Selling into Pacific Rim Presents Rewards and Roadblocks.
One of the World's most developing areas is the Pacific Rim. The economic and political development which the nations in this particular region currently are facing will create many marketing opportunities for developed nations such as the US. The pacific rim consists of eleven potential nations. These countries are; Japan, South Korea, Indonesia, Singapore, Australia, New Zealand, Malaysia, Thailand, China, Taiwan, and finally Hong Kong. The total Gross Domestic Product (GDP) of this region total $5 trillion. Furthermore, the region is forecasted to have an insatiable demand. However, some economists argue that problems such as insufficient infrastructure, and political stability may influence foreign marketers operating in the area.
Japan has one of the world's most powerful economies. US firms have faced regulatory and traditional barriers in the process of marketing goods and services in this potential market. However, the politics behind these barriers are changing. There is potential for growth in many prospects of foreign goods and services entering the Japanese market (125 million potential customers). Prospects such as industrial chemicals, medical equipment, telecommunications, and construction equipment are in high demand and many US firms have formed joint ventures with domestic firms. As the Japanese will buy their own products, it is natural for such firms to closely work and utilize established Japanese firms in forming joint ventures.
South Korea represents another prospect. This nation is slowly opening its markets to foreign imports. However most trading areas will not be liberalized until 1997 or 1998. Leading prospects are concentrated on highly technological advance areas. South Korea can benefit by buying high-tech goods from developed countries. This fact supports that the nation's trade barriers will slowly become more liberalized.
Another country that is rapidly developing in the Pacific region is Indonesia. With a population of 125 million, and an actively developing economy, the country represents a potential market. The country has historically concentrated its export industry on raw materials, and imported transformed goods. However, Indonesia is going to have a more sophisticated downstream industrial base. Presently, the US exports products and services worth $2.8 billion a year. There is a high need for state-of-the-art technology, and American corporations such as Motorola and Ford have recently established themselves.
Singapore is one of the most economically powerful nations in the Pacific region. Its industry is high-tech, and the nation is known as a major financial center in the region. Singapore is currently facing a labor-shortage, and it imports labor from many of the neighboring countries. Economic and trade relations between the US and Singapore are excellent. There are many examples of successful joint ventures of Singaporian and American firms. Even though the population only number 3 million, it has a strong purchasing power.
Malaysia, bordering to Singapore, clearly represents one of the fastest growing economies in the world. In addition, it is very keen on having foreign investors investing in its industry. However Malaysia's high trade tariffs (15% for manufactured goods, and 30%-50% on agricultural goods) may be of concern for foreign investors. The US is a leading trade partner of Malaysia (after Singapore and Japan), and there is clearly a potential for a future growth in its market share. Prospects include; Electronic components, computers, and communications equipment.
Malaysia is a country with a multi-culture. Indians, Malay, and Chinese live together and work together. There is no thing as a "Malaysian culture", as it is a mix of everything! Such a fact has to be carefully considered when penetrating a prospective market. Such a thing as advertising may be a terrible headache, as certain approaches may offense various cultures. In Malaysia, there is no way that you can advertise without humiliating one particular market group.
Thailand probably has the most liberal trade policies in the area. The US presently has 10% of the International market share. However, political factors, such as the civil uprising in 1991, have to be considered when examining this market.
Another example of a nation that has political uncertainty is China. China has one of the world's fastest growing economies. With over 1.6 billion potential customers, this country is a potential market for foreign companies. Leading prospects for export include telecommunications, computers, chemicals, and machinery/services. American firms such as Apple, and AT&T have already begun operations. Also, joint ventures of Chinese and US firms have formed.
Possibly, the gateway to the Chinese Mainland is Taiwan. Taiwan has a relatively open market, and by forming joint ventures with Taiwanese companies, and use these as a stepping stone to the Chinese market.
Hong Kong represents a second gateway to China. American trade with this strategically located country has historically been successful, and US firms have over 200 regional headquarters here. In addition, the country's economy is in a great boost. Hong Kong has 6 million prospective customers. In 1997, Hong Kong will be transferred over to China, which may be of great concern to the Multinational enterprise.
There are two steps to success in prospecting a new market in the Pacific Rim. First, introduce products with high quality. Secondly. have plenty of capital ready to spend.
Furthermore, a majority of the countries in the pacific rim have a different way of doing business. Bribes, and other "if you scratch my back and I will scratch yours" approaches are necessary if you are going to be able to do business. The bureaucracy in many of the nations is terrible, and I believe that companies that approach the Pacific rim should account for large time spans. It may take years to get an import permit, or negotiate on certain trade tariffs. In some cases, corporations even question if it is worth the efforts of approaching new markets.
In addition, factors such as infrastructure should be carefully examined. For instance, if you are planning on selling cars, you should make sure that your market has an infrastructure (roads) that can support your product. In addition, factors relating to communications, such as the amount of people per one telephone should be considered. Effective communications are crucial in the present society.