For all you corporate strategists out there plotting an assault on the Pacific Rim, the big accounting firm of Coopers & Lybrand has some bad news: There is no Pacific Rim.
The discovery is contained in the firm’s annual report on the world economy. It says, “Strategically, there is no Pacific Rim.”
Coopers & Lybrand does not mean that the world ends somewhere off Catalina Island. Behind the attention-grabbing overstatement is a serious message that the firm says it is trying to convey to corporations planning a global marketing strategy.
“People talk about dominating the Pacific Rim, but they forget the fact that we are not talking about places right around the corner,” the study’s author, Grady E. Means, said in a telephone interview. “It is a big area. It is complicated. And, if you are a corporate strategist, you have to understand that there is no simple way to get into it.”
Means, an economist and director of C&L;'s strategic management services group in Washington, added: “We would never counsel our clients to ignore the Pacific Rim, but we feel its strategic relevance has been overstated.”
The geographic, cultural and political differences of the nations commonly lumped together as the Pacific Rim require individual marketing strategies, rather than a single approach to the region, the study said.
Corporate expansion might be better aimed at Latin America, Means said, where the study found that companies have a better chance of using a foothold in one nation to expand into others because distances between countries are shorter, borders more open and governments more stable than in Asia.
U.S. Economy Underrated
The report was upbeat about economic progress in Latin America, particularly Brazil, which is a bigger manufacturer than Taiwan, Hong Kong, Singapore and South Korea combined. It predicted that Brazil could move from eighth to fifth among free world markets in the next 15 years if it deals successfully with its high debt.
The optimism carried over into the overall assessment of the strength of the U.S. economy, which Means said has been vastly underrated. He predicted that the United States will remain the world’s dominant economic power for the foreseeable future.
“All this stuff from Paul Kennedy about the decline of America is nonsense,” said Means, referring to the Harvard professor whose best-selling book, “The Rise and Fall of the Great Powers,” characterizes the United States as a nation in decline. “Any sense of the United States being challenged by Asians and Europeans in global markets is being overstated.”
The study said Japan “remains one of the most protectionist nations in the world,” but it held out hope that the Japanese market may be opening up to foreign corporations because of shifts in business conditions and economic factors.
Focus on India
According to Means, India is a better strategic marketing target than most of the other Pacific/Asia nations. Its population is roughly equal to the combined population of the United States, the Soviet Union, Japan, West Germany, France and the United Kingdom, and its government has been relatively stable.
“In our view, (India) should be an important hub for global strategy in the Asia/Pacific region,” the study said.
Is The Pacific Rim Overrated? Diversity, distance and potential for political instability make the Pacific Rim a difficult area for corporate marketing strategists. Below are “critical business zones” defined by Coopers & Lybrand.