Magazine article Management Review

Southeast Asia: Doing Business in Paradise?

Magazine article Management Review

Southeast Asia: Doing Business in Paradise?

Article excerpt

Imagine awakening in a tropical paradise. You're near a river that, even at 7:00 a.m., is filled with the sights and sounds of an open-air market conducted from boats. You have your choice of an American, Continental, or Asian breakfast, brought by courteous and enthusiastic servers. The perfume of orchids fills the air.

Is this a dream? No, it's a description of what I and other business travelers have experienced in countries belonging to the Association of Southeast Asian Nations (ASEAN): Thailand, the Philippines, Indonesia, Malaysia, Singapore, and Brunei. Courtesy, an eagerness to please, entrepreneurial spirit, high literacy rates, and skilled craftsmanship all contribute to a business climate highly attractive to United States corporations.

ASEAN countries are good business partners. Unlike many Third World countries that have amassed large foreign debts, ASEAN members have excellent credit ratings and are extremely prudent about not borrowing more than they can repay (except for the Philippines). They can borrow at cheaper rates from commercial banks than from the World Bank.

Consider these little-known facts about the ASEAN nations:

* Brunei has the world's highest per capita annual income-more than $20,000.

* Gross national product (GNP) growth rates for ASEAN nations averaged nearly 5 percent in 1987, as opposed to the U.S. rate of 1.7 percent.

* ASEAN exports soared an average of 35.7 percent from 1986 to 1987.

* Imports rose an average of 33.8 percent over the same period.

Tables I and II (page 32) give a fuller account of basic indicators.


Nations and corporations both are moving toward global interdependence. In 1987, there were 19 international mergers of companies worth $1 billion or more, part of the nearly $100-billion total in international mergers, acquisitions, and divestitures.

But the old way of doing business-sending the most technically competent manager overseas to do things "our way"-doesn't work anymore. Too many major errors have resulted from a failure to "think globally." Improperly selected expatriate managers, lags in production schedules, poorly coordinated plant designs, products that weren't designed to be easily modified for overseas markets are just a few of the many mistakes. Today's managers and future CEOs must become global strategists: people who feel at home anywhere in the world, know how to penetrate language and cultural barriers, can design easily modified products for targeted markets, and can develop workable trading agreements with overseas partners.

Many top U.S. executives are broadening their view of markets and competition worldwide and see the effort to penetrate lucrative Southeast Asian domestic markets as important.


According to Marcia Brewster, a United Nations economic affairs officer, The ASEAN nations are a wonderful place to do business. The people have a strong work ethic, are genuinely eager to please, and love life." Brewster should know. She lived and worked in Southeast Asia, mainly Thailand, for 11 years. While at the Central Bank of Thailand, she did a regional study of exports, noting that the area was moving toward manufacturing and processing for both domestic and regional markets.

She comments on her experience in Thailand: "It was fun. The Thais are very proud of their culture and heritage. They have no chip on their shoulder and no resentment of Americans or Europeans, because they've always been free-they were never a colony. They're proud of their king, Rama IX, who's the longest-reigning monarch in Thai history."

Brewster was impressed by their strong work ethic: "The Southeast Asian countries received a large influx of Chinese people, forced out of their country by economic hardship, during the 19th century. Inculcated in the Chinese is a tremendous work ethic, based on their 5,000-year-old history and culture. …

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