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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Dayuhan who wrote (9078)	8/11/1999 12:05:00 AM
From: Ron Bower	Read Replies (2) \| Respond to of 9980

Steve, Rains over? This may sound like I know what I'm talking about, but it's just a layman's opinion based on readings - probably worth nothing. Just finished the 'Asia news' tour I take every couple of days and saw the information you posted on Thailand and Japan. Have recently seen similar articles on most all ASEAN countries. I'm reminded of US States competing with each other by offering years of tax exemption, low interest loans, and other incentives to bring in factories and other businesses to stimulate their economies. It worked to some extent as it created jobs as those companies in union States moved to right-to-work for lower wage scales. Over the last 10-15 years we have seen US businesses prosper, but the wages of the lower income workers actually declined as the tax burden was shifted to them in the form of higher income, sales, property, and other taxes. We now have a different situation as US companies threaten their workers with moving to a foreign country. A factory in the area has been changing policy resulting in lower wages for the employees. They are complaining but as non-union workers they have no organized or legal position. The company has started two factories in Mexico and bought a company in Malta indicating the products made locally will be shifted to those factories if they have problems with the labor here. I also see a shift in US and Euro business policy towards Asian investment. Instead of investing in factories in Asia (risk), they are chosing to sub-contract to Asian companies. An example: VTech (HK/China) makes over 50% of the remote phones sold in the world under numerous brand names. Sandisk had plans to invest in a chip factory in Japan, but withdrew in favor of a contract for a Chinese company to produce their chip wafers (big time transfer of technology). Without getting into it, there's many other examples. I see the Asian countries continuing to increase their debt by making capital expenditures to boost their economies and offering tax incentives to attract or improve their business climate - companies in Asia will be forced to tighten margins to gain business - unemployment will decline but wages will remain stagnant - and gradual recovery in Asia as the US economic growth declines. Surprised at a major increase in China's exports to South Korea. Might indicate SK is truly leading the recovery. Get started and don't know when to stop - sorry. JMHO, Ron