Lecture 1 - Asia

7/31/2019 Lecture 1 - Asia

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Asia Pacific BusinessLECTURE 1

Ishtiaq P. MahmoodNUS Business School


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What is Asia? What dowe mean by Asianbusiness?

Why do we want to learnabout business in Asia?


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Emerging Asia vs. Re-emerging Asia?

India accounted for 33% of the world economy in

1 AD. Indias share was three times the share of Western Europe and was much larger than that of the Roman Empire as a whole (21.5%). In otherwords, India was by far the worlds economicsuperpower at that time.

In 1000 AD, Chinas economy was 23% of theworld economy. By 1500 it was the same size asIndias and thereafter has always remainedsignificantly larger.

Angus Madison


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Asia in historical context

33%75%Asia

45%15%W. EU, US, Aus,Canada

1992

19%66%Asia


1950

58%66%Asia


1820

Income Population RegionYear


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Japan, The dragons, China, India, Southeast Asia What is driving Asias dynamism?

Free market /Government tinkering (Ghana vs. Korea) Big business/ Networks of SMEs (Korea vs. Taiwan)

Will Asia be able to sustain its economiccompetitiveness?

Working hard (perspiration) vs. working smart (inspiration) The Asian Financial Crisis/ Sub-prime Crisis Is economic competitiveness is the only thing to care about?

Asia-Pacific has been the most dynamic part of the world since the 1960s


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Productivity

Innovative Capacity

Competitiveness

Innovation is more than just scientific discovery

There are no low-tech industries , only low-tech firms

Prosperity

What is competitiveness?


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What makes countries competitive?

Solid macro-foundation Trade regime: Ghana vs. S. Korea FDI regime: Is FDI always good? FPI regime: Is free movement of capital a good

thing?

How about Free movement of labor?


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But ultimately countries are competitive

because the companies in those countries arecompetitive

What makes firms competitive? Internal: firm competence and resources

Does competence that work in one context also work in another context? (Guanxi)

External competition: the structure of theindustry in which the firms operate

Multi-domestic vs. global business (role of

government)


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LONG TERM INDUSTRY PROFITABILITY

G o v e r n m e n tPol icy

I M PACT OF GOVERNM EN T ON


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Strategy is about how to align the internal

competence with the external rules of the game

How universal are the strategic wisdoms wetake for granted?

Samsung vs. Sony

Diversification vs. focusCentralized leadership vs.

decentralization

Family ties vs. professionalmanagers


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A quick recap

If countries are competitive because thefirms are competitive, what makes firmscompetitive?

Firm strategy and resources Industry structure Macro-economic foundations Also, the location of the firms (the clusters)


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Messo: Clusters & Competitiveness

Firms are more competitive if they are partof clusters What will it take for Asia to develop successful

bio-tech clusters/ education clusters/ moviesclusters, etc.?

Should government be the one to initiatecluster-development? Does the govt. have the ability to pick winners?


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Specialization of Regional EconomiesSelect U.S. Geographic Areas

BostonAnalytical InstrumentsEducation and Knowledge CreationCommunications Equipment

Los Angeles Area

ApparelBuilding Fixtures,

Equipment andServices

Entertainment

ChicagoCommunications EquipmentProcessed FoodHeavy Machinery

Denver, COLeather and Sporting GoodsOil and GasAerospace Vehicles and Defense

San DiegoLeather and Sporting GoodsPower GenerationEducation and KnowledgeCreation

San Francisco-Oakland-San JoseBay AreaCommunicationsEquipmentAgriculturalProductsInformationTechnology

Seattle-Bellevue-Everett, WAAerospace Vehicles andDefenseFishing and FishingProductsAnalytical Instruments

HoustonHeavy Construction ServicesOil and GasAerospace Vehicles and Defense

Pittsburgh, PAConstruction MaterialsMetal ManufacturingEducation and Knowledge

Creation

Atlanta, GAConstruction MaterialsTransportation and LogisticsBusiness Services

Raleigh-Durham, NCCommunications EquipmentInformation TechnologyEducation andKnowledge Creation

Wichita, KSAerospace Vehicles and

Defense

Heavy MachineryOil and Gas

Note: Clusters listed are the three highest ranking clusters in terms of share of national employmentSource: Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School


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Process of Economic ReformThe Reinforcement of Macro and Micro Reforms

Macroeconomicreform

Microeconomicreform

Create opportunityfor productivity

Required to achieveproductivity

Productivity growth allowseconomic growth without inflation,

making macroeconomic stability

easier to achieve

Stability and confidence supportinvestment and upgrading


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But clusters dont develop out of nothing, contexts matter

Macroeconomic contexts provide the hardinfrastructure Is free market the way to go to develop

competitiveness?

