Asia

China is the world’s second-largest economy, with a total GDP of more than $15 trillion in 2020, and the GDP growth rate is expected to be 8% 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 $1.i billion worth of goods shipped from Wisconsin to China in 2022. 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 relationships established during the past years. China’s changes drive demand for products and technology. Recently, as the United States and China both set goals on carbon emission and agree to cooperate closer on climate change, it is undoubtedly that there will be large potential in the field of environmental protection. Meanwhile, Wisconsin businesses could also benefit from offshore service contracts for legal, financial and health care as the rise of the middle class in China is creating the need to improve the country’s health care related 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 over $283 billion in economic benefits.

Japan is Wisconsin’s No. 7 export destination, with $687 million in Wisconsi products traveling there in 2022. There are many Japanese investments in Wisconsin in industries such as food, bioscience, mining, and high tech, among others. I naddition to a language barrier and business culture differences, exporters face challenges such as overlapping regulations and authorities, slow approval processes, and complex multi-tier distribution systems. Such hurdles can be overcome by establishing a relationship with a local partner.

Wisconsin companies wishing to enter the Japanese market should strongly consider partnering with a reputable, well-connected agent or distributor and cultivating business contacts through frequent personal visits. Japanese business culture attaches a high degree of importance to personal relationships and these take time to eastablish and nurture. The nature and pace of deal-making in Japan are quite different from those in USA.

The South Korean economy became the 10th-largest in the world last year (IMF World Economic Outlook, 2020). 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 located at a strategic economic crossroad 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.

South Korea has achieved a remarkably high level of economic growth and has maintained a good relationship with the U.S. as a 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; the South Korean government is actively pursuing new industries in order to stay ahead of innovation. Even though South Korea has a fairly small size of land and population compare to neighboring countries, it is located at the center of regional air and maritime transportation networks. South Korea has many globally recognized companies and offers a very attractive market for international businesses to establish or expand their Asian presence.

The South Korean government is actively pursuing new industries in order to ahead of innovation. Last year in July 2020, the government unveiled a road map for a Korean New Deal stimulus package. The country plans to invest a total of $160 billion by 2025. For this plans, 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 strenghthen employment security. Since March 2018, the South Korea-U.S. Free Trade Agreement (KORUS FTA) was revised and has helped facilitate bilateral trade, making South Korea an attractive market for the 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; Wisconsin companies related to those industries have excellent opportunities to expand their business in this market.

Singapore is a highly developed and successful free-market economy. It boasts a higher per capita GDP than 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 came into effect on Jan. 1, 2004. Singapore was the 14th-largest export destination for the U.S. in 2020, receiving $27 billion worth of goods. The U.S. was the fourth-largest source of imports for Singapore during the year.

India is a developing market economy. It is the seventh-largest country by area, the second-most populous country with over 1.37 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 October 2019 World Economic Outlook. Since 1995, the country’s nominal GDP has jumped more than 700%. India is on track to 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, adjusting its policies regarding social protections and infrastructure development.

India boasts an immensely rich cultural heritage, including numerous languages, traditions, and religious groups, and is unique in its diversity—an important factor to keep in mind when doing business in India. Since 2018, India’s working-age population has grown larger than those not of working age. This bulge in the working-age population is projected to last through 2055, giving India what’s known as a demographic dividend. India has the third-largest startup base as well as the third-largest number of “unicorns” (privately held startups with a value exceeding $1 billion) in the world, according to NASSCOM, the premier trade body and chamber of commerce for India’s tech sector.

There is synergy between Wisconsin’s strong export sectors and India’s growth sectors. There is potential in the agriculture, infrastructure, and manufacturing sectors common to India and Wisconsin that would lead to win-win outcomes for both. India’s growth potential offers tremendous opportunities for Wisconsin-based companies exporting to India. Additional opportunities have been created in the infrastructure, health care, digitization, and education sectors during the pandemic as a result of policy changes and investment by foreign and Indian companies into these sectors. Various reforms are being undertaken to boost investment, consumption, and exports. India’s top five trading partners continue to be the U.S., China, UAE, 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—higher than neighbors Japan, Singapore, and Hong Kong, which all declined by at least 5%. Despite a weak global economy, Taiwan enjoyed record exports thanks to surging global demand for its technology components and products because of 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 COVID in Taiwan have been extremely low and increased domestic tourism has helped 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.’s sixth-largest agricultural export market.

With a GDP of $543 billion as of 2019, Thailand is the 22nd-largest economy in the world and the second-largest in South East 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 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.

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 whom are under the age of 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 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, a rapidly expanding affluent and middle class, makes it an attractive market for exporters in a range of sectors from industrial machinery to medical equipment and environmental solutions.