Analysis of Asia Pacific Multinationals and International Business

This report provides an in-depth analysis of the rise of Asia Pacific Multinationals (APMC), examining their contributions to the global economy, particularly through foreign direct investments. The report highlights key players from countries like Japan, Korea, and China, focusing on their strategies, including producing high-quality, affordable products to capture broader markets. It explores the aims of Japanese multinationals like Toyota and Sony, and the international business strategies of Korean and Chinese companies such as Samsung. The report contrasts the competitive advantages of APMCs, such as cost-effective production and market adaptability, with those of Western multinationals. It also discusses changes in operational control over time, the impact of government policies, and the ability of APMCs to compete in Europe, North America, and Asia, concluding with a brief overview of the relevance of the European Union to these businesses. The report emphasizes the impact of these companies on global economics and their ability to adapt to the changing market dynamics.

Asia Pacific Multinationals 1
RISE OF ASIA PACIFIC MULTINATIONALS
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1. Introduction
Most of the developed and developing countries in the Asian Pacific regions have, in the
recent past became major contributors to the global economy due to the increase of multinational
companies from these countries. They usually engage in Foreign Direct Investments, and within
their home countries, retains a measurable amount of management and overall control of their
businesses. The Asian countries with major multinational companies include Japan, Taiwan,
Korea, China and India. These multinational companies produce varied range of products which
include electronics, medical equipment, and automobiles, among others. Most of the
multinational organizations or business firm in the Asian Pacific region has achieved their
success mostly due to the availability of cheap labor from the local population, making
production process cheap as well as their subsequent end products (Dunning and Lundan, 2008).
They also, possess a rich macroeconomic management coupled with conducive policies that
favors export of their manufactured products. The multinational companies in Asian regions
have, by far overtaken their western rivals who majorly concentrate on the products that targets
the high class and middle class customers only.
The largest percentage of the Asian population are on average lifestyle and others live
below the poverty line. Companies who produce products and services that are pocket friendly to
this kind of population will likely succeed in terms of high revenues. Airtel for example, which is
a leading mobile phone service provider in the Indian market offers services that are friendly to
those individuals living below the poverty line. This company has markets in various parts of the
world including Africa. The western rivals produce classy products, for example Apple Inc.,
their products are expensive such that, most of their consumers are only the high class population

Asia Pacific Multinationals 3
which are few in number. On the other hand, western multinationals produced products that are
technologically competitive, and pocket friendly at the same time.
2. Aims of the Japanese multinationals in regards to global strategies
Japanese economy has been rapidly growing, especially after World War II. Currently,
the Japanese economy is ranked third globally in 2017 (Oecd.org, 2017). This economy is being
driven by multinational companies that deals with automobiles and electronics such as the
Toyota, who deals with world’s largest selling brands of cars and Sony Corporation that deals
with electronics among others.
The aim of the Japanese multinational companies (MNCs) is to produce world class
products that are directed to the middle and low class population at local and international
markets. Toyota, which is the leading Japanese MNC has been the leadxporter of cars to Middle
East, America and Asian countries since 1950’s after the World War II. Their cars were in high
demand due to the efficiency and economy in terms of fuel consumption (Rugman and Li, 2007,
p.335). For many years, Toyota, as company has been strategizing on increasing their
productions which will be subsequently sold in various markets both, locally and intentionally.
Sony, on the other hand, is one of the largest competitor in the electronics market
globally. It was started in 1946 by Akio Morita and Masaru Ibuka, whereby their major focus is
to produce electronic gadgets such as TVs, mobile phones, gaming consoles, etc. The products
that is being produced by the company since its initial times up to date has been of the best
quality, and has attracted a lot of consumers, from within Japan and globally (Sauvant, Maschek
and McAllister, 2010, p.22).

