The size and vitality of various Asian markets drive economic trends around the world. While COVID-19 first emerged in central 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 $14 trillion in 2020, and the GDP growth rate is expected to be 8% in 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 largest export destination outside of North America. Non-electrical machinery is the state’s biggest export to China, followed by computers and electronics, waste and scrap materials, fabricated metal products and processed foods. Opportunities for Wisconsin companies in China are related to broader use of machines and technology in manufacturing, improvement on environmental contamination, and less sophisticated health care services. The rise of the middle class and urbanization throughout China make it a high-growth market where Wisconsin communities can build on previously established relationships. China’s changes drive demand for products and technology. 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 is 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 innovative solutions in the form of products and services. Tokyo will be hosting the summer games of the XXXII Olympiad (currently scheduled for July 23-August 8, 2021), which are expected to generate more than $283 billion in economic benefits.
Japan is fifth-largest export destination for Wisconsin, with exports totaling $686 million in 2020. 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 complex multi-tier distribution system; these hurdles can be overcome by establishing a partnership 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.
With a GDP of $543 billion, Thailand is the world’s 22nd-largest economy and the second-largest in Southeast Asia. Thailand’s economy is well-diversified and competitive, and has proven resilient to external and domestic economic shocks. Thailand offers a favorable business environment owing to its open, market-oriented economy; efficient regulatory systems; 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.
Thailand is an upper-middle-income country with an open, export-dependent economy and a strong, diversified manufacturing base across sectors such as automotive, electronics and food. The country offers generous tax and non-tax incentives to attract foreign direct investment. In addition, the 1966 Treaty of Amity and Economic Relations gives special rights and benefits to U.S. citizens who wish to establish their businesses in Thailand. The successful holding of elections in 2019, the first since a military coup in 2014, has brought political stability to the country. Thailand is also a hub for the Indochina region (encompassing the CLMV countries of Cambodia, Laos, Myanmar and Vietnam). Thailand presents opportunities for exporters of aerospace and defense equipment, agricultural machinery, industrial machinery, medical devices, pharmaceuticals and automotive accessories, among others. Exports from the U.S. to Thailand reached $11.2 billion in 2019. The U.S. has been the third-largest source of imports for Thailand, after China and Japan, since 2014. The U.S. was also the top destination for Thai exports in 2019 and 2020, reflecting the deep economic ties between the two countries.
Vietnam was one of the few countries in the world to maintain positive economic growth in 2020, with GDP expanding by 2.91%, 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 toward a globally integrated market economy. Vietnam has a large population of 98 million, more than half of which are under the age of 30, representing a huge pool of potential customers and employees. The country has gained fame worldwide as a go-to place for export manufacturing, largely because of cheap labor. 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 Doi Moi (renovation) 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. exports to Vietnam have more than doubled during the past 10 years, reaching $10 billion in 2020. Meanwhile, the U.S has been the largest export market for Vietnam in recent years. The country’s political stability, positive economic outlook, large population of 98 million, and rapidly expanding higher 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 10th-largest in the world in 2020, according to the International Monetary Fund. 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. Located at a strategic economic crossroad near both China and Japan, South Korea has, by any objective standard, 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.
South Korea has achieved a remarkably high level of economic growth while maintaining a strong relationship with the U.S. as a good trading partner. The South Korean people tend to be highly conscious of fads and react quickly to emerging trends. According to the Bloomberg Innovation Index’s latest report, South Korea ranked first among the world’s most innovative countries. On the same note, the Korean government is actively pursuing new industries in order to stay ahead of innovation. Even though South Korea has a fairly small land area and population size compared to neighboring countries, it is located at the center of air and maritime transportation networks in Northeast Asia, and is home to globally recognized companies. Given all these factors, South Korea constitutes a very attractive market for international businesses worldwide to as an entry point to the Asian market or for expanding their presence there.
In July 2020, the South Korean government unveiled a road map for a Korean New Deal stimulus package, under which the country plans to invest a total of $160 billion by 2025. About $58.2 billion of this fund will be applied toward Digital New Deal projects, $73.4 billion toward a Green New Deal project, and $28.4 billion to strengthen employment security. Since March 2018, the South Korea-U.S. Free Trade Agreement was revised to help facilitate bilateral trade, making South Korea an attractive market for U.S. companies to enter. South Korea is always looking for technology-intensive industries, such as health care (precision medicine, unique and advanced medical devices), aerospace and defense, and environmental technology.
