U.S. Business Can't Ignore Asia's Potential

July 07, 1985|JOHN F. LAWRENCE | John F. Lawrence is The Times' economic affairs editor

One overwhelming impression from a visit to Japan, South Korea, Taiwan and China is that the economic explosion that has already occurred in the region may be modest compared to the one that's to come.

The explosion of the past involved a massive, low-paid work force competing for world markets. The one to come, already far along in Japan but just beginning elsewhere, will combine the diligence and education of this work force with the power of modern technology. It will make the region a formidable competitor in a vast range not just of low-price goods but of high-quality and increasingly high-tech ones as well.

It presents the U.S. economy with a major challenge and opportunity. American business will respond or be reduced to the status of some European economies--its markets shrinking and surviving on government subsidy and protection.

Past experience in America demonstrates the potential for growth. Massive investment in new equipment and processes, combined with increasingly skilled workers, propelled this nation for a long time.

In South Korea and Taiwan, wage rates are escalating as they did in the past two decades in Japan and already give average citizens 7 to 10 times the annual income of those in China. Productivity-boosting investments are just beginning. Robots are being introduced even in cases where they are not yet fully economic because manufacturers want to gain both quality in their products and experience for their workers. Ford's experience in improving productivity by 139% in four years in Taiwan is a sample.

In all four countries, where documents always have been written by hand in the past, computers with native script capability promise to produce a leap forward in clerical productivity far greater than what the shift from the typewriter to the word processor meant for the United States.

Aware of Challenge

The Japanese, perhaps more aware of this challenge because of their own recent successes, are already reaching for higher technology and preparing to see more of their own markets served by more efficient foreign producers.

Until now, much of the growth has come from export to the United States. But the day is fast approaching when the citizens of South Korea and Taiwan will be able to buy more of what they make. Even Japan could expand its consumer market with more infrastructure investment, especially in housing.

This is one of the unrecognized opportunities for American business, seemingly mesmerized at the moment by the size of its market at home and the possibilities on mainland China. It seems silly to ignore smaller economies when to do so would be like ignoring the economy of the state of California.

True, protection in various forms still hamstrings U.S. export efforts. But those barriers would fall faster were U.S. companies pushing.

China, of course, is a mass market almost totally undeveloped, and a mass work force yet to be set in full motion. Its immediate future lies in supplying the high labor-content products the other Asian nations may have to abandon and Japan already has. Add to that China's natural resources--assets so lacking in its smaller neighbors--and the potential for that economy is immense, if still distant.

Can the United States compete with all of this? Certainly, if its business leaders catch some of the spirit expressed in Taipei by Lin Ting-sheng, chairman of Tatung Co.: "The world has changed, it has become more international and we need to take advantage of this."

His company's exports and its direct investment around the world are mushrooming, making this maker of television sets and many other products one of the fastest growing in the world. It even produces electric fans in the United States, a market some domestic makers abandoned.

U.S. business has many assets: A big home market to begin with, a highly skilled work force awakening to the foreign challenge and making concessions to get costs in line, a big lead in venture capital and in many areas of innovation. Now it needs to recognize that the successful companies of the coming decades will measure market share in global terms, not domestic.

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