Kotler ASEAN -The Paradox of Globalization vs Localization

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Transcript of Kotler ASEAN -The Paradox of Globalization vs Localization

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    Why ASEAN?

    ASEAN Community 2015

    ASEAN Regional Marketing

    Contents

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    Why ASEAN?

    ASEAN Community 2015

    ASEAN Regional Marketing

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    Globalization

    Localization

    Regionalization

    Regionalization: The Right Balance

    ICT has allowed wide information access. Goods and services can move cheaper thanks to

    cheap transportation and ICT. The world is more borderless. In a flat world, competition searches for lowest cost.

    National borders still have economic meaning. National markets exist and are defined by psychology

    and politics. National economic and political setbacks can threaten

    globalization.

    Convenience of flows of information, goods, services,

    and people within the region Relatively similar psychology and national interest

    within region

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    The paradox has forced countries to form regional blocs

    Source:Wikipedia.com

    http://upload.wikimedia.org/wikipedia/en/4/43/ActiveBlocs.PNG
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    Regional Blocs, including East Asia will be prominentPrincipal blocs will be Europe, East Asia and the Americas.

    The 21stCentury is the Asian Century!

    Asia will be almost half of the worlds economy by 2020

    Global View of Asia

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    Asia Pre-Crisis: The Flying Geese

    Note:Flying Geese is a concept developed by Kaname Akamasu that best describes the economic structure of Asia before the crisis.

    The formation resembled flying geese, headed by Japan, while the rest of the group followed. Countriestoward the front tend to transfer older industries to countries at the back.

    Before the crisis, the flying geese phenomenon was soaring throughout Asia

    and influencing the Pacific Rim economies.

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    Asian Economic Crisis in 1997-1998: The End of Flying Geese, The end of

    the good old days of the Asian miracle

    But the crisis put an end of flying geese.

    Source: BBC

    Asian Crisis

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    After the crisis, squadrons of the former flying geese, who increasingly drive regionalintegration.

    SAARC Squadron

    ASEAN Squadron

    China Squadron

    Korea Squadron

    Japan Squadron

    Asia Post-Crisis: The Regional Squadrons

    http://images.google.co.id/imgres?imgurl=http://www.aesf.org/branches/100/japaneseflag.gif&imgrefurl=http://www.aesf.org/bd.cfm%3Fbr%3D100&h=393&w=600&sz=6&tbnid=oiDQpPDzHnkJ:&tbnh=87&tbnw=133&hl=en&prev=/images%3Fq%3Djapan%2Bflag%26hl%3Den%26lr%3D&oi=imagesr&start=1http://en.wikipedia.org/wiki/Image:SAARC.JPGhttp://upload.wikimedia.org/wikipedia/en/3/3f/SAARC2.PNG
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    Chindia, where the world's workshop meets its office

    Manufacturing giant with the lowestprices

    Hybrid communist-capitalist model thatenables development

    Solid primary schools Infrastructure that lures foreign

    investment Good distribution of wealth with higher

    per-capita income

    Strong technology and service

    industry Relatively efficient capital

    market Strong private sector and legal

    framework Younger workforce Growing population

    Great university system Strong entrepreneurial culture Attracts higher prices

    Red tape, corruption, toughlabor laws and bureaucracy alldeter investment

    Woeful infrastructure Lackluster primary education

    system Exclusive growth environment

    to the rich The privatization of key

    industries has stopped

    Heavy reliance on low prices Weak financial system Inefficient capital system Slow population growth

    China India

    Strengths

    Weaknesses

    Strengths

    Weaknesses

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    How should ASEAN ride the waveof the rising East (read: Chindia)?

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    ASEAN Countries at a Glance

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    The Rising East: Threat or Opportunity?

    Threat Opportunity

    ASEAN is the only regioncapable of being in the driverseat of the Greater East Asia

    integration*

    Individual countries in ASEANare nothing compared to

    Chindia

    ASEANIntegration

    * ASEAN is the first to seat ASEAN countries together with China, India, Japan, South Korea,Australia, and New Zealand, as well as Russia (as an observer) in one table during the first EastAsia Summit.

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    Initiated by ASEAN, the first East Asia Summit held in Kuala Lumpur, Malaysia, inDecember 2005, brought together leaders of the former flying geese, with the

    objective to establish the East Asia Free Trade Area by 2015 and moving towards theNew Asia.

    (Observer)

    The First East Asia Summit Driven by ASEAN

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    hy is ASEAN in the Driving Seat of the Greater East Asia

    Neutral Position

    ASEAN

    High BargainingPower

    Attractive SingleRegional Market

    CompetitiveRegional Production

    Base

    Huge market

    High consumption Less competitive

    Smooth flow of goods,

    services, and peopleunder FTA

    Abundance of naturalresources

    Low labor cost

    ASEAN is not considered athreat to China, India, Japan,

    South Korea, Australia, and NewZealand

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    Why ASEAN?

    ASEAN Community 2015

    ASEAN Regional Marketing

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    Single Regional MarketRegional Production Base

    The Peaceful, Prosperous, and People-Centric ASEAN

    ASEAN SecurityCommunity (ASC)

    ASEAN EconomicCommunity (AEC)

    ASEAN Socio-Cultural Community

    (ASCC)

    ASEAN COMMUNITY 2015

    Towards ASEAN Community 2015

    Dual Track Strategy

    Production/Supply Consumption/Demand

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    What does ASEAN Integration Mean?

    Tariffs will be eliminated and non-tariff barriers willbe gradually phased out Rules and regulations will be simplified and

    harmonized ASEAN investors will be permitted to invest in

    sectors formerly closed to foreigners and theservices sector will also be opened up

    All barriers to the free flowof goods, services, capital,

    and skilled labor areremoved

    The region will become amore level playing field

    Applicable international standards and practicesare followed, and policies on intellectual propertyrights and competition are put in place

    Regional infrastructure will be more developed

    with the expansion of transportation,telecommunications and energy linkages

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    2

    Four Key Success Factors of ASEAN Integration

    Rigorous Focus onHigh-Impact Sectors

    Source: McKinsey&Company, ASEAN Competitiveness Study, 2003.

    Workable Institutions

    Continued Support byASEAN Leaders

    More Effective Public-Private Collaboration

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    2

    Corporate Trends Supporting ASEAN Integration

    Global trends in manufacturing indicate a shift towards adopting

    flexible production techniques and integrated production chains

    It is no longer cost effective for all manufacturing activities to be done in in-house or in asingle country

    MNCs are integrating their manufacturing activities across several locations

    MNCs are not only seeking large consumer markets but also regional sites where they canestablish efficient production networks

    Regional Production Base

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    Potential Cost Savings from ASEAN Integration

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    Benefits to MNCs Targeting more sales volume

    in the ASEAN market Components procurement on

    an ASEAN-wide basis More product specialization

    to achieve economies ofscale

    Greater emphasis onprofitability using ASEAN-

    wide operations

    Benefits to Local Companies More export opportunities to

    ASEAN market ASEAN-wide expansion

    opportunity for corporategrowth strategy

    Technology and financial

    support opportunities fromMNCs

    ASEAN-wide pool of talent

    A Balanced Approach is Needed

    A Balanced Approach

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    2

    Why ASEAN?

    ASEAN Community 2015

    ASEAN Regional Marketing