COMPETING WITH EAST ASIAN FIRMS MASAAKI KOTABE The
COMPETING WITH EAST ASIAN FIRMS MASAAKI KOTABE The Washburn Chair Professor of International Business and Marketing Temple University Philadelphia, PA 19122 U. S. A.
1. Ever-Changing World Economy • Which country had 15. 2% ($19. 4 trillion) of the world’s real GDP ($127 trillion) in 2017? USA • Which country had 35% of the world’s GDP in 1820? * China • Which Latin American country/ies had a higher percapita income than Germany, Norway, Finland, Austria, Italy and Spain in 1950? Argentina & Venezuela • Which country dominated the world economy in the 1980 s, slated to overtake the U. S. supremacy in the 21 st century? Japan • Which country was the most economically dominant in the 1990 s? USA • Which country/region will become the most economically dominant in the next 10 years? ?
2. Asian Economies Overseas Chinese
2 a. Trans-Pacific Protocol
2 b. China’s Belt & Road Initiative Source: All Aboard the Belt-and-Road Express, ” Economist, May 6, 2017.
Source: “Tracking the sources of robust payments growth: Mc. Kinsey Global Payments Map, ” Mc. Kinsey, September 2019 | Report.
South Korea (11 th) Nominal GDP: $1. 54 trillion Real GDP: $2. 03 trillion
Combined GDP of China, Japan, India, and Korea: 26. 73%
Vital Statistics on 4 Major Asian Countries relative to the U. S. and Finland Population United States Finland China India Japan Korea 329 million 0. 80% $19. 49 trillion 5. 5 million 0. 33% $0. 25 trillion $0. 24 trillion 1, 384 million 0. 37% $12. 01 trillion $23. 21 trillion 1, 297 million 1. 14% $2. 60 trillion $9. 47 trillion 126 million 51 million -0. 24% 0. 44% $4. 87 $1. 54 trillion $5. 44 $2. 04 trillion GDP per capita based on purchasing power parity GDP real growth rate Inflation rate Composition of GDP (Agriculture; Industry; Services in %) $59, 800 $44, 500 $16, 700 $7, 200 $42, 900 $39, 500 2. 2% 2. 1% 0. 9; 19. 1; 80. 0 2. 8% 0. 8% 2. 7; 28. 2; 69. 1 6. 9% 1. 6% 7. 9; 40. 5; 51. 6 6. 7% 3. 6% 15. 4; 23. 0; 61. 5 1. 7% 0. 5% 1. 1; 30. 1; 68. 7 3. 1% 1. 9% 2. 2; 39. 3; 58. 3 Unemployment rate 4. 4% -$449. 1 billion 8. 5% $1. 8 billion 3. 9% $164. 9 billion 8. 5% –$48. 7 billion 2. 9% $196. 1 billion 3. 7% $78. 5 billion Population growth rate GDP in current US$ based on purchasing power parity Current account balance Source: U. S. Central Intelligence Agency, The World Factbook 2019, www. cia. gov/library/publications/the-world-
3. The Effect of Technology on Economic Performance What is your impression of the economies of China, India, Korea, Japan, and the United States?
3 a. Change in Country Innovativeness: A Key to a Country’s Long-Term Competitiveness Source: Michael E. Porter and Scott Stern, The Challenge to America’s Prosperity, Washington, D. C. : Council on Competitiveness, 1999, pp. 34 -35.
3 b. Patents in Force (2016)
3 c. Resident Patent Applications per Billion US$ GDP Source: WIPO, Intellectual Property Indicators, 2017.
3 d. R&D Expenditures as Share of GDP for Selected Countries (1996 – 2016) Source: https: //data. worldbank. org/indicator/GB. XPD. RSDV. GD. ZS? locations=IN-CN-JPKR-US-GB&name_desc=false, 2019.
3 e. Top 30 Patent Holders in the U. S. (2016) J K J J J K J Source: C
4. Three Fundamental Sources of Competitive Advantage F Legal Protection: The extent to which a firm can keep its technology/know-how from being imitated or learned by competitors (Patent, Trademark, Copyright) F Dominant Design: Setting an international and/or regional standard F Mass Marketing and Distribution Capabilities: Ability to mass-produce and mass-market products/services
5. Elements of Culture F Religion – Beef-less Mc. Donald’s in India – Avoiding 4 and 9 in Japan F Education (Literacy) – Gerber’s Baby: Ground-up babies in jars? – Nestlé's powder milk in Africa F Value Systems – Ethical standard – Group vs. Individual “Golden Arches” in China
6. Cross-Cultural Comparisons F High- vs Low-Context Cultures F Hofstede’s Components of Culture – power distance – uncertainty avoidance – individualism vs groups – masculinity vs. femininity – long term vs. short term orientation
Contextual Background of Various Countries Japanese High context IMPLICIT Arabian Latin American Spanish Italian English (UK) French English (US) Scandinavian German Low context Swiss EXPLICIT Source: Edward T. Hall, Beyond Culture, NY: Anchor Books, 1976.
7. How Cultural Differences Affect Marketing? • Toyota, Nissan, and Honda introduced Lexus, Infiniti, and Acura brands, respectively, for their high-end automobiles in the U. S. , but not in Japan (with the exception of Toyota). • Procter & Gamble emphasizes individual product brands but does not emphasize its company name in the U. S. , but emphasizes its company name in some countries including Japan. • Toyota and Honda developed hybrid cars before anyone else did. Why not BMW, Daimler, or Ford? • Gasoline prices at the gas station change 2 ~ 3 times every day in the U. S. , but tend to be more stable in others.
7 a. How Cultural Differences Affect Marketing? When you check Honda’s website and click the Civic link: Honda USA Honda China Honda France Honda Italy
7 b. Cultures Manifested in TV Commercials 1. Global Message 2. Low-Context: Clear Message, Individualistic 3. High-Context: Vague, Feeling, Group Value
8. International Law and Local Legal Environments International Law Local Legal Systems and Laws Common Law vs. Code Law • Sony’s Restaurant in New York City vs. Sony of Japan • Mc. Donald’s in US vs. Mr. Mac. Donald’s in Venezuela Business Practices and the Legal System • Controlling price through the distribution channel • Comparative/Testimonial advertising • Advertising regulations (e. g. , beer, tobacco, etc)
9. International Law and Local Legal Environments (cont) • “First-to-Invent” Principle: U. S. only Finally Converted to the Secrecy Requirement First-to-File System on March 16, 2013, but… No “Working” Principle • “First-to-File” Principle: The rest of the world Applications to be “laid open” in 15 -18 months “Working” Principle
10. Three Fundamental Sources of Competitive Advantage F Legal Protection: The extent to which a firm can keep its technology/know-how from being imitated or learned by competitors (Patent, Trademark, Copyright) F Dominant Design: Setting an international and/or regional standard F Mass Marketing and Distribution Capabilities: Ability to mass-produce and mass-market products/services
11. Location Still Matters F F F U. S. Automobile Industry in Detroit Cellular phones in Scandinavia Dot matrix, bubblejet, inkjet, and laserjet printers & fax machines in Japan Alcohol-powered automobiles in Brazil Best-selling Suntory “三得利” beer in China that tastes bad Bananas exported from Iceland
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