Wednesday, October 20, 1993

AAMA Annual conference, 1993

Opening remarks as Chairman of the 1993 annual conference, the fourth in succession of annual conferences that I chaired going back to 1990.

Since this conference is located in the now world famous Silicon Valley, I thought we would kick off the conference with the help of some state-of-the-art high tech presentation gadget. This device is called Media Pro and is on loan from nView of Newport News, Va. The technical brochure is available in the literature handout area for those interested in knowing more. My colleague Jon Goldman is the creator of ths presentation.

Over the past three years or so, the world has been engrossed by the rapidly changing Easern Europe and may have wondered about the business opportunities in that part of the world.

Frequently overlooked has been one part of the world which has been growing steadily and some would say spectacularly for the last two decades. We are referring to Asia of course, and paticularly East Asia.

Since one of the mission of AAMA is to act as the bridge enhancing greater understanding and cooperation between the East and West, we have accordingly decided to concentrate on "Keys to Asia's New Economies" as the topic for the conference for the next two days. To paraphrase a local TV channel, you have questions, we try to provide answers. As you will see, we have invited speakers who understand and have been successful in that part of the world and others from that part of the world to tell you what changes are taking place, what opportunities these changes protend, and how to participate there.

We had originally hope to invite an official from the World Bank to present an overview of that region. Unfortunately, they have other travel commitments, but they were most gracious in sending us the latest compilation of economic data so that we can pretend to be an economist for next five minutes.

The reason for throwing up this slide on Japan's export history is to show that since 1991, Asia has taken over from the U.S. as its largest trading partner. And as you can see, while the export to the U.S. is static, the trend with Asia is steadily climbing. In fact, in 1992 China alone has become Japan's second largest trading partner, second only to the United States. To give you another indication of the growing importance of Asia and China in particular to Japan, last year Japanese companies initiated 1800 new investments in China, equal to the sum total for the preceding 13 years. What is it that the Japanese know that we in the U.S. still don't know or at least fully appreciate? One of the business books Japanese were reading this summer was "China: Japan's only escape route from America's impending bankruptcy."

If you consider what rate of growth for the gross domestic product or gross national product (to us non-economists GDP and GNP are practically the same) has been for the Asian countries compared to the developed economies like the U.S. and Japan, then Japan's interest in Asia becomes easy to understand. As you can see from this slide, the GDP for Asia outside of Japan has been growing at 5-10% per year and is expected to continue. While for the U.S. and Japan, the growth rate when it is not negative, has been in the 1-2% per year. The forecast for the U.S. here may be by a particularly optimistic economist.

If you compare the per capita GDP of the established economies to the Asian countries by the traditional yardsticks, the difference seemed to be vast (for instance the annual per capita GDP of China is only $370 which is considered barely above poverty level) and one would wonder what markets and business opportunities could possibly exist in these countries. Trouble is traditional yardsticks are not comparing apples with apples and has been misleading.

Recently the United Nations and International Monetary Fund has been adjusting the local GDPs by the purchasing power parity. PPP is economist talk and we do not need to go into it here. Suffice it to say that the same dollar can buy a lot more or less from country to country and the buying power needs to be taken into account. When that's done, all the previously mentioned Asian countries have significant GDPs and indeed the consumer habits and existence of markets more closely reflect the adjusted GDPs that the traditional ones.

In fact according to the UN, when looked upon in that manner, China and India are among the 5 largest economies in the world ahead of all of the developed Western European countries. In light of these findings, Asia should no longer be considered as just a place for low cost labor. Asia represents the most vibrant part of the world.

We have invited some of the most qualified speakers to address the theme of this conference. I am guessing that their recommendations will have certain things in common: The market is global. You need to be there. To be there you need to have an open mind, willing to listen and learn, and ready to be flexible to find ways that will enable you to succeed in each and every local market.
Note by blogger: These remarks were made almost 15 years ago and still resonates in 2008.