Perspectives for Sustained Prosperity in AsiaMarch 5th, 2012
I recently met a distinguished historian who confidently told me that ‘Asia’ didn’t exist until Europeans invented it.
Each of the many nations in the region, he explained, thought itself unique and apart from the others, a continent unto itself, until European traders came and gave the region a single unifying name.
An elaborate argument, but he was wrong. Asia has existed for millennia and the glue that holds this unique continent together is a set of core values that just about all Asians share – values that center on family, education and financial thrift.
While it is true that there is great cultural diversity across the continent, it is these core values, more than anything else, that define what it means to be Asian. They are at the heart of an identity that all Asians, from Turkey to Thailand, recognize and adhere to with pride.
Asia Is Big
Just about every aspect of Asia is impressive.
With about 30% of the planet’s land area, Asia is the world’s largest continent. Asia is also rich. It possesses vast mineral and agricultural resources. But, without a doubt, the continent’s most valuable resource is its large and industrious population. Asia is home to just under 4 billion people, about 60% of the world’s population.
Three of the four most populous countries in the world are located here. About 1.4 billion people live in China, about 1.1 billion live in India and about 230 million live in Indonesia.
Asia also supports a wide array of cultural diversity. More than 2,100 languages are spoken in its 48 independent nations and the world’s four major religions were born here – Buddhism, Christianity, Hinduism and Islam.
While Asia can be proud of this rich heritage, history is still being made here today. Where once only wrenching poverty and fabulous wealth existed, a huge middle class is now rising up and flexing its economic and political muscle.
Asia’s Economic Miracle
The success of Asian nations competing in the world economy is well known. Chinese electronics, Korean cars, Indian call centers, Japanese robots – the list of product categories that Asian nations dominate is almost endless, and it is continually growing longer.
Looking at Asia’s gleaming cities and powerhouse economies, it is hard to imagine that only 60 years ago Japan, China and the East Asian ‘Tigers’ were just beginning to recover from the devastation of World War II. Cities were in ruin, refugees were abundant and food was in short supply.
With Asia’s traditional values of family, education and financial thrift to guide them, millions of entrepreneurs and small businesses began the arduous task of rebuilding. They succeeded beyond everyone’s wildest expectations. Today, many East and Southeast Asian countries can be counted among the most economically advanced nations in the world.
China and Japan have significant aerospace and satellite capabilities and are gearing up to produce commercial aircraft. Thailand is becoming one of the world’s major automotive engineering and manufacturing centers. Indian firms are playing an increasingly dominant role in software and systems development. Korean firms have taken the lead in television and computer display technology.
Will Growth Continue?
The question is whether Asian economies can sustain the current furious pace of growth over the long term. The answer, I believe, is both yes and no.
Can the huge trade imbalances that currently fuel the growth of Asian economies be sustained over the next 50 years? In my opinion, they cannot.
Trade patterns between Asia and the rest of the world will eventually balance out. But that doesn’t mean that the region’s economies will slow down. In fact, I am sure they won’t.
Gross Domestic Product is not purely a function of inbound or outbound trade, investment and domestic consumption are also important factors.
Countries like China, India, Korea, Thailand and Indonesia, are investing heavily in sophisticated infrastructure, education and industrial productivity. This, I am sure, is the beginning of an important transformation.
Asian nations are taking the funds gained though export-driven trade policies and redirecting them into the domestic sector. This redeployment of capital has many positive impacts, but most significantly, it is creating an affluent middle-class. In the last three years China has doubled the number of citizens earning US$12,500 a year to 500 million.
As more Asians become affluent, there will be more spending and more saving. Both these activities stimulate and sustain economic growth.
The only danger I can see is Asians abandoning their traditional emphasis on fiscal prudence. Consumption is needed to stimulate the economy, but if consumers over-consume, the economy can be damaged.
Striking the right balance won’t be easy, but a proclivity towards traditional Asian thrift will help countries like China, India, Singapore and Korea to maintain growth without excessive debt.
Asia-based companies tend to keep logistics and supply chain operations in-house. This trend is driven by a lack of trust in outside service providers and by a lack of appreciation for how complex modern supply chain processes are becoming.
This is frustrating for us and, as the recent Japanese earthquake and tsunami demonstrated, it can create unexpected and costly problems for companies that manage their own logistics.
In the wake of the devastation in Japan, many companies experienced supply chain disruptions that sometimes took weeks to overcome. We have to demonstrate to Asian businesses that we have the world’s best logistics resources and an unrivaled expertise in transport and inventory management, and that we are consistently reliable.
Given that Asian companies are notoriously conservative about outsourcing functions such as supply chain management, building this kind of trust is a challenge that is going to take some time.
What the Future Holds
Over the past 50 years, Asian businesses have learned from the West about the importance of nimbleness and innovation, and they applied what they learned extremely well.
But the world is now learning something from Asia. The deeply rooted values that put family, education and financial thrift at the center of every Asian’s life are now resonating around the world.
I believe that this two-way exchange of values between East and West bodes well for everyone everywhere.
As my future grandchildren grow into productive adults, I don’t want them to think of themselves as Asian or Western. I want them to think of themselves as international citizens who naturally combine the best values from both worlds.
I want them to cherish their family and value education as Asians do. But, I also want them to approach the tasks and problems they will encounter in their lives innovatively, like a Westerner, and to be able to react to opportunities with nimbleness.
In this sense, I believe that the future of Asia is the future of the world … and vice versa.