Asia's Lessons For Emerging Markets
HighBeam Research
Title: Asia's Lessons For Emerging Markets.(Brief Article)
Date: 11/1/1999; Publication: Risk & Insurance; Author: NEUT, TOM VANDER
U.S. multinationals continue to pursue market opportunities in Asia, despite the recent economic crisis. But now they are more cautious--and more focused on the risks of emerging markets.
The Asian crisis of two years ago has taught many U.S. multinational companies a bitter lesson about doing business in emerging markets: No matter how great the long-term potential of a market, an economic climate can turn nasty in a hurry. Indeed, Asia's rapid economic growth came to a halt in 1997, although the economy has been slowly recovering ever since.
"What the Asian crisis did was demonstrate to many companies the speed and the severity with which the market can change and the way that it had such a dramatic impact on so many different companies' performance," says Marty Scherzer, managing director of Marsh Risk Finance in New York.
People are "recognizing that they're operating now in a very volatile world and, as a result, they're taking a sharper eye to their risk management practices across all different areas of risk," he says. Companies are realizing it is not enough to focus on property/casualty risks without also addressing risks such as political, currency devaluation, and interest rates. If a crisis similar to the Asian crisis were to coincide with another crisis to a company's business, the effect could be detrimental.
Yet, many U.S. companies remain interested in Asia. "Companies say, 'Here are very important future markets and we just have to be there and we have to pay the learning curve,'" says Joachim C. Bartels, senior vice president of global business development for Dun & Bradstreet.
Company executives realize that deals may fall through in Asian countries because of partners not paying their bills. But they also realize that their...
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