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The New Asian Ascendancy and New Zealand

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The importance of recycling. Presentation to Asian Studies, University of Otago 18 May 2006 ... TCL TVs and DVDs. Hisense TVs. But the big one is.... No, Hai'er ... – PowerPoint PPT presentation

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Title: The New Asian Ascendancy and New Zealand


1
The New Asian Ascendancy and New Zealand
  • Tim Beal
  • School of Marketing and International Business

2
Environmental correctness
  • The importance of recycling
  • Presentation to Asian Studies, University of
    Otago 18 May 2006

3
Outline
  • Asia in global economy the historical
    perspective
  • Importance of Asia to NZ
  • Chinas expansion into global markets
  • India joins China The Indian Market
  • Research Project
  • Opportunities for New Zealand Business in India
  • Work in progress - some tentative conclusions

4
ASIA IN THE GLOBAL ECONOMY THE HISTORICAL
PERSPECTIVE
5
The Old Order, or our perceptions of it
  • Example of pre-modern China
  • Self-sufficient, complacent, autarkic
  • Eg Qianlong emperor to King George III in 1793,
    rebuffing attempts to open trade relations

6
The Celestial Court has pacified and possessed
the territory within the four seas. Its sole aim
is to do its utmost to achieve good government
and to manage political affairs, attaching no
value to strange jewels and precious objects.
The various articles presented by you, O King,
this time are accepted by my special order to the
office in charge of such functions in
consideration of the offerings having come from a
long distance with sincere good wishes. As a
matter of fact, the virtue and prestige of the
Celestial Dynasty having spread far and wide, the
kings of the myriad nations come by land and by
sea with all sorts of precious things.
Consequently there is nothing we lack, as your
principal envoy and others have themselves
observed. We have never set much store on
strange or ingenious objects, nor do we need any
more of your countrys manufactures
7
Mad?
  • Whilst this condescension and incomprehension was
    to lead to disaster, the emperor had a point, as
    we shall see
  • Look at graphs of GDP and trade
  • The dominance, decline and resurgence of China
    and Asia

8
Rise, decline and resurgence of Asia
  • Two sets of data
  • 1 Long term trends in the world economy
  • Angus Maddison, OECD (2001, 2004)
  • 2 Rise of Asia in world trade
  • World Trade Organisation

9
Wealth and population
  • Maddisons regions
  • Asia includes Middle East, not Central Asia
  • Former USSR
  • Western offshoots US, Canada, Australia, NZ
  • Not Latin America
  • Here regions conflated to allow focus on Asia
  • Maddisons money 1990 international
  • Comparability over space and time

10
Figs 1-5
  • 1 Regional distribution of world GDP, 0-1998
  • 2 China and West Europe population 1 2001
  • 3 China and West Europe GDP, 1-2001
  • 4 China and West Europe pc GDP, 1-2001
  • 5 NZ in East Asian context pc GDP, 2004

11
Fig 1 Regional distribution of world GDP, 0-1998
12
China and West Europe
  • AsiagtgtgtChina
  • West Europe Offshoots gtgtgtWest Europe
  • China, West Europe in columns, Y-axis to left
  • Relationship (China as of WE) in line, Y-axis
    to right
  • 100 line (above ChinagtWE)

13
Fig 2 China and West Europe Population 1-2001
14
Fig 3 China and West Europe GDP, 1-2001
15
Fig 4 China and West Europe pc GDP, 1-2001
16
Fig 5 New Zealand in the East Asian context pc
GDP, 2004
17
Asia and Trade
  • Asian resurgence not in isolation, but connected,
    primarily through trade
  • Trade
  • Trade in Services
  • Eg tourism, education..
  • Merchandise trade goods
  • Focus here

18
World Trade Organisation data
  • Fig 6 Share of world imports, 1948-2003, Asia
    and NZ
  • Fig 7 Share of world exports, 1948-2003, Asia
    and NZ
  • Fig 8 China and NZ in world trade, 1948-2003

19
Fig 6 Share of world imports, 1948-2003, Asia
and NZ
20
Fig 7 Share of world exports, 1948-2003, Asia
and NZ
21
Fig 8 China and NZ in world trade, 1948-2003
22
IMPORTANCE OF ASIA TO NZ ECONOMY
23
Interaction between NZ and Asia
  • Decline and rise of Asia
  • Now economic interaction between NZ and Asia
  • Asia important to NZ in early days of European
    settlement
  • 1792 sealskins to China
  • jumping off point for China trade
  • Importance declined, then revived

