TODAY, Jan 10, 2011
Republished in the South China Morning Post, 15 Jan 2011
Many people talk of the rise of Asia. This is especially now in the post-crisis period when prospects for the United States and Europe seem quite weak for the short to medium term.
But the term "rise" is used by some to suggest something natural and irresistible. When we extrapolate the growth graphs into the future this way, it seems smooth, even if the incline is steep.
However, there are reasons to forecast bumps and sharp edges to that growth. There are also possible disjunctures and problems that, unless surmounted, can throw Asian growth off track. This is not only in business and economics but also in social and political systems.
Given this, rather than a smooth rise, Asia must expect transformation and indeed many revolutions from what we see currently.
FROM TRUCE TO PEACE
The first necessary Asian revolution will be for nations to move from truce and co-existence to peace and deeper cooperation.
In the decade from the Asian crisis to the global (1998-2008), a regional production system has been created. Intra-Asian competition is strong, especially at the firm level but for nations and their governments interdependence is now more strongly felt.
Yet this economic interdependence among Asians papers over many differences. Tensions between China and Japan, China and India exist over past, present and future issues; from islets in the sea to distant mountain tops, from military build-up to accusations of unfairly subsidised trade.
Similar issues are there in relations between China and Asean, as seen last year when disputed claims in the South China Sea resurfaced.
As I argue in my 2010 book Asia Alone, Asia's rise is contingent and risky. We will need to further develop norms and habits of peace and deeper cooperation.
PRODUCING FOR ASIANS
The second revolution in Asia will be how we think of our societies and our economies.
The existing Asian economy emphasises export production, targeted at the US and European markets primarily. The existing Asian system also has a social outcome.
Production has primarily involved and benefitted certain elites in Asia, often collaborating with MNCs - the professionals, the larger national companies and often the well established elites and families - and less so the mass of the society.
A revolution is needed to change these characteristics of Asian production. Asians must increase produce for their own consumption at the national and regional level.
For this to happen, companies need to refocus. From basic goods to luxury items, companies need to produce for Asians, rather than in Asia.
The third revolution facing Asians is to move from production or manufacture to creation.
The Asian production system and especially China's has been built largely by and for the developed world corporations. We provided the cheap inputs of land, labour, resources and often subsidies. These corporations provided the concepts, intellectual property and industrial know how, brands and marketing.
In this equation, not all parts are equally valued. Mr Stan Shih of Acer has likened the general pattern to a smiley-face: A curve on which the greatest value added is at the start and end - with creation, IP and know-how at the start, and branding and marketing and access to consumer at the end.
Asians are increasingly going to have to learn to develop, protect and profit from their intellectual property, rather than copying and pirating others.
In the context of these three revolutions, we should resist the urge to see Asia's rise as being irresistible, predestined or smooth. It is a period of potentially disjunctive change and of increased competition. The post-crisis attention to Asian prospects redoubles this.
Before the crisis, even if Americans and Europeans and their companies looked at Asia, the region would be just one of many areas for potential growth.
After the crisis, for many more companies, Asia is the number one strategic focus. They will resource their ambition in Asia, with more funds, more management time and focus, and their best talents.
If Asia rises, as most predict, they will want to be embedded in that rise and maximise their benefits. As such, Asians and Asian companies will face even greater competition.
Everyone predicts Asia will rise. Probably. But who will win in Asia's rise - which countries and which companies and products - that is far less certain.