Student_international_marketing_15th_edition_chapter_11_0042_2060561_20180802_041117

Chapter 11The Asia Pacific RegionInternational Marketing15th edition Philip R. Cateora, Mary C. Gilly, and John L. GrahamThe People’s Republic of China (PRC) (1 of 2)Aside from the United States and Japan, there is no more important single national market than the PRCThe PRC with a dual economic system, embracing socialism along with many tenets of capitalism, has produced an economic boom with expanded opportunity for foreign investment Its GNP averaged nearly 10% since 1970 and is predicted to be around 8 – 10% in the next 10 to 15 years, equaling that of the US by 2015Roy Philip 2The People’s Republic of China (PRC) (2 of 2)Two major events that occurred in 2000 had a profound effect on China’s economy:Admission to the World Trade Organization (WTO)US granting normal trade relations (NTR) to China on a permanent basis (PNTR)Two steps China must take if its road to economic growth must be smooth:Improving human rightsReforming the legal systemRoy Philip 3Hong KongAfter 155 years of British rule, Hong Kong reverted to China in 1997, when it became a special administrative region (SAR) of the PRCHong Kong is given a high degree of autonomy. It negotiates bilateral agreements (which are then “confirmed” by the PRC0 and makes major economic decisions on its ownHong Kong is a free society with legally protected rights as the PRC continues to pursue a generally noninterventionist approach to economic policy that stresses the private sectorRoy Philip 4Taiwan, The ROCBoth Taiwan and China continue to implement WTO provisions between themselvesTaiwan companies have invested over %50 billion in China, and about 250,000 Taiwanese-run factories are responsible for about 12% of China’s exportsTrade helps out both countries: Taiwanese companies face rising costs at home - China offers a nearly limitless pool of cheap labor and engineering talent; China’s SOEs are laying off millions and Taiwan provides plentiful jobsRoy Philip 5JapanJapan’s fast growth in the 1970s and 1980s amazed the world. Then came the early 1990s, and Japan’s economy produced a stunning surprise: it slowed, sputtered, and stalledFour explanatory themes have emerged:Faulty economic policiesInept political apparatusDisadvantages due to global circumstancesCultural inhibitions Roy Philip 6Global CircumstancesJapanese population is shrinking faster than the U.S. In 2005, while American baby boomers were at their peak of productivity, the Japanese were about 10 years ahead to population declines and graying hairSerious disadvantage in the information age: its complex language (three alphabet system) hindered software innovationsWith historically low real prices of oil and the U.S. peak consumption level of SUVs, Japan was late to tap this marketRoy Philip 7The Cultural ExplanationThe lack of a national goal for Japan plagued them after successfully building themselves from the ruins of World War IIThe Japanese management culture such as, lifetime employment, job promotion based not on merit but on length of service, reciprocal contractor/subcontractor loyalties, hindered their adjustment to the new economic eraJapan is expected to continue its slow-growth economy; Toyota’s 2010 quality problems may have disrupted its contributions to the economyRoy Philip 8India The following steps have already been taken:Privatizing state-owned companies ; reducing stake to about 51%Recasting the telecom sector’s regulatory authority and demolishing the monopolies enjoyed by SOEsSigning a trade agreement with the U.S. to lift all quantitative restrictions on importsMaintaining momentum in the reform of the petroleum sectorPlanning the opening of domestic long-distance phone services, housing, and real estate and retail trading sectors to foreign direct investmentRoy Philip 9India India still presents a difficult business environmentTariffs are well above those of developing world normsInadequate protection of intellectual property rightsAnti-business attitudes of India’s federal and state bureaucracies continue to hinder potential investors and plague their routine operationsDelay by policymakers on selling money-losing SOEs, making labor laws flexible, and deregulating bankingWidespread corruption and ingrained briberyRoy Philip 10IndiaBut India presents a lot of opportunitiesMassive market (over 1 billion, second in size only to China)Cheap and qualified laborKnowledge of EnglishEducated middle class numbering 250 million (college graduates, scientists, engineers, etc)Supplier and exporter of expertise in all areas of information technologyTime zone puts India in a competitive position with their European counterparts (they work while Americans sleep)Roy Philip 11Asia Pacific Trade AssociationsOnce a source of inexpensive labor for products shipped to Japan or to third markets, countries in the Asia Pacific region are now seen as viable marketsThree free trade associations in this region:Association of South East Asian Nations (ASEAN)ASEAN+3 (ASEAN members plus ministers from China, Japan, and South Korea)Asia-Pacific Economic Cooperation (APEC)Roy Philip 12Association of Southeast Asian Nations (ASEAN)(1 of 2)Goals of the ASEANOperating within a free trade areaThe ability to sell in an entire region without differing tariff and nontariff barriers Distribution can be centralized at the most cost-effective point rather than having distribution points dictated by tariff restrictionsPricing can be more consistent, which helps reduce smuggling and parallel importingMarketing can become more regionally and centrally managedRoy Philip 13Asia-Pacific Economic Cooperation (APEC)APEC was formed in 1989Provides formal structure for major governments to discuss mutual interests in open trade and economic collaborationIncludes all major economies of the region and the most dynamic, fastest-growing economies in the worldCommon goal and commitment to:Open tradeIncrease economic collaborationSustain regional growth and developmentStrengthen the multilateral trading systemReduce barriers to investment and trade without detriment to other economiesRoy Philip 14Marketing Opportunities in Greater ChinaAcross this vast land of opportunity, there are extreme differences in economic wellbeing, cultures, and political structuresThe following sectors are great for American exporters:Automotive components, cleaner coal, construction equipment, education and training services, machine tools, marine industries, healthcare, water and wastewater treatment, rail equipment, renewable energy, and green buildingFinally, the influence of national government policies and regulations of marketing will often be minor compared with that of their local counterpartsRoy Philip 15