Singapore is a highly developed and successful free-market economy. It boasts a higher per capita GDP than that of most developed countries, and is remarkably open and corruption-free. It is ranked second globally by the World Bank for ease of doing business. With a pro-business environment, strong legal protections for intellectual property, state-of-the-art infrastructure and a highly educated, English-speaking workforce, Singapore has become a major distribution, logistics and financial hub. The city-state also has a vibrant tech innovation ecosystem, with 80 of the top 100 tech firms in the world having a presence there. The country is a gateway to the Association of Southeast Asian Nations (ASEAN) market, a 10-nation economic bloc that has a population of 656 million and a combined GDP of $3.2 trillion, making it the world’s fifth-largest economy.
Around 46% of Asian regional headquarters of prominent multinational companies in sectors such as health care, technology, media and telecommunications are based in Singapore. The city-state is strategically located along the world’s major trade, shipping and aviation routes. While Singapore itself has a small population, it is a major trading hub for a much larger region. Many of the products shipped to Singapore are ultimately trans-shipped to other destinations in Southeast Asia. The region’s middle class is expected to grow from 135 million in 2021 to 334 million by 2030, while its internet economy is expected to surpass $300 billion by 2025 (up from $100 billion in 2020).
Singapore is known for its rule of law, transparent and streamlined business regulations, and enforcement of intellectual property rights. In addition, more than 99% of all imports into Singapore enter the country duty-free. This makes Singapore one of the easier markets in which Wisconsin exporters can succeed. The U.S.-Singapore Free Trade Agreement took effect on Jan. 1, 2004. Singapore was the 14th-largest export destination for the U.S. in 2020, purchasing $27 billion worth of goods. The U.S. was the fourth-largest source of imports for Singapore during the year.
India is the world’s seventh-largest country by area, as well as its second-most-populous country, with over 1.37 billion people–and the most populous democracy in the world. A developing market economy, India is the world’s fifth-largest economy by nominal GDP and the third-largest by purchasing power parity, according to the International Monetary Fund’s October 2019 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 its future growth is more sustainable and inclusive, using tools such as social protections and infrastructure development.
India boasts an immensely rich cultural heritage including numerous languages, traditions and cultural groups–an important factor to keep in mind when doing business in India. Since 2018, India’s working-age population has exceeded the “dependent” population of children and elderly, and this “demographic dividend” is expected to last through 2055. India has the world’s third-largest startup base, as well as the third-largest number of so-called “unicorns” (startups that are privately owned with valuation exceeding $1 billion), according to NASSCOM, the premier trade body and chamber of commerce of the tech industry in India.
Synergy exists between Wisconsin’s strong export sectors and India’s growth sectors such as agriculture, infrastructure and manufacturing sectors. Additional opportunities have emerged in the infrastructure, health care, digitization and education sectors during the COVID-19 pandemic. Reforms underway to boost investment, consumption and exports are also creating opportunities. India’s top five trading partners are the U.S., China, the United Arab Emirates, Saudi Arabia and Hong Kong.
Taiwan has a dynamic, capitalist economy that is driven largely by industrial manufacturing, especially exports of electronics, machinery and petrochemicals. Taiwan’s economy grew by about 3% in 2020—compared to its neighbors, Japan, Singapore and Hong Kong, which all declined by 5% or more. Despite a weak global economy, Taiwan enjoyed record exports thanks to surging global demand for its technology components and products due to the need to work and study from home. Taiwan’s strong manufacturing capabilities and complete supply chain have helped it dominate the global microchip marketplace despite strong competition from South Korea, Japan, China, the U.S. and India.
The island runs a trade surplus with many economies, including both China and the U.S. Its foreign reserves are the world’s fifth-largest, behind those of China, Japan, Saudi Arabia and Switzerland. In 2006, China overtook the U.S. to become Taiwan’s second-largest source of imports, after Japan. China is also the island’s number-one destination for foreign direct investment. The majority of Taiwan’s imports come from other Asian countries, but about 13% come from North America. Taiwan has managed the spread of COVID-19 far better than most other countries. Deaths from the virus in Taiwan have been extremely low, and increased domestic tourism (in light of restrictions on international travel) has boosted the service sector.
Taiwan’s government has expressed a strong interest in starting talks toward a comprehensive free trade agreement with the U.S. The top categories of Taiwanese purchases from the U.S. include industrial machinery, mineral fuels, electrical machinery, aircraft, and optical and medical instruments. U.S. exports of agricultural products to Taiwan totaled $3.6 billion in 2019, making Taiwan the U.S.’ sixth-largest agricultural export market..
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