Asian financial problems arise from various sources

by Jan K. Allen

SBJ Contributing Writer

Many Missouri companies have reaped the benefits of international trade, but exports have decreased due to the recent Asian financial crisis, which has caused some concern about the stability of the Far Eastern markets.

It would appear the problems in the closely interrelated countries of Asia might be universal among them, but in fact they are as diverse as the cultures they represent.

With Japan, for example, it is the classic example of the "boom and bust" syndrome, said Jim Robb, international trade specialist for the U.S. Department of Commerce.

For Indonesia, Thailand and Korea, the drop in the value of their currency was brought on by a number of ills specific to those countries and their antiquated governments. Each of them has already begun measures to boost its ailing economy and attract new commerce.

Japan's internal problems stem more from bad debts in the banking industry than from the manufacturing sector, Robb stated. Fear about the economy among the Japanese people has caused a decrease in demand for consumer goods, he said.

Foreign suppliers are affected by the trickle down effect.

He said the demand for raw materials, food and medical-related goods is still up. It's industries that produce items like Levi's and Reeboks that are feeling the crunch.

Along those same lines, imports to Indonesia are down one-third from last year. Conversely, imports of raw materials in that country are up 15 percent for the same period, according to a report from the U.S. Export Assistance Center.

Among the Missouri companies to feel the pinch is American Rod and Gun, the wholesale affiliate of Bass Pro Shops.

Burt Steinberg, president of the company, said business in Japan, Korea, Taiwan and Malaysia had been growing steadily over the past 10 years until the slump hit in 1997.

American Rod and Gun sells to independent retailers in 52 countries, and attends two major trade shows per year for the hunting and fishing seasons. It also advertises in foreign trade journals to attract business from other countries.

Steinberg said the Japanese businesspeople he keeps in contact with do not see any relief in sight. To offset the decreased Asian sales, the company has looked to other areas where interest in sporting goods has increased.

Europe, in general, has been, and still is, a strong market for the company, with Spain showing increased demand and Russia coming into the recreational marketplace. Mexico and South America have also provided increased sales.

While recreational products are usually the first to go, the Asian crisis has not strongly affected sales for Tracker Marine, according to Jo Moon, director of international sales for Tracker.

On the Asian front, things began to fall apart in late October of 1997, with Korea and Japan the hardest hit, Moon stated.

"Oddly, this little niche has not suffered as much," she said, speaking of boat sales.

Tracker sales have increased dramatically in Mexico and are up in general in South America.

Pretty much all Tracker product lines and the other boat names it carries are still in demand in Asian and Pacific countries and are in increased demand in Eastern Europe.

International Trade Specialist Kristi Wiggins said that while the Far East is down, many emerging countries in the Middle East, Africa and Eastern Europe are coming into the marketplace and filling the gap.

Some manufacturers are shifting emphasis to make up the deficit left by a sluggish Asian market, she said.

Paul Mueller Company has shifted its focus while keeping a presence in the Far East, said Robert Hetherington, president of the international division for the company.

The Mueller company exports about 20 percent of its products with annual revenues at $20 million from foreign trade. The Asian market represents about 40 percent to 50 percent of this business.

Hetherington estimated a 5 percent increase in 1998 foreign sales, which includes Asia. While the company had projected a 15 percent increase, based on past performance, it was pleased with the results, considering the circumstances, he said.

Plans are in progress for an $8 million brewery to be built in Japan in the near future to showcase Mueller products, he added.

Asian countries are working to remove some of the obstacles to foreign trade. Thailand has relaxed restrictions on foreign ownership, and Taiwan's President Lee Teng-hui spoke out for fair competition at an Asian Bankers Association meeting.

Korea is relinquishing some of its governmental control and reconstructing its corporate and financial sectors. Singapore is lowering airport landing fees and port charges.

Robb said no one doubts that Asia will come back, its just a matter of time.

INSET CAPTION:

Plans are in progress for an $8 million brewery to be built in Japan in the near future to showcase Mueller products.

PHOTO CAPTION:

Robert Hetherington, of Paul Mueller Company, says his firm has shifted its focus in response to the sluggish Asian market. See page 15 for more on Mueller.[[In-content Ad]]