The size and vitality of various Asian markets drive economic trends around the world. While COVID-19 first emerged in China, the country was also the quickest to get a grip on the pandemic after authorities imposed strict control measures. With its large population and rapid growth, India is also a driver of overall trends in the region. Stages of development and opportunities within the other countries in the region vary significantly. Asia is projected to be home to more than half the world’s population by 2050, and Wisconsin now has trade representation covering 11 Asian markets.
View detailed country information: China, Japan, Thailand, Vietnam, South Korea, Singapore, India, Taiwan
China is the world’s second-largest economy, with a total GDP of more than $15 trillion in 2020, and 8% GDP growth projected for 2021. China’s total import and export amount has reached $4.95 trillion. Trade between Wisconsin and China has grown substantially over the last decade, and today China is the state’s third-largest export destination, with nearly $1.6 billion worth of goods shipped from Wisconsin to China. Societal changes in China will further improve export opportunities for Wisconsin companies. These trends include wider use of machines and technology in manufacturing, improvement of environmental contamination, and growth in low-tech health interventions.
Trade between Wisconsin and China has grown substantially over the last decade. China is the state’s third-largest export destination, following Canada and Mexico. Major export categories include medical and scientific instruments (lenses, prisms for optical fiber equipment, CT scanners, X-ray equipment), industrial machinery (outboard marine engines, small agricultural equipment motors, gear boxes, transmission shafts, wheels/sprockets), electrical machinery (prepackaged software, static converters, power supplies, insulated conductors, small wires), oil seeds (soybeans, ginseng), and pharmaceuticals (heparin, products made from blood). Opportunities for Wisconsin companies in China are related to the broader use of advanced machines and technology in manufacturing, improvement of environmental protection in the production process, and health care services. The rise of the middle class and urbanization throughout China make it a high-growth market. Recently, as the U.S. and China both set goals for reducing carbon emissions and agree to cooperate more closely on climate change, opportunities to work together on environmental protection abound. Meanwhile, Wisconsin businesses could also benefit from offshore service contracts for legal, financial, and health care services, as the rise of the middle class in China and population aging are creating the need to improve the country’s health care industry.
Japan is the world’s fourth-largest economy. It is also the second-largest foreign investor in the U.S., with more than $300 billion invested. Japan’s large government debt (more than 200% of GDP), persistent deflation, and an aging and shrinking population are major complications for the economy but create opportunities for novel products and services. Tokyo will be hosting the summer games of the XXXII Olympiad (currently scheduled for July 23-Aug. 8, 2021), which is expected to create more than $283 billion in economic benefits.
Japan is the fifth-largest export destination for Wisconsin, with exports totaling $687 million in 2021. There are many Japanese investments in Wisconsin, in sectors including food and beverage, bioscience, mining, and high-tech, among others. On top of the language barrier and business culture differences, exporters face challenges including overlapping regulations and authorities, slow approval processes, and a complex multi-tier distribution system; these hurdles can be overcome by establishing partnerships with local actors. Wisconsin companies wishing to enter the Japanese market should strongly consider partnering with a reputable, well-connected agent or distributor and cultivating business contacts by visiting the market in person. Japanese business culture attaches a high degree of importance to personal relationships, and these take time to establish and nurture. The nature and pace of deal-making in Japan are quite different from U.S. practices and expectations. The business culture in Japan is incredibly loyal with regard to both suppliers and business relationships. If you’ve managed to invest sufficient time in building trusting relationships, you’re likely to be rewarded by loyalty and reluctance to change suppliers . The business culture in Japan can be summed up as formal, harmonious, hierarchical, and loyal.
With a GDP of $543 billion as of 2019, Thailand is the world’s 22nd-largest economy and the second-largest in Southeast Asia. Thailand’s economy is well-diversified and competitive, and it has proven resilient to external and domestic economic shocks. Thailand offers a favorable business environment due to its open, market-oriented economy, efficient regulatory system, relatively low tax rates, and open policies towards investment and trade. The country has long-term plans to develop three coastal regions into a special economic zone called the Eastern Economic Corridor, with airports, deep sea ports, and high-speed rail and spanning a multitude of industries. The government has also prioritized development of digital infrastructure and acceleration of the digital economy, aiming to usher the country into the “Thailand 4.0” era.
Vietnam was one of the few countries in the world to maintain positive economic growth in 2020, with GDP growth of nearly 3% driven by expansion in key areas of industrial activity. It has been one of the fastest-growing economies in the world over the past decade. Sustained economic reforms demonstrate the government’s commitment to open up the country to trade and investment and move from a closed, centrally planned economy to a globally integrated market economy. Vietnam has a large population of 98 million, more than half of whom are under age 30, representing a huge pool of both potential customers and employees for many investors. The country has gained fame worldwide as a go-to place for export manufacturing, largely because of low labor costs. It has been the biggest beneficiary of the U.S.-China trade conflict, with manufacturers shifting operations to Vietnam and firms sourcing from there to bypass higher tariffs.
The economic and political reforms launched in 1986 have made Vietnam one of the most dynamic economies in Asia. Between 2002 and 2018, more than 45 million people were lifted out of poverty. An emerging middle class, currently accounting for 13% of the population, is expected to reach 26% by 2026. Rising incomes have made consumption a key economic engine, accounting for around 70% of GDP. Vietnam is also a highly favored destination for shifting supply chains. Labor-intensive manufacturing has been migrating to Vietnam from China for at least the past decade, and the process has been accelerated by trade tensions between the U.S. and China. Supported by steady opening up of the market and easing of regulations, U.S.-Vietnam trade turnover has significantly increased during the past two decades, reaching $111 billion in 2021 from just $450 million in 1995. U.S. exports to Vietnam have more than doubled during the past 10 years, reaching $15 billion in 2021. Vietnam ranked as the 26th largest export market for Wisconsin, importing $169 million in goods from Wisconsin in 2021. The country’s political stability, positive economic outlook, large population, and rapidly expanding upper and middle classes make it an attractive market for exporters in a range of sectors from industrial machinery to medical equipment and environmental solutions.
The South Korean economy became the tenth-largest in the world last year, according to IMF World Economic Outlook. South Korea is a very sophisticated market with a taste for high-quality, differentiated products and commodities. South Korea is home to iconic and globally recognized brands such as Samsung, LG, Hyundai, and Kia. Moreover, located at a strategic economic crossroads near both China and Japan, South Korea has, by any objective standards, a strong and vibrant economy and a tech-savvy population. As South Korea moves toward technology- and capital-intensive industries and services, it will be an excellent market for Wisconsin exporters with state-of-the-art technologies and innovative products and services.
India is a developing market economy. It is the seventh-largest country by area, the second-most-populous country (with over 1.3 billion people), and the most populous democracy in the world. India is the world’s fifth-largest economy by nominal GDP and the third-largest by purchasing power parity, according to IMF’s World Economic Outlook. Since 1995, the country’s nominal GDP has jumped more than 700%. India will become the third-largest consumer market by 2030. According to the World Bank, India is also seeking ways to ensure that its future growth is more sustainable and inclusive, adjusting its policies regarding social protections and infrastructure development.
Synergy exists between Wisconsin’s strong export sectors and India’s growth sectors such as agriculture, infrastructure, and manufacturing. Additional opportunities have emerged in the infrastructure, health care, digitization, and education sectors since the COVID-19 pandemic. Continued reforms underway to boost investment, consumption, and exports are also creating opportunities. India’s top trading partners are the U.S., China, the United Arab Emirates, Saudi Arabia, Iraq, Singapore, and Hong Kong.
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