USC Trojan Family Magazine - Autumn 2000: All Abroad!
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apan has advantages over the United States as it seeks to exploit Asia’s continuing economic growth through the end of the century.
Armond Fingleton, an American chamber of commerce official in Tokyo, says that of all the world’s economies, Japan, with the exception of 1993, has fared best. Despite slower growth since the heady 1980s, Japan’s cumulative growth since 1990 of 15 percent surpassed the American economy’s 13 percent expansion over the same period.
“Japan keys its growth to exports,” he says. The United States consumes more than it produces. “Japan invests in savings,” he adds. Forty percent of all the world’s savings are in Japan.
Asia experts look at China as a country which has done well in its exports to the United States, but still has to learn com-petitive marketing and needs monetary stability. American advantages in the Asian market come from unequaled high-tech products and from the marketing skills of a variety of firms ranging from Coca Cola to Amway.

eyond economic opportunities, the varied anecdotal patterns of growth and change one finds today in Asia are mind-boggling.
Whether in Hong Kong, Jakarta, Guang-zhou or Shanghai, the music most played on public address systems in modern shopping centers and Asia’s proliferating malls is American. Current Asian favorites include American pop classics from the 1940s and 1950s.
Many young professionals in Hong Kong now get their recreation by taking weekend hydrofoil boats to golf courses in China. Golf is new to communist China.
But the sport is growing.
No Asian city is more surprising than modern Jakarta. More than 8 million
people crowd the capital of the world’s fourth largest country.
Indonesia has more water than land within its boundaries, which encompass 17,000 islands. Its president jokes that the number goes to 19,000 islands at low tide.
President Suharto, all but certain to be elected to a seventh five-year term in 1998, bases his claims to a major place in history on the national stability he has created and on growth which has brought his country from bankruptcy in the 1960s to annual growth rates today of 7 percent.
Protest demonstrations in Java and East Timor prior to the most recent elections marred Indonesia’s image of stability. But Suharto remains in firm control. His Golkar Party claimed over 70 percent of the vote in the recent elections.
In another private discussion with USC trustees, it became apparent that Suharto takes great pride in the high-rise buildings and the giant shopping centers of Jakarta as signs of remarkable economic growth. His next goal, he says, is to help 22,000 of Indonesia’s poorest villages. Toward that end he gives each impoverished village a $30,000 grant. Large businesses are assessed a payment of two percent of after-tax profits to help the low-income communities.
Jakarta has become a center of world architectural competitions. Its giant, high-rise apartments, banks, offices and hotels offer modern construction outclassing any American city. Yet many Americans couldn’t find Indonesia on a map.

hen one looks for proof of massive growth in Asia, however, it is demonstrated most vividly in Shanghai Pudong. In 1990, the Chinese communist government announced it would showcase its new “economic socialism” by making Pudong the locomotive pulling Shanghai into an international economic, financial and trading center.
The Chinese see Shanghai, with its own Shanghai stock market, developing into a competitor with Hong Kong. Businessmen in Hong Kong see Shanghai Pudong as an internal financial center for China in the next century, while believing they will remain China’s dominant center for international commerce.
Morgan Stanley, a Wall Street brokerage with its Asia headquarters in Hong Kong, has become the first foreign company to join in a partnership with the People’s Construction Bank of China. Together, they have formed a private investment bank to help finance more entrepreneurial business in China.
Jack Wadsworth, who heads Morgan Stanley in Asia, still sees a major problem. “China will have full access to western capital markets only when its currency becomes fully convertible,” he says. Beijing has set the year 2000 as its goal for convertibility.
Henry Kissinger recently called Pudong “one of the most admirable places I’ve ever been to. It is an incredible success.” Kissinger is not given to excessive praise, and few would dispute his description.
In 1996 one-third of all of the world’s major construction cranes were said to be operating in Pudong, which has as its Eiffel Tower-style trademark a giant communications tower in the center of the financial district.
When I first visited Shanghai in 1972, transportation consisted mainly of bicycles with a few cars and buses. Today Pudong’s freeways are crowded with cars.
By mid-June of 1996, Pudong had attracted 3,931 foreign-financed projects with a total worth of $16.7 billion. During the past six years an average of $1.9 million in foreign capital was invested in Pudong each day.
Shanghai has a major international airport, but the Pudong project includes a separate airport now under construction and planned for completion in 1999. Its planned capacity will be 20 million passengers a year, expandable to handle 70 million passengers in the future.
In a meeting in Pudong, visiting Trojan trustees were amazed to hear the Chinese Communist director of the giant project talk glibly of using capital gains, tax benefits, stocks and bonds, profits and capital investment. Obviously, economic change is a breathtaking reality in China.
In the midst of this momentous growth, one still finds smaller Chinese entrepreneurs who are finding niches in the PRC’s seemingly paradoxical “socialist-free market” system.
Shanghai Fuller Foods began as a dairy operation. When Rich Wang graduated from USC in 1985 as a business major, he returned to his father’s dairy business. After Wang learned of tax advantages offered in Pudong, he and his family built a modern plant to convert their old-fashioned dairy business into a company producing chocolate, coated ice cream bars and chocolate milk. Wang’s ultra-modern, mechanized ice cream factory has 200 employees and is about to expand from Pudong to Beijing.
Under China’s “socialist” system, Wang provides his employees two meals daily and the government supplies housing and benefits. Wang’s employees say they are happy with their $300 monthly salaries, with which they can purchase what they want.

he world will change as it moves into the next century. But in no part of the world will the economic growth be greater than in Asia. This poses both a problem and an opportunity for the United States. It already is providing an opportunity for leadership by the University of Southern California.
International free trade becomes more important to the U.S. economy each year. The cultural differences found in doing business in Asia are far more complicated for the United States than when we focus mainly on Europe.
As a nation, we have much to learn about our neighbors around the Pacific Rim. But this is the opportune time to learn, and then put that knowledge to good use.
Asia’s huge market is expanding at record rates. The United States needs to be a major player in this vast and rapidly growing market.
It is long past time for Washington to regain the focus it had on Asia a quarter of a century ago when President Nixon opened the way with his historic trip to China.

In 1996 one-third of all of the world’s major construction cranes were said to be operating in Shanghai Pudong.
photograph by Rick Simner

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