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Interview with Professor Hellmut Schutte, Dean, Asia Campus, INSEAD, on what is needed to develop the ASEAN economies.
 What actions would you recommend for the ASEAN economies to remain competitive?
ASEAN governments need to support centres of excellence and provide better infrastructure (in the broadest way). They also need to boost productivity, especially through training and education. A third task is to establish good relationships with China and Japan.
Private companies in ASEAN should be aimed towards specialisation rather than diversification. It’s important that they try to avoid price intensive product categories, which are dependent on low labour rates or economies of scale. Internationalisation is key, in the sense of becoming active across borders within the region, not necessarily in far away markets such as the US or Europe. Companies also need to invest in competencies and capabilities rather than assets, such as real estate.
What do you think should be on the regional agenda at the World Economic Forum on East Asia?
- The role of China in the unification of Asia
- Japan: Is it part of G7/G8 or part of East Asia?
- The re-emergence of the EAEC and the idea of a unifying East Asia
- APEC: Preventing or promoting the formation of a unified East Asia?
- The impact of bi-lateral trade agreements on the formation of trading blocks
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"Internationalisation is key, in the sense of becoming active across borders within the region, not necessarily in far away markets such as the US or Europe."
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How would you characterise the way international business is adapting to the emergence of China and India?
The often rather slow reaction in terms of investments has paid off. In very few industries in China have first mover advantages paid off. Many companies have done well with operations that combine local production, imports and exports. Those who that failed have often either overestimated the size and depth of the Chinese market, or underestimated competition (both from other multinational companies and local firms).
Not much has happened so far in India except in companies with colonial legacies. Multinationals are more careful in India than in China, being more realistic in terms of infrastructure, the shortcomings of the government in policy making and the competitiveness of Indian companies in selected industries. I would expect the overcapacities in India to have a dampening effect on investors' appetite for the build-up of additional factories and service centres.
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