US FDI to Asia to Increase Dramatically - by www.InvestAsiaPacific.com, division of AsiaBIZ Strategy

US investments in Asia looks set to dramatically increase over the next 2 years. According to APEC, globally, three host countries — the United Kingdom, Canada, and the 

Netherlands—accounted for more than a third of the 2004 total position of US investments in Asia. Equity capital increases were largest in Asia and Pacific and in Europe. Given that 

Japan as the largest recipient of US investments and the share is only 3.9%, the upside potential is enormous if we factor in other now-growing Asia economies like China, India and 

ASEAN! US CEOs should re-examine Asia and increase their investments in this region to update their global country allocation and diversification portfolio. 

I feel that US companies should include more Asian countries in their Asia strategy for the following strategic reasons: low Asia market share of US FDI, Asian consumers emotive 

embrace of US goods, services and culture as well as a rising Asian workforce. 

US Direct Investment in Asia
In 2004, Japan was the largest recipient of US direct investment. No other Asian country even came close. Low Asia market share of US FDI. A lot of Asian countries have still not 

reach maturity in terms of market share capture of receiving US investments. Biggest US exports to Asia are nuclear reactors, boilers and machinery (17.6%) followed by electric 

machinery, sound and TV equipment (16.8%), with vehicles a third (10.7%)

US Exports to Asia
Biggest US 2005 exports to Asia were electric machinery, sound and TV equipment (22.4%), nuclear reactors, boilers and machinery (16.4%), aircraft and spacecraft (8.5%) as well 

as optic, photo, medical and surgical equipment (7.8%). The list of the top 10 US exports to Asia excludes the value of consumer goods and services, which may be captured in 

franchise revenues but excluded from export figures. 

Asian consumers still warmly embrace most US culture, products and services, offering a big consumer market base. Asians prefer two Western location brands: US and Europe. 

However, from a national country branding standpoint, US companies need to pay attention to better differentiate themselves from their European competitors in order to better 

engage and connect with Asian consumers. Already, some European companies have outperformed their US competitors in several sectors. 

Ask any Asian to think of a beer brand and they will mention a European brand like “Heineken or Carlsberg”, not a US brand like “Bud”. Anheuser-Busch, Miller Brewing, and Adolph 

Coors may be the US market leaders but not in Asia. Ask any Asian to think of a good passenger or luxury car brand name and they will say, “BMW, Lexus or Mercedes” but not Ford or 

GM. Not only do US companies have to contend with 

European competition, they now have to face-off with rising Asian competition as well, who are also attacking US markets while defending their Asian turf. Still, the US enjoys a slight 

advantage to capture an Asian heart and mind share. This must be heavily capitalised on. Once the appropriate Asia market entry strategy is developed, feasibility and market research 

studies conducted, right human resources selected and trained, ‘Asianisation’ of US business practices done, and care taken to understand the Asian culture and potential partners, 

US CEOs’ Asia strategies and action plans stand a high probability of being properly executed and implemented.

Rising Asian workforce. Consider the following factors: Asian executives and workers are spending more money and time to upgrade their higher education and technical skills. This 

inevitably means future increased productivity. Also, Asians earn lower wages relative to their American counterparts and have a higher propensity to work longer hours. Asia has no 

militant labour unions as the Asian culture is one used to submission to authority with strong leadership exercised in governments and employment. US CEOs should consider 

outsourcing or moving some production to Asia. 

The ‘Made in USA, Export to Asia’ mantra may have worked well in the past but the season has changed. The new mantra may well be ‘Made in Asia, Sell in Asia, Re-export to USA’.