| La Lettre du GERPISA | no 127 (december 1998) |
The economic crisis in Southeast Asia has brought on profound modifications in this region which are far from complete. Yveline Lecler's presentation during our November 13th workshop day 1 , commented by Jean-Bernard Layan, gave us the opportunity to examine a few of these changes, especially in there structuring of this regional area and the role played by Japanese firms in this endeavor.
Up until 1995, perspectives of high growth in the region and low labor force costs had encouraged Japanese firms to develop their activities in the ASEAN zone. Industrial projects multiplied and reached a production capacity far greater than expected growth rates for the region (and this despite the great ambition of these expectations), setting this zone up to become a area of re-exportation. Competition from other constructors had not slowed this movement down, quite the contrary. In addition, Japanese firms implanted in this zone (both constructors and equipment suppliers) established particular practices there. Thus, equipment suppliers often diversified their partners by working for competing constructors. Also, a certain number of firms had already developed an industrial network throughout Southeast Asia through specialized fabrication of their various plants in function of the country. Already, before the beginning of the 1997 crisis, a drop in sales had encouraged Japanese firms to increase the re-exportation of their Southeast Asian production to other regions of the world such as Latin America. Last year's crisis nonetheless marks an important break with the reduction by half of ASEAN sales previsions established in 1995 for the year 2000. Despite this decrease, the prevailing attitude among Japanese constructors seems to promote maintaining their strategy by playing for time, to remain in these countries, adapt while awaiting recovery, and sometimes even to invest. Thus, Japanese firms have often reduced their workforce in a variety of ways, with the hope of preserving the future. For example, a part of labor force reduction has involved sending workers to Japan for training programs. In short, initially established previsions for the year 2000 were simply postponed to 2003. Faced with the crisis, this "wait and see" attitude on the part of Japanese firms has provoked a series of criticisms. The maintenance of Japanese firms within ASEAN countries plays an important role for local activity. If pursued, it should reinforce the position of these firms within local economies, industrial integration seriously risking to be accompanied by financial integration. This perspective nonetheless risks, in turn, to provoke a reaction by the countries concerned, even if they can not presently shoulder the weight of developing their own national projects for their economies. Most importantly, one may wonder about the capacity of Japanese firms to maintain their industrial networks in Southeast Asia. For example, Australia, traditionally included in this region by Japanese statistics, is already in difficulty, as demonstrated by the closing down of a Toyota plant in this country.
In fact, Japanese constructors evolve differently during the crisis. In Japan, analysts divide constructors up into groups having different performance levels. On the one hand is the "winner" group, such as Toyota and Honda who both had considerable benefits in 1997. Toyota made up for its losses in Asia thanks to its activity in Western countries, whereas Honda progressed everywhere. These firms still have enough important reserves to adequately face the development of the crisis. On the other hand, firms such as Nissan and Mitsubishi experienced setbacks in all their markets, and are presently in serious difficulty. The future maintenance of their industrial apparatus is severely compromised, as demonstrated by the possible cessation of the Nissan diesel subsidiary at Daimler-Benz. Between these two extremes, one may find a group of constructors such as Isuzu, Daihatsu, Suzuki or Hino whose performance has decreased and who are opening up their capital to more sold firms such as Toyota and Ford. Aside from ongoing transformation in the Japanese business realm, it is thus probable that the Japanese automobile sector experience a large-scale restructuring in the near future. As a consequence, its involvement in ASEAN will undoubtedly be affected.
Finally, other actors besides Japan who play a role in this region will have to modify their strategy. Korea, who had hoped to surpass Japan in regional influence, is now more severely affected by the crisis than Japan, as demonstrated by the numerous difficulties linked to restructuring its automobile sector. Insofar as Western firms are concerned, especially American ones, they seem to be waiting for clearer skies in the development of the crisis. A number of other elements remain uncertain, such as the future development of China. Traditionally focused on developing an autonomous national sector, this country does not yet have the necessary resources to establish a transportation policy in the near future which would transform this reality.
The present crisis in Southeast Asia seems therefore to be bringing about profound structural transformations. This is even more the case since American protection of the zone up until the 1980s has been replaced by the actual United States policy which is aiming at a full liberalization of exchange