Asia's Century A market of 5 Billion people have awoken.

Asian economies are in some way a dichotomy of what we would call in the west Capitalism versus nationalism. I'll explain but first I'll remind myself of a claim that my first boss made back in the days of Addressograph Multigraph my first employer, he said to me “For Communism or Capitalism to survive they both need to be present”.  I never understood the value of that statement until after the wall fell. The balance to Capitalism in the west became greed with ethics and morals largely cast aside. In Asia, you have a form of checks and balance that mirror those two ideologies. Once in discussion with senior Huaweii exec I referred to their communist balance, he quickly let me know that Communism is a past term and that a more modern name should be applied, although he didn't offer an alternative, but his indignation was felt.

In previous notes I have talked about Globalization and how Asia wants no part of this. I should qualify this; Asian economies have benefited from globalization there is no doubt, but they have stopped short of totally opening up.  Perhaps for several reasons in my view, 1. They have been on the losing side of colonization along with the brutal ills that that brought. 2. The currency crisis of 1998, major corporations were saddled with US debt which they struggled to balance. Many if not all did repay suppliers, loans etc. but it cost them their place in the market. There is no better example of this than Indonesia, two destined to be conglomerates one had the incumbent fixed telecom state owned network as its partner the other Nynex out of the US. One operator XL I would say at that time was progressive dynamic and inventive, the other Telkomsel more pragmatic, harnessed by tradition, due to the 98 financial crisis the balanced shifted in favour of Telkomsel. Today Telkomsel are 3 times bigger than their nearest competitor XL, in a country of 260M 1998 was a significant handicap to XL. Globalization was seen as a western benefit, as a result what we have today is savvy ministers who were able to take the advantage of globalization but spin on a sixpence so to speak as the 2008 financial crisis hit the west, opening the door to regionalism a tried and tested system of integrated trade ties established following 1998, save that of the wave activity which has been present for 50 years as referred here in a previous post. CLICK HERE!

The mix of ideologies following savvy economic policies have put this region as the frontrunner by a furlong to be the dominating party of the 21C. 19C was dominated by the British Empire, the 20th by America and the American dream. We now have an Asia dream and it really should not be missed.

That's not to say that Asia doesn't have its issues, for sure it does. But first be mindful; they are aware of the behaviour of the globalization actors, their aggressive push to build and retain superpower status. Their overtures in seeking free trade policy backed up by neo-mercantile policy. 

Asia have to come to terms with the need to rebalance their economies, to move the power base away from family conglomerates. Large parts of a country’s listed stocks are led from family run business. In Korea, they have a term chaebol which refers to family business conglomerate, they make up 50% of the Korean stock market. We all remember I'm sure the peanut issue on a Korean airline leaving New York, these are powerful families and as such are, in the case of Asia generally able to hold direction over a countries fortunes.  For that reason Asian economic ministers look to China as to the way they have handled this issue in order to spread the wealth creating more entrepreneurialism. In Indonesia large family conglomerates control major sectors such as construction, real estate, shipping, commodities trade, banking, and telecoms. The corporate pyramid remains narrow at the top, giving individuals enormous influence over policy. According to McKinsey, family businesses across the region have been growing at more than 20 percent per year over the past decade and using their strong cash positions to invest in joint ventures and new technology that raise the productivity of their home-based workers. Some might call this Confucian capitalism, recognizing the centrality of community, it is as Chinese as the notion of guanxi, or having privileged influence through networks. 

Corruption is a scourge across the world, it has more visibility across Asia only because the money is not flowing into the pockets of the west. In Asia, particularly Indonesia there is an anti corruption unit which has made great strides to reduce this burden, as with China many official have fallen, continuing to fall, they are being jailed by the 100s. Through pragmatism, good leadership and a realization as to the handicap this practise have on future growth prospect. 

Consider: In the west Competition is freely banded around as though it is the domain of western economies. But look at the banking sector. As one executive of a European bank put it, “In the US, American banks face little competition to service wealthy clients. In Europe, both European and American banks compete for the market. And in Asia, European, American, and Asian banks are all competing for wealthy customers. All our margins get squeezed, but at the same time it unlocks trillions of dollars of savings to be profitably invested.”

All of this is fascinating but the facts remain Asia will march forward in this Century. Americanism will give way just as Colonialism gave way. Stop it you can not, participate for sure you can!