24
NZs trade with Asia
  • Fig 9 Direction of NZ exports, 1859
  • Fig 10 Direction of NZ exports, 1859-1997
  • Fig 11 Direction of NZ imports, 1859-1997
  • Fig 12 NZs top twenty export markets, 2004
  • Fig 13 Top 25 source countries for NZ imports,
    2004

25
Fig 9 Direction of NZ exports, 1859
26
Fig 10 Direction of NZ exports, 1859-1997
27
Fig 11 Direction of NZ imports, 1859-1997
28
Fig 12 NZs top twenty export markets, 2004
29
Fig 13 Top 25 source countries for NZ imports,
2004
30
Trade in Services
  • Tourism
  • Educational services

31
Tourism
  • Fig 14 Asian share of tourism to New Zealand,
    1985-2004
  • Fig 15 Provenance of tourists to NZ, 2004, by
    region
  • Fig 16 Share and change in tourism from Asia,
    2002-04

32
Fig 14 Asian share of tourism to New Zealand,
1985-2004
33
Fig 15 Provenance of tourists to NZ, 2004, by
region
34
Fig 16 Share and change in tourism from Asia,
2002-04
35
Educational services
  • Fig 17 Continental provenance of global
    international students, 2001/2
  • Fig 18 Provenance of international students in
    New Zealand, 2004

36
Fig 17 Continental provenance of global
international students, 2001/2
37
Fig 18 Provenance of international students in
New Zealand, 2004
38
CHINAS EXPANSION INTO GLOBAL MARKETS
39
Contemporary geopolitical context
  • Need to position it within the China-US
    confrontation
  • US fearful of rise of China
  • Eg purchase of Unocol by CNOOC
  • my China page has many articles
  • US strengthening US-Japan, US-Taiwan alliances
  • Forcing China and Russia together
  • South Korea gtgtChina
  • Papers in
  • November 2005 Asian Affairs
  • December 2005 NZ Journal of Asian Studies

40
Chinese manufacturing
  • For some years China has been known as the
    factory for the world
  • Now seeing corporations, and their brands,
    surging onto world stage
  • EG Haier, Lenovo and Shanghai Automotive
    Industry Corporation
  • Faster, and less expected, than Japans
    expansion in 60s and 70s

41
Entering world markets
  • Two ways
  • Low-end producers of labour-intensive products,
    eg textiles
  • Manufacturing components and products fro foreign
    brands
  • Following Japan, S Korea
  • Will remain mainstay of exports for some time

42
Something new
  • Acquisitions
  • Brand expansion
  • Often connected

43
Acquisitions
  • Lenovo buys IBMs PC division
  • Formerly Legend
  • Highly symbolic act end of an era

44
Chinese brands
  • Shanghai Automotive
  • Kelon fridges
  • Galanze microwaves
  • Guangdong Donlim kettles
  • GD Midea rice cookers
  • TCL TVs and DVDs
  • Hisense TVs
  • But the big one is.

45
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46
No, Haier
  • Qingdao home of Chinas first global brand,
    Tsingtao beer
  • Also home of Haier

47
Haier stands out
  • Incorporated 1984
  • Rapid growth
  • Diversification across industries
  • Aggressive global expansion
  • 78 annual sales growth 86 categories of
    products, 13,000 specifications, 160 countries
  • Entered US in deal with Wal-Mart and Target, but
    under own name
  • Started production in the US

48
Japanese parallels
  • Japanese moved production to US to circumvent
    protectionism
  • True for Haier, but also desire to establish
    perception as American company
  • US regions now vying for Chinese FDI as sought
    Japanese in past

49
Hai'er charisma
  • Dynamic leader Zhang Ruimin
  • Member of Central Committee of Chinese Communist
    Party
  • (Haier part owned by Qingdao local government)
  • Spawned a film, a book, scholarly articles and
    Harvard case studies

50
Chinese expansion
  • Rapid, taken most observers by surprise
  • But in historical perspective not so surprising
  • Asia was centre of world economy
  • When regained independence, made transition to
    modernity then resurgence to be expected

51
Asian successions
  • Japan
  • 4 (Little) Dragons/Tigers
  • ASEAN
  • China
  • India

52
The Indian Market
  • Like China, India has long been fertile breeding
    ground for myths
  • For centuries, even millennia, both countries
    have been seen as large and rich
  • The GreeksgtgtgtMarco PologtgtChristopher Columbus

53
Fig 1 Long-term changes in the share of global
GDP China and India, and the West
Source Maddison 2001
54
Decline and resurgence
  • Decline during rise of European expansion and
    imperialism
  • mid-20th century both countries regained
    independence, and began economic resurgence
  • Relatively slow growth, especially in India
    Hindu rate of growth

55
Opening Up and Liberalisation
  • Late 1970s China began opening up
  • 1990s liberalisation in India
  • Great expansion of foreign trade and investment,
    general economic growth
  • Unasked questions - At what costs? To whose
    benefit?