Culture provides the soft infrastructure

Can Asians think? Does political freedom matter for

competitiveness?


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The 5C

Competence (firm) Competition (industry)

Cluster (location) Context Culture


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RecapWEEK 14

Southeast AsiaWEEK 13

IndiaWEEK 12

ChinaWEEK 11TaiwanWEEK 10

KoreaWEEK 9

JapanWEEK 8INDIVIDUALCOUNTRY CASES+ VIDEOS

InnovationWEEK 7

Diversification& Groups

WEEK 6MICRO

Culture& Politics

WEEK 5

InternationalFinance

WEEK 4

FDIWEEK 3

TradeWEEK 2MACROINSTITUTIONALCONTEXT

IntroWEEK 1


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China: Some Mind-benders

1. Exactly, how well has China done? Howsustainable is Chinas growth?

2. What does China need to do in order tosustain its dynamism?

3. Can China open up economically withoutopening up politically?

4. Can other emerging economies emulatethe Chinese miracle?


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Can India overtake China?

1. Is India rising?

2. Why was India left behind?3. What explains Indias recent

competitiveness in IT?4. Can the service sector lift India out of its

poverty?

5. Can the US lose its dominance in IT thesame way it did in electronicsmanufacturing? Andy Grove

6. Can India overtake China?


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Japan: Some issues to ponder 1. What explains the immense popularity of

Japanese pop culture across the globe (Japaneseanime, hello kitty, TV drama, J-pop). How can asociety so bound by norm and discipline such asJapan still come up with innovative concepts (cup

noodle, karaoke)?2. Are the problems confronting todays Japanuniquely Japanese? Can Japan beat off low costcompetition from China and other emergingeconomies?

3. Can Japan maintain its technological edge with itscurrent immigration policy?


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Geographic Influences on Competitiveness

Broad Economic Areas

Groups of NeighboringNations

Regions

Clusters

Nations

World Economy

Economicdevelopmentis acceleratedby concertedaction at allfour levels


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Warning

The outline and case sequence may change slightly due toAvailability of new case/ article/ videos, etc.

You should regularly check the course platform


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Class Process: What to Expect A course about ideas

The answer is less important than thethinking process

interdisciplinary approach to a complex subjectmeans that you have to get used to a lessstructured approach

Preparation Readings (E-reserves)


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Source: US Patent and Trademark Office (www.uspto.gov). Authors analysis.

Annual U.S. patentsper 1 million

population, 2001

Compound annual growth rate of US-registered patents, 1990 - 2001

International Patenting Output

0

50

100

150

200

250

300

350

400

0% 10% 20% 30% 40%

Australia

Canada

Germany

Japan

South Korea

New Zealand

Singapore

Sweden

Taiwan

UK

Israel

= 10,000patentsgranted in2001

US

Finland

Switzerland

NetherlandsNorway


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US Patents Granted to Country's Inventors: 1970-99The main numbers indicates the number of US patents granted for inventions made in

these countries in the indicated time period. The number in brackets indicates the number

of these patents that are owned by domestic entities for the country in question.

56(49)

15(13)

11(9)

7(5)

3(1)

4(4)Thailand

89(45)

43(20)

13(7)

6(5)

13(10)

2(2)Malaysia

18(12)

26(19)

10(7)

5(4)

5(4)

19(6)Indonesia

332(263)

239(211)

129(112)

7(6)

2(2)

61(52)China

316(237)

126(74)

64(33)

40(24)

67(37)

83(37)India

Emerging Asian Economies

499

(287)

148

(59)

47

(39)

20

(15)

9

(5)

21

(10)Singapore

570(469)

279(237)

177(149)

113(94)

75(61)

59(45)Hong Kong

11,366(11,278)

2,890(2,865)

424(418)

91(87)

43(36)

24(20)South Korea

12,366(12,148)

5,271(5,179)

1,772(1,738)

397(386)

176(170)

1(1)Taiwan (ROC)

Newly IndustrializedEconomies

1995-991990-941985-891980-841975-791970-74Recipient Countries

Documents

Lecture 1 - Asia