Chapter 11 – The Asia Pacific Region
11-1
Chapter 11 – The Asia Pacific Region
Teaching Objectives
Because more than half the people on the planet live in this region it deserves a chapter focused on its
characteristics. The Asia Pacific Region is also the fastest growing area of the world, particularly lead by
China. Also, because great poverty is part of the picture, particularly in both China and southern Asia, the
discussion of Bottom-of-the-Pyramid concept is most pertinent here. Finally, China’s size and complexity
justifies a focus on the diversity of the Middle Kingdom and its cultures and economies. The teaching
objectives of this chapter are to:
1) Communicate the reasons for the dynamic growth in the area.
2) To discuss the reasons for and the importance of Japan’s slow growth.
3) To present the concept of the Bottom–of-the-Pyramid Markets
4) To demonstrate the diversity across the region
5) To describe the interrelationships among countries in the region
6) To describe the diversity within China
Comments and Suggestions
1. You might lead a discussion about the incredible consecutive advances of Japan, the Four Asian
Tigers, and now China. Have the students list the reasons for this phenomenon and have them
predict whether the others will continue to follow the example of Japan and stabilization.
2. You might have your Asian foreign students in class describe the diversity in the region as they
have witnessed it. Also, they might point out the commonalities as well.
3. Another controversial, but stimulation topic is the advantages of democracy/free-enterprise
economies in the U.S. compared to more tightly controlled economies is some of the nations in
the Asia Pacific Region.
Lecture Outline
I. Dynamic Growth in the Asia Pacific Region
A. The Greater China
B. Japan
C. India
D. The Four “Asian Tigers”
E. Vietnam
II. Bottom-of-the-Pyramid Markets
Chapter 11 – The Asia Pacific Region
III. Asia Pacific Trade Associations
A. ASEAN+3
B. APEC
IV. A Focus on Diversity within China
A. Northeast China
B. Beijing-Tianjin
C. Shanghai and the Yangtze River Delta
D. The Pearl River Delta
E. The Other Billion
F. Differences in Negotiation Styles within the Greater China
G. Marketing Opportunities in the Greater China
Discussion Questions
1. Define:
2. Explain why China’s economy languished for the last 500 years but has now burgeoned in the last 20.
In the 15th Century China was the most advanced society on earth. Indeed, important technologies such as
the compass, printing press, and gunpowder flowed west along the Silk Road. China also experimented
3. Why has Japan’s economy faltered?
fact: 1) Japan’s faulty economic policies; 2) their inept political apparatus; 3) their disadvantages from
11-3
1. Faulty Economic Policies. A wealth of facts reflects Japan’s economic pain during the 1990s. None
more so than their stock market collapse. In the early nineties, its Nikkei index level plummeted from
over 35,000 to under 13,000. At this writing it now hovers at about 20,000. Their woefully inflated real
was its decade-long persistence. Unsurprisingly, most economists sought to convince us that faulty
economic policies both triggered the onset and the persistence of Japan’s troubles. They explained with
commendable brevity.
“The bubble burst.” But why the bubble, and why did it burst? The most common answer went
2. The Political Explanation. Views of economists on Japan’s crisis have not been the only ones heard.
Political pundits also rose to the challenge. They found two major villains: Villain #1: The Country’s
Long Entrenched Liberal Democratic Political Party. Villain #2: The Hidebound Japanese Bureaucracy.
Chapter 11 – The Asia Pacific Region
11-4
© 2020 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
power leaves off and another’s begins. In any event, to those who championed a political explanation of
Japan’s woes, these two national institutions were viewed as joint culprits. Meanwhile, other observers,
particularly many within Japan, were dissatisfied with either the economic or political explanations they
were hearing. They felt compelled to look for deeper roots.
3. Global Circumstances Have Hurt. The third explanation for Japan’s end–of-the-century economic
problems has more to do with three circumstances beyond their control.
First, the Japanese population, like the western European is shrinking faster than the American. While
American baby-boomers circa 2005 were at their peak of productivity, both the Japanese and Europeans
are about 10 years ahead of us in adjusting economic, political, and cultural systems and institutions to
4. The Cultural Explanation. In the mid-nineties, we became aware of what might be called “The
Cultural Causation” theory of it all. This theory went somewhat as follows: Immediately after World War
II a shattered Japanese nation arrived at a consensus goal for national recovery. That consensual goal
they had indeed reached their coveted goal. So, the question for them now became “all right, what’s
next?”
