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The New Asian Ascendancy and New Zealand

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  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 • China’s 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 country’s 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 • Maddison’s 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 • Maddison’s 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 • Asia>>>China • West Europe & Offshoots >>>West Europe • China, West Europe in columns, Y-axis to left • Relationship (China as % of WE) in line, Y-axis to right • 100% line (above = China>WE)

  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. NZ’s 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: NZ’s 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: NZ’s 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. CHINA’S 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 >>China • 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 Hai’er, Lenovo and Shanghai Automotive Industry Corporation • Faster, and less expected, than Japan’s 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 IBM’s 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. No, Hai’er • Qingdao – home of China’s first global brand, Tsingtao beer • Also home of Hai’er

  46. Hai’er 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

  47. Japanese parallels • Japanese moved production to US to circumvent protectionism • True for Hai’er, but also desire to establish perception as ‘American company’ • US regions now vying for Chinese FDI as sought Japanese in past

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

  49. 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