EU Firms Expand Trade,Investments in Asian Region
European companies have advanced into Asia more to cash in on the sustained growth potential held by the emerging markets than to draw on its cheaper labor costs, many industry experts say.
In the 1990s, European firms stepped up their efforts to raise exports to Asia. By 1996, Asian-bound products accounted for more than 7 percent of all European Union's exports, up from 3 percent in 1980.
Northern European countries with relatively smaller domestic markets were the ones most aggressively spurring the export drive. Finland, for example, saw the share of its exports to Asia grow from 2 percent of its total outbound trade to 10 percent in 1996. Finnish electronic products, including mobile phone handsets, were well-positioned to meet Asia's growing demand.
Direct investments in Asia by European countries also took off in the 1990s and outpaced those of the region's traditional sources of capital the United States and Japan in terms of growth rates.
The most compelling motivation behind the EU's advance into Asia is the long-term potential the Asian region holds, which is expected to get back on the fast-track once economies rebuild from the 1997 financial shock.
Pundits specializing in Europe-Asian trade attribute the growth in EU's exports to and investments in Asia to at least four factors:
First, the economic recession that hit many European countries in the early 1990s drove European firms to gear up their international strategies, shifting toward Asian ventures as a means to cope with changing industrial structures.
Second, the power Europe holds in the decision-making process for internationally recognized quality standards helps strengthen the region's influence in Asia.
A regulation set by the International Organization for Standardization (ISO) stipulates that member countries adopt international standards by majority rule with each member country given one vote. …