Chapter 11 – The Asia Pacific Region
11-5
© 2020 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
company’s contributions to the economy. However, economists and governments all over the world are
using Japan as a model for policy making as Japan has been the first to manage a big recession and its
fast-graying population by strategically growing government debt.
3
4. What explains the fast growth of the four “Asian Tigers?”
5. Compare the growth successes and potentials of India and China. List the advantages and
disadvantages of each.
Which factors will be problems for India? For China?
Chapter 11 – The Asia Pacific Region
11-6
• Planning. A central plan with observable and measurable development goals linked to
specific policies.
• Outward orientation. Production for the domestic market and export markets with increases in
6. Discuss the problems a marketer might encounter when considering the Marxist–socialist countries
as markets.
In Asia both North Korea and China fit the description of a Marxist-socialist country. Of course,
7. What are the market opportunities and challenges in The Greater China?
8. What are the political issues swirling around the strong trade relationship between the U.S. and the
PRC?
Chapter 11 – The Asia Pacific Region
11-7
In the 1980s and early 1990s the strong economic interdependence between Japan and the U.S. often
resulted in political disputes primarily about trade protectionism, but also with America fears of Japanese
political dominance around the world. Those seemingly important political problems of those decades
9. Briefly describe three examples of strategies of MNCs in China and in India.
a. In China, General Motors maintains an important joint venture with Shanghai Auto, Yum! Brands is
10. Should the United States fear China’s emergence? Why or why not?
11. Do you expect that China, then India, will follow the growth paths of Japan and South Korea? What
factors are similar across the countries, and what is unique about each of these four?
Chapter 11 – The Asia Pacific Region
11-8
So far India has fallen behind China in the race out of poverty. One of China’s key advantages has been its
12. Describe the opportunities and threats of entering the market in Bangladesh.
The major opportunities in Bangladesh are best summarized in the Bottom–of-the-Pyramid discussions
13. Describe the economic interaction of China and its northern neighbors.
In the old, planned economy, Northeast China used to be the most industrially and technologically
Northeast China, however, remains an important sub-economy of the country although it is lagging
Japan, Jilin province with South Korea, and Heilongjiang province with Russia. Northeast China is
indeed a geopolitical and socioeconomic melting pot that blends everything together to become one of the
most important sub-economies of China.
Unlike the rest of the country, many high school students in the region study Japanese or Russian in
foreign language class, instead of English. Korean is also a widely spoken language, with about two
Chapter 11 – The Asia Pacific Region
11-9
to the United States, “a cheap industrial zone near the main office.” They attribute their decision of
investing in Dalian to the quality of workforce, lower cost of real estate, and cheap labor cost. As a result,
more than 100,000 highly trained workers are employed in Japanese high-tech companies in Dalian. And
partially contributed to this dramatic change. Dalian High-Tech Industrial Park has witnessed an output
value of $40 million in the software development businesses outsourced from the Japanese and South
Korean companies.
Liaoning province shares the border with North Korea. It has historically been the entry gateway to
the Korean Peninsula. China is home to over two million minority Koreans who immigrated to China
Heilongjiang takes a bulk portion of this border, across from Russia with the borderline rivers of
Heilongjiang and Wusulijiang running in its north and east, respectively. Heilongjiang, meaning Black
Dragon River, is referred to as the Amur River in Russia. Harbin, the capital city of northernmost
province of Heilongjiang, historically an important gateway from China to Russia and Europe, may
surprise visitors for its Russian appearance. For centuries, this “Ice and Snow Capital”, China’s closet
prewar Russian architecture in all European neo-styles, especially neo-Baroque, neo-classical, and art
deco. These buildings, thanks to China’s newly gained wealth, are better preserved and maintained than
their counterparts in the Russian Far East.
Despite mutual suspicions and wariness between these two Far Eastern giants, China and Russia see a
need to cooperate, particularly in the energy field, with Siberia’s rich oil reserves and China’s increasing
11–10
© 2020 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not
authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated,
forwarded, distributed, or posted on a website, in whole or part.
an oil capital of China, but it has been fast drying up after forty years of exploitation. Thus, export of
Russian oil to China continues to grow fast.
14. How are China’s marketing strategies abroad similar to and different from those of American firms?
15. What can the United States, Europe, and China learn from the experiences of Japan during the last 20
years? The first lesson to be learned from Japan’s boom/bust history is about the dangers of fast growth.