56
Indian economy
  • One of worlds largestand fastest growing

57
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58
Source CIA World Factbook, updated 29 March
2006, accessed 11 April 2006
Table 1 Growth in GDP, 2004-5
59
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60
Table 2 World imports, 2005
Source CIA World Factbook updated 29 March 2006
61
The India market
  • All this makes India an attractive market

62
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63
Winners and losers
  • Although imports are growing, performance is
    uneven

64
Table 3 Changes in share of imports into India,
2001-2005
Source Reserve Bank of India trade database,
accessed 23 December 2005
65
New Zealand asks why
  • Asia NZ Foundation commissions research into
    Opportunities in India for NZ business
  • Awarded to School of Marketing and International
    Business, Victoria University of Wellington
  • Interviews in NZ, and India
  • Video interviews, still being processed

66
NZ case companies
  • Interviewed by Val Lindsay and Fergus McLean
  • Glidepath
  • Manukau Institute of Technology
  • Gallagher Group
  • Hayes International
  • Beca International
  • Robinson Seismic
  • Fisher and Paykel Healthcare
  • Vista Entertainment
  • Beca Carter Hollings and Ferner
  • Cadmus Payment Solutions
  • Solid Energy
  • Tait Electronics
  • (Tim Fowler, formerly VUW Vic Int in Australia)

67
Interviews in India
  • Tim Beal and Michel Rod
  • Saw it as part of Doing Business in India
    Project
  • Interviews in South Korea, North Korea, Japan,
    Malaysia, and Hong Kong
  • India February 2006
  • 25 interviews Delhi, Mumbai, Bangalore, Chennai

68
Interviewees - NZ
  • NZ officials
  • High Commissioner, Trade Commissioner (NZers)
  • Senior Trade Development Manager (Indian)
  • Honorary Consuls in Mumbai (also tourism),
    Chennai (Indian)
  • Honorary Adviser to AsiaNZ Foundation (Indian)

69
Interviewees - Indians in NZ companies
  • All of Indian ethnicity
  • 3 NZ companies
  • Air New Zealand (Mumbai)
  • Tourism New Zealand (Mumbai)
  • Fisher Paykel Healthcare (Bangalore)
  • 1 Joint Venture Britannia NZ Foods Pty Ltd
    (dairy products)

70
Interviewees Indian businesspeople
  • Forestry/Wood
  • Education
  • Fruit
  • IT
  • 1 Software for multiplex cinemas
  • 2 Building security hardware and software
  • Coal
  • Wool
  • Wine

71
Two perspectives
  • NZers focus on Indian problems
  • Bureaucracy, trade barriers, infrastructure,
    corruption
  • Indians poor marketing by NZ companies

72
Poor marketing - Education
  • Australia main competitor
  • NZ less active
  • NZ slower turnround time for applications
  • NZ immigration requires police clearance
  • Other issues work opportunities, immigration
    possibilities, length of courses
  • Quality of education not a major consideration

73
Underlying issue
  • Sustainable comparative and competitive advantage
  • Mutual benefit for India, NZ
  • (What benefit for ordinary Indians?)
  • Especially evident in IT sector
  • Wine as example

74
Wine - now
  • Growing market for wine in India
  • High tariffs on imports
  • Increasing domestic production
  • Like NZ, initially poor quality
  • Grown in wrong places, lack of viticulture
    skills, undiscerning customers
  • If NZ can develop world class wine industry, why
    not India?

75
Wine future
  • Quality of Indian wines will improve
  • Develop an export market
  • (watch out for competition from China)
  • As (if?) barriers drop growing niche market for
    NZ wines
  • Some NZ wines will have sustainable advantage
    based on land and climate

76
What do we make of India?
  • Indian market is growing fast, but opportunities
    are tempered by challenges
  • Challenges
  • Complexities of market,
  • Foreign competition (education- Aus apples
    China)
  • Domestic competition (wine)

77
New Asian Ascendancy and NZ
  • Vital, importance growing, but unevenly
  • Need to analyse, understand, and prioritise
  • Large but complex and difficult markets
  • Need understanding and skills
  • hence Asian Studies
  • Finally, a commercial

78
(No Transcript)
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