with globalisation (eg global institutions, trade relations, trade patterns with high energy costs);

• Global protectionism issues;

• Integration of LEMs into business strategy e.g. capture of raw materials+ manufacturing;

Focus of Research

• Changing nature of strategy within LEMs e.g. Eli Lilly and Chinese hospitals, Renault/Nissan and electric cars;

• Impacts on aspects of the world economy e.g. resources, financial flows;

• Impacts of China and India on Asian regional economy;

Focus of Research

• Impacts of China and India on least developed economies;

• Growth of FTAs;

• Labour market impacts e.g. skill differentials, labour/capital share

Focus of Research

• China and India – complements competitors, convergence?

Management Issues

• Political economy of the rise of LEMs –– Accommodation re USA– Complementarities vs competitiveness– Backlashes – nationalism, currency, global

protectionism, offshore sourcing;

• Innovation and competitive upgrading;

India – Offshore sourcingChina – IFDI and spilloversRole of foreign firms

Management Issues

• Management of global supply chains – quality/cost/ethics;

• CSAs/FSAs of LEM firms and capture of CSAs;

• Learning from LEM firms – management of government relations, networks, innovation for the bottom of the pyramid.

Asia and the Sustainability of IB

• China and India, like Japan, provide new stimulus to IB:– New, complex issues– Cross-discipline nature of these issues– Makes infusion more difficult– Encourages problem-oriented approaches– Encourages embeddedness (centres, cross-

disciplinary programmes, committed Deans)

Asia and the Sustainability of IB

– Amenable to external funding– Strengthens non-US perspectives on IB

LEMs makeinfusion moredifficult

LEMs offernew issues

Asia in the Longer Term

• Key issue of sustaining success beyond catch-up

• Will China and India turn out to be another Japan?– Size, openness and integration– Competitive relations between China and

India drive them– Massive resources– Drivers of regional integration