Why It’s Not Clicking For Asia More Economic Turmoil in the Far East?
Why It’s Not Clicking For Asia More Economic Turmoil in the Far East?
Wednesday, October 8, 1998
The Internet is renown for speeding things up. We can now get immediate stock quotes, sports scores, and even hot news like Ken Starr’s White House Tour with the click of a button. But, as the old saying goes, speed kills. For non-English speaking cultures, the most important thing about the Internet may be how quickly they are being left behind.
Let’s not forget that just a few years ago growth was so strong in Hong Kong, Korea, Singapore and Taiwan that these countries were called the Four Tigers. As late as 1988, there was a popular book, “Yen!: Japan’s New Financial Empire and Its Threat to America,” that went so far as to warn of Japan’s pending takeover of the world economy.
Acting with the kind of groupthink that often leads economists astray, the conventional wisdom has since shifted, and now holds that Asia suffers from long-standing and deep-seated problems that weren’t apparent back when the pack thought we’d all be turning Japanese.
Using the past as their guide, economists at organizations like the IMF and the World Bank tell us history is simply repeating itself. The same measures that reversed previous declines will do the trick this time, they say. The most commonly recommended solutions would compel Asian countries to allow more imports, place stricter limits on credit, and keep labor costs and government spending under tighter control. All the Asians have to do is take their tough medicine, tighten their belts, and await their coming recovery.
The problem is these experts don’t see what they’re not looking for. Thanks to the Internet, the future probably won’t resemble the past as much as they think.
You don’t have to be Ron Unz to realize that English is the predominant language on the Internet. Rapid communications facilitate business transactions. If you’re not in the English-speaking loop, you are out of the Internet loop.
The prognosticators tells us e-commerce will hit $30 billion this year, swelling to more than $300 billion by 2002. While a few Asian companies are minority investors in successful Internet companies, like Yahoo!, most Asian companies are not getting in on the online action. Think of all the heavy-hitting Internet companies. How many Asian names come to mind?
Asian investors and business leaders are not blind. They understand that the economic playing field has tilted toward countries on the frontline of the online revolution. That realization must certainly contribute to the uncertainty and anxiety that has helped foster the regional panic we now see. For the past few years, Asian money has been flying out of their own equity markets and into our stock market, particularly into high-flying Internet stocks, which have gone through the roof as Asia’s roof caves in.
You get a sense of why many Asian companies are not participating fully in the Internet opportunity just by visiting the homepages of the most respected Asian firms. Take the Fujitsu website, for example, which is run by the American arm of the company, Fujitsu America. Everyone knows Fujitsu’s most important decisions are made in Japan, not the United States. Top executives at thriving Western companies typically stay very close to their nooks on the net. Can you imagine Sun Microsystems, for example, or Cisco Systems, Inc., outsourcing their Internet presence to a foreign subsidiary?
Likewise, Honda’s website, which features a department menu that loads slower than a moped going up Lombard Street, is also disconnected from the company’s main headquarters. What is sacrificed are most of the direct customer interactions senior executives at Internet-savvy Western companies glean from an effective web presence.
I’m sure messages, including new ideas, can get thru to Honda’s top leaders in Asia. But the company does not make it easy. No wonder the American car companies are gaining ground. What’s more, while many of the smallest American companies now have websites, major second-tier Asian firms, companies that badly need new markets and customers, are virtually invisible on the Net.
The situation appears even worse at a random sampling of leading Korean companies. Many of them remain mired in the online shingle stage, using the Internet like some kind of new-fangled electronic billboard. At the center of the current economic turmoil we find Malaysia, Indonesia, and Thailand. Well, seen any good Thai websites lately?
The Net-induced acceleration of the importance of English and the distance of top Asian executives from the web aren’t the only reasons Asia is getting its clock cleaned online. There are cultural factors at work, too.
During the first few months it was up, for example, the Okidata website contained links to the vendors of Okidata products and supplies. You could quickly find out who had the best price for toner or an image drum and then contact the dealer directly.
Those links vanished after old-line Okidata dealers started howling about being undercut on price by online competitors. Okidata did the honorable thing and replaced the vendor links with web resources that can only be accessed by their existing reseller network. In essence, the company has used the Internet to throw up a firewall between its customers and the information they want most.
Like Okidata, many Asian companies seem to be more loyal to their long-standing distribution channels than more promiscuous Western firms. Cutthroat American companies are busy using the Net as rapidly as possible to wipe out the middlemen or, to use the more bloodless term now in vogue, to pursue “disintermediation.” At the same time, many Asian companies are trying to look after the business partners and employees to whom they feel obligated. This is to their moral credit and severe financial loss.
So even if we establish a hypertext Peace Corps and dispatch thousands of HTML programmers to help Asian companies come up to speed online, it might not be enough. New tools, by themselves, don’t break old habits.
The idea that the Internet may be responsible for unleashing global economic dislocations shouldn’t be that much of a surprise. After all, for more than half a decade now, the champions of the Internet have been promising us the Net would destabilize virtually everything. And then we turn around and, what do you know, we find instability.
By ignoring the role of the Internet and offering up their usual menu of solutions international financial policymakers may inadvertently be making Asia’s problems worse, throwing gasoline on a hotplate. Our friends in the Far East could be in for a far more lengthy slump than anyone now predicts; cultures don’t usually turn on a dime. Strangling these countries with solutions designed for the old economy probably isn’t the best way to rapidly bring them into the new economy.
Options to reduce the negative impact of the Net on non-English speaking cultures are not obvious. It’s anyone’s guess what the long-term fallout will be if the Asian economic crisis is prolonged or deepens even further. Countries, it is said, don’t have permanent allies, only permanent interests. Hostilities probably won’t break out over these issues anytime soon. But it’s unlikely we will find a lasting cure for what ails Asia by looking in all the old familiar places.