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3. Aims of Korean and Chinese multinationals and international business strategies
The multinational corporations has a direct relationship (and impacts to) with the Foreign
Direct Investment. These Asian multinationals have long be known in their brands such as
Samsung and Sony electronics, which are situated in Korea, Hyundai and Honda among others.
These multinational companies from Japan and Korea have deeply get their roots into the global
markets for over four decades (from 1980’s). Their products have been in the fore front in terms
of technology, and has greatly boosted innovations across the world (Black and Morrison, 2010).
Most of the Asian Pacific countries are still developing, or are not developed at all, but
this does not limit the multinational companies from emerging from these nations. The Asian
Pacific region was recorded to be the most growing region in terms of economy which
contributed to more than 30% of the global GDP in 2013. According to the research that was
conducted in 2014 that was analyzing the top 500 Fortune companies globally, 192 of the
companies came from this region (Guillen and Garcia-Canal, 2009, p.27). The Korean and
Japanese companies’ targets global markets with their cheap and high end products that targets
all groups of people, either rich or poor. This is the basis of their success.
4. Differences between industries and types of businesses
The car manufactures in the APAC regions are leading their competitors from other
regions of the world. Shanghai Automotive Industry Corporation, for example, has been growing
in terms of production and sales of their FAW trucks and other cars in the recent years. Also,
Indian Mahindra and TATA, Bajaj and Maruti have been experiencing one of the largest growth
in the automotive industry (Cuervo‐Cazurra, 2012, p.155). Japanese companies although, has
been recording a consistent drop in their range of products in terms of production, stock and
sales from 2014 when compared to the previous years. The reason for this drop is due to the

Asia Pacific Multinationals 5
entrance of new players in the market that produces alternative products at more competitive
prices. There are also several challenges that the Japanese companies have been facing including
the direct negative impact of the natural calamities such earthquakes (Hood and Birkinshaw,
2016). Generally, there exists a stiff competition between the APAC multinationals due to the
entrance of new players with more innovations.
China, as seen in 2010, had produced more cars when compared to United States. They
had a growth of more than 20% in 2010. China increased the production of all types of vehicles
such as trucks, passenger cars and personal vehicles. The government intervention has been
behind this enormous increase production. The Chinese government introduced tax breaks and
subsidies.
5. The extent of global versus the local control
Currently, Japan is third in terms of the global economy. It is among the best countries
that producing the most innovative products. The Japanese companies have closer ties, whereby
they take shares of their own companies. This provides a stronger basis for developing industries
as they get a major boost in terms of capital and other financial assistance. The local companies
provides a dependable market search for their growing members.
Apart from local markets that they target, the successful multinational companies offers
other companies an assistance in performing production process and conducting foreign sales.
5.1 changes in operational control over time
After the attack of Japan in World War II, the country was negatively affected, and the
same was reflected in the multinational companies. Nevertheless, the country took immediate
recovery measures to restore their economy to the initial state that they were before the attack.

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From 1980 to millennium period, Japan retain the second position the world in terms of
economy.
For the case of Korea, in 1945, there were several crises that emerge and let to the split of
the Korean region into North and South. The South Korea became one of the most industrializing
nations in the world due to the existence of several multinational companies that provided a great
boost to the economy. After the 1990, peace and stability pave way for a conducive environment
for industrialization, and a subsequent progress of the multinational companies in the country.
6. Competitive advantage of Asian pacific multinationals compared to those of their
competitors
The APAC multinationals have always had a greater or good competitive advantage over
the western multinationals due to various reasons such as market and competitive pricing of
products. In terms of electronics for example, Apple Inc. which is from the western region has
less competitive advantage compared to their rivals such as the Samsung Corporation (Sauvant,
2010, p.377). Samsung produces a varied range of products that are technologically competitive
and pocket friendly for low income earners. Apple on the other hand, produces products which
are quality but expensive (Jaussaud and Schaaper, 2007, p.237). The target market will be the
high income earners which are few, hence making Apple to record a lower turnover compared to
the Samsung and other electronics from the Asian Pacific region.
Also, there is availability of cheap labor in the APAC region which makes the production
process economical, and can be translated into cheaper end products. In western countries, labor
is expensive making the production process high, and subsequently expensive end products.
In terms of automobile industries, using the case example of Toyota from Japan, and
General Motors from the western region, both companies are giants in terms of car production.

