Check out: The Asian Network
For instance, Asia includes a variety of countries which happen to be in different stages of economic, political and social development. The only official countries listed as fully developed are Japan, Singapore, Hong Kong and Australia. Therefore there is a still a long way to go for most of the Asian countries, but as the development happens comparably fast in this region, they additionally need to be prepared for constant and frequent changes in the environment. This leads to huge challenges, such as keeping up on technological innovations, generate employment and high standards of education to foster entrepreneurship and high-skilled labor. Furthermore, the countries governments need to develop more profound health care systems, job security and working conditions. But that’s not all. The additional challenge is to combine this with the local traditions and customs, while the whole process needs to spread throughout urban and rural areas.
But what has been the main advantage and the source for Asia’s fast development? In the case of China and India, it has mainly been the low costs of labour. This doesn’t only include the wages, but also the absence of insurance and tax payments for companies. This has been a real attractive deal for foreign companies to invest or spreading out to these Asian countries. Yet we’re talking about the changing faces of these Asian countries. So what actually has changed?
An article by the German newspaper Wirtschaftswoche explained in an elaborate manner how especially in China the identity is changing. Due to the extraordinary economic development since Deng Xiaoping’s campaign of open markets in China, the all-over conditions for labour (notably migrant workers), has continuously changed. The wages for migrant workers have been steadily growing by 11,8% per year since the mid-90’s. Now, with the new Five-Year-Plan inaugurated by Xi Jinping, the health care and insurance system will be upgraded in order to draft a more secure setting for all kinds of workers in China. These improvements will boost the social environment for the population, but at the same it means cut backs for foreign companies who entered that market for economic competitive advantage.
China has been attractive because of low costs, as mentioned below, but now as these incentives are becoming more and more equal to the standards of developed countries, the companies need to think about new strategies and need to adapt them to the changing environment in Asia. As mentioned in the article of the Wirtschaftswoche magazine, especially companies in the manufacturing sector seek for new countries in which exploitation of labor is less costly than in Asia, they found new options opening up in the northern countries of Africa. But, Asia’s market has huge potential. With the two countries of China and India, which hold in total 2,3 billion people, there must be another strategy than moving away. Even if companies need to cut back in low labor cost, they have the option to educate and employ high-skilled students. This strategy means to attract the large number of highly educated students in China and India, especially in the fields of IT and manufacturing, and use their potential to move away from cheap work as a competitive advantage to an high-quality position which uses their skilled young professionals to conquer the massive Asian market. Just the way offices in the developed countries are used.
To bring this article down to a round figure I want to mention the example of Germany at this point. The development of e.g. China is not that different from what happened in Germany decades ago. The manufacturers have been copying machines and technological skills from the far more developed British. Afterwards these newly educated students were brought back to their home country to implement their knowledge to cause technological development within Germany. In combination with profound education, Germany managed to combine the applied and theoretical skills of the scientists and created a high-standard technological environment. Even that everything started with copying and using cheap labor, the companies managed to turn it around and find their competitive advantage.
This is a development that is very likely to happen in Asian countries in the near future and which will indicate a new shaped identity.
Application deadline for The Harvard Project for Asian and International Relations is due on December, 15th 2013. Apply now!