Asia's Lucrative Challenge For US Small Businesses
COLORFUL gondolas on Bangkok's waterways and the relics of Beijing's Forbidden City bespeak an exotic past. But it is the rapidly multiplying factories, hotels, and skyscrapers dotting these and other cities of the region that really indicate the future of Southeast Asia.
Within a decade, countries like Indonesia, Thailand, Malaysia, and China will collectively outstrip Japan in purchasing power. Asia is being transformed, economically and politically, by growing trade, rising living standards, and a flood of foreign investment. Those changes have huge implications, and opportunities, for America.
On a trade mission last month supported by the White House, I and other House members met with the leaders of Indonesia, Thailand, and China. The sessions highlighted the situation our nation faces in Asia. For while the American economy can certainly profit from the modernization of Southeast Asia, our participation is far from guaranteed.
Despite continuing poverty, influential militaries, severe pollution, and overcrowding, most Southeast Asian nations are aggressively adopting economic strategies to lure foreign investment. Within these exploding economies, the US business community plays a significant but inadequate role. Only a few large corporations represent the bulk of US business: oil companies, computer giants, soft drinks. Smaller US companies do not play a significant role in Asia - unlike their counterparts from Hong Kong, Japan, and Europe.
Without greater ingenuity by US business, American firms will lose out in Southeast Asia. Our annual trade deficit with China now exceeds $23 billion; we have smaller, but significant, deficits with Indonesia and Thailand.
Some of our low profile is due to our nation's justifiable insistence that China, Indonesia, and other nations improve their abysmal record on human rights before enjoying more benefits of easy access to US markets through the Most Favored Nation (MFN) and the Generalized System of Preference (GSP) programs. In meeting Asian leaders, we emphatically told them these are very serious US concerns, shared not only by President Clinton and the Congress, but also by the American people.
During discussions held at the urging of the White House with Indonesia's President Suharto, China's President Jiang Zemin, Vice Premier Zhu Rongji, and others, our delegation demanded substantial movement on human rights, free labor unions, prison labor, and democratic reform as a precondition to renewal of MFN and GSP trading status.
We've seen movement. An agreement has been signed with Indonesia on human rights, and China has said it will restrict exports of products to the US made by prison labor. There are discussions with the Red Cross on inspection of Chinese prisons. Whether China remains intransigent or not, we must move forward with other Asian nations without further delay.
Dozens of Asian cities and provinces will need subways, highways, telecommunications systems, water treatment facilities, and energy plants - perhaps a trillion dollars worth of infrastructure in the next decade. We were told that Asians want American-made products. Yet our economic presence thus far doesn't fill the demand.
In Guangzhou, China, where more than 7 million people share one water treatment facility, the Finns, Dutch, and French - but no American companies - are competing to build new facilities. American businesses lost a huge subway construction project to Germany, thanks to a mission personally led by Chancellor Helmut Kohl.
Perhaps the greatest opportunity for US business is pollution controls and environmental technology. Asia demonstrates little regard for the devastating impact of industrialization on the environment - theirs or ours - and the side effects of modernization will be huge increases in coal consumption, nuclear power, air pollution, and acid rain unless dramatic investments are made in pollution controls.
Environmental measures increase the cost of a new power plant 20 to 25 percent, a surcharge Asian nations are now unwilling to pay. But world pressure for developing nations to address pollution has grown steadily since the 1992 Earth Summit, and US industry must be poised to capitalize on the burgeoning market. Other US products have huge potential markets in Asia. In China, just one percent of homes have telephones; only one in 4,600 people has a car. Indonesia's electrical power needs are growing 16 percent a year and a dozen new power plants are planned for the next decade. Subways and new airports are also planned in most of these nations.
US government and business must become partners in breaking into these emerging markets. Providing Asians with needed infrastructure and the quality products they have the money to buy will not only be good for Asia. It will be good for jobs and growth in our domestic economy as well.