The Asian financial crisis is as bad now as it has been and it's taking a toll on American companies, but things are bound to get better and American firms exporting there should tough out the bad times.
That is the gist of remarks by Peter B. Hale, deputy assistant secretary for Asia in the U.S. De-part-ment of Commerce's International Trade Administration, and Lee Radebaugh, director of University of Utah/Brigham Young University Business Education and Research, during a recent session exploring the Asian financial situation.In the last nine years, Hale said, Utah exports have increased 30 per-cent, most of that going to Asian countries, but the recent financial crisis is having an impact on the exports. He can see "the light at the end of the tunnel," and says markets have a good long-range potential if American companies can be patient.
In some instances, said Hale in a Wyndham Hotel speech, other markets in Mexico and Latin America have picked up the slack when exports to Asian countries declined.
For many years, Hale said, Asian companies were run in a closed environment, but once others became involved it was apparent balance sheets showed many companies were making risky investments. In an effort to protect their money, the Asian countries raised interest rates and that made it difficult for companies elsewhere in the world to export their products.
Hale said the financial crisis isn't about the quality of products produced in Asian countries, but the closed structure of the banks and companies that have interlocking interests and a traditional distrust of foreigners that tends to keep information secretive.
Radebaugh said he was in Asia two weeks ago visiting companies, banks and other financially-related entities and he received an impression of a bleak outlook. "How long the situation will last, nobody knows," he said.
After experiencing huge growth in the 1980s and early 1990s, Asian countries were expected to be among the most financially viable areas in the future. That outlook has changed, he said.
One of the problems is the currency; last July many Asian currencies fell against the U.S. dollar and those currencies currently are in "very volatile" conditions."
Radebaugh said stock markets in many Asian countries suffered heavy losses and that also impacted American stock markets with large fluctuations. In addition, interests rates were raised to protect a country's money so economic growth slowed, which leads to high unemployment and political instability.
He said car companies are being impacted by the Asian financial crisis and Japan could reduce the price of their autos, which should make the American auto industry "scared to death."
Because of high interest rates in Asian countries, American companies with interests in that area aren't selling anything, but there are indications the Asian economy will make a comeback. "As long as the American economy keeps chugging along, it won't be as impacted by the Asian situation as other areas," said Radebaugh.