Financial minds. com defines emerging markets as those countries “which have reached a minimum level of GDP and are in the growth phase of the development cycle but whose economies are particularly vulnerable to internal or external forces.” (Olsson, 2001, 11).
With the growing trend of internationalization, global marketing has become increasingly important. Emerging markets have enormous potential and marketing professionals face the great challenge of deciding which markets to enter and the proper strategy to achieve success in that market. Michigan State University found in 2002 that Asia is currently home to eight out of twenty-four of the most prominent emerging markets. Those eight countries include Hong Kong, Singapore, South Korea, China, Thailand, Malaysia, Philippines, and Indonesia.
Asia as a whole does not have a uniform economic system. The countries in Asia have very diverse economies that range from modern to poor or rural systems. Nor has Asia, in the past, made regional integration much of a priority. No attempts have been made to merge the countries into a unified program, although there is a growing debate among Asian nations on how to address financial issues and stabilization of the region after the banking and currency crisis of the late 1990’s.
This diversity in the economic stages of the countries in Asia has made it difficult to establish free trade agreements with countries such as the United States. As stated above, the economic development of these nine countries is very diverse. China’s gross domestic product (GDP) grew eight percent in 2000. The majority of its workforce is employed in the agriculture industry but the divide between city and country wealth is increasing due to government policies that prevent ownership of Emerging Markets 3 farmland.
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China’s industrial development has grown dramatically and machinery and electronics are China’s main exports. High tech companies see it as a promising market since it became a member of the World Trade Organization in 2001. In 2000, China’s global trade totaled $454 billion. Hong Kong, while officially “owned” by China, has retained its own infrastructure.
Hong Kong, similar to China, has a good financial outlook. Its GDP increased 10. 5% in 2000 and has minimal public debt. The rising rate of unemployment is a concern and rampant intellectual property rights violations by businesses in Hong Kong have impacted possible trade agreements with other countries. Overall, Hong Kong is seen by outside companies as a viable market with vast opportunities. South Korea, while suffering great setbacks due to the financial crisis in 1997, has rebounded nicely.
In 1999 its GDP grew 10. 2%, unemployment levels began decreasing, and wages showed improvements over crisis levels. Korea is the United States sixth largest exporter and manufacturing has continued to grow rapidly and its industrial sector accounts for almost 40% of its exports. While Malaysia showed strong growth in 2000 with an 8.
3% increase in GDP, it has seen a dramatic slowdown of its economy in recent years. Malaysia’s main trade and investment partner is the United States and the recession here negatively impacted Malaysia’s growth. Malaysia has shifted its focus from commodities based to manufacturing based economy, which has assisted in shoring up their financial sector. Poverty remains a challenge for the Malaysian government. Emerging Markets 4 The Philippines has gone from being one of the richest Asian countries to one of the poorest due to political and financial instability. In 2000, it had a minimal 4% GDP growth and output in its main economic sectors of industry and agriculture have fallen or are stagnant.
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Commercial banking growth remains slow and a weak currency has had a negative impact on recovery. Singapore currently has a strong economy with a growth of 9. 9% in the GDP in 2000. It has utilized its location on major sea thoroughfares to its benefit.
Singapore’s economy depends mainly on manufacturing and business, with electronics compromising most of its industrial output. The economic slump in other areas of the world, including the United States is expected to impact Singapore negatively due to its dependence on the export market. Thailand has shown modest growth in recent years, posting a 5% increase in GDP in 2000. Similar to other Asian countries, Thailand’s primary business is agriculture although it is encouraging growth in the manufacturing industry. Although Thailand has shown promise, its weak organized labor and shortage of skilled technological workers may hinder its economic recovery. In contrast to these countries, Indonesia’s government plays a much larger role in the business sector.
Indonesia is primarily involved in the oil and mineral sector. After the financial crisis of 1997, Indonesia’s government took control of a majority of privately owned corporate assets. Political instability has created a weak economic structure and unemployment is very high. GDP growth in the country is considered to be below levels necessary to sustain a recovery.
In addition, debt levels are very high. Emerging Markets 5 After review of the economic structure and development of these individual countries, it is not difficult to understand why regional economic integration is a challenge. While several of them export and import the same type products and show strong financial bases, the outlying factors of poverty, politics, and employment that affect individual countries ability to participate in a geographical union. The countries of Asia are making a concentrated effort to overcome their financial hurdles though and promote cooperation amongst them. The Association of Southeast Asian Nations (ASEAN) was formed in 1967 for exactly that purpose. The Association has made great strides in encouraging and enhancing free trade among some of the countries discussed above and other Asian nations.
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The current economic and financial crisis is the least the world expects and wishes to happen at this time. Considering the political, social and environmental upheavals happening in almost every continent around the world, people have to face yet another form of crisis that hits them right in the pocket and through their stomachs. Everyone hopes that the economic and financial crisis ebb out soon ...
The cooperative attitude of the nations and willingness to work toward a common goal will allow these emerging markets to become full-fledged, viable members of the global business community.