Asia Pacific Multinationals 7
According to Jackson and Deeg, (2008, p.552) in 2008, USA was hit by a great depression which
directly affected the production of general motors. The products fell, giving Toyota a
competitive advantage in terms of productions. Toyota took the advantage to deeply settle into
the global markets, where most of their cars were preferred due to their cheap prizes and high
quality (Li and Shooshtari, 2007).
Availability of good policies in the APAC regions favors their multinationals and gives
them a competitive advantage over their rivals from the western countries. The government
offers incentives alongside the innovation differentiation which most of the companies have
adopted.
7. Organization and operation in home and host nations
The multinational companies in the APAC regions are well established in that they have a
strong management as well as the organization. Their operations such as production process have
been made efficient through adoption of specialized or hybrid production process. These
companies also, have systems that complies with the lows, policies and requirements of the host
nations in which they are operating. In this manner, they are able to gain access to wider market
for their products.
8. Ability of Asian multinationals to compete in Europe, North America and Asia
The APAC multinationals have richer history in producing quality products. For
example, Toyota brands, Sony products, Samsung electrons and Honda among others. These
products are of high quality and have gain trust in most of the countries such as Europe and
United States. Their products are cheap and quality since they take the advantage of the available
cheap labor at their disposal (McAllister and Sauvant, 2013, p.30). These cheap products makes
them compete in the global market with other similar products. The consumers will have to

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choose between cheap and quality products, and Classy by of equivalent quality. In most cases,
the Asian products finds a flowing market, outdoing their rivals.
8.1 Adapting to market and policy changes or variations
Most of the APAC multinationals have been in the world market for a close to century.
This experience have enabled them to adapt to new changes of the local as well as the host
country demands. They also utilize the current technology making them to retain the loyal
customers (Witt, and Redding, 2013, p.280). Their customers are ever satisfied due to the
quality services and products that they provide. They offer products warranty, or repair in the
event that their products gets defective.
9. Relevance of the European Union
The European Union has been the key player in influencing the global trade. It has a
direct influence to the business operations of the multinationals, and specifically those
companies from the APAC regions. In most cases, the Asian multinationals does not cooperate
with the policies provided by the EU. These companies are rigid due to absence of complex
policies in their native nations. The Asian countries are govern by cultures, and are rigid to
certain policies due to their nature of colonial states. The Asian policies are not strong enough,
and hence when the EU offers guidelines on their operations, they tend to modify to suit their
situation (Tan and Mahoney, 2007, p.260). Strong bureaucracies in some countries such as
Taiwan and Japan has led to high levels of industrialization.
Japan, has in their course incorporated polices laid down by the European Union to their
advantage, and this has enabled them to amass their growth in terms of economy.

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10. Conclusion
The ever growing number and expansion of multinational companies in the APAC
regions has played a crucial part in the global market. The existing companies, as well as the new
entrants into the market have set a strong organizational base in terms of management and
running of the business operations. The market is highly competitive that it requires utilization of
high technology and use of available opportunities to reach into new markets. The success of the
prominent multinational companies such as the Toyota Corporation is due to the adoption of
modern systems of product such as Toyota production which makes the production process
efficient and cost effective.
Most of the companies in the APAC regions produce products that meets the
technological requirements of the individuals, and at the same time, the products are less
expensive. The makes their turnover to increase since most of the consumers are the middle and
low income earners. Application of new technologies is the source of success of most of these
companies as it provides efficiency in production process. Also, in these regions, the cost of
labor is extremely cheap which is crucial in the production process. Cheap labor translates into
low production costs, which will be equivalently translated into the cost of final products. Cheap,
and high quality products attracts a larger market.

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11. References
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multinational corporations will struggle in the global future. Springer.
Cuervo‐Cazurra, A., 2012. Extending theory by analyzing developing country multinational
companies: Solving the Goldilocks debate. Global Strategy Journal, 2(3), pp.153-167.
Dunning, J.H. and Lundan, S.M., 2008. Multinational enterprises and the global economy.
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Guillen, M.F. and Garcia-Canal, E., 2009. The American model of the multinational firm and the
“new” multinationals from emerging economies. The Academy of Management
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Hood, N. and Birkinshaw, J. eds., 2016. Multinational corporate evolution and subsidiary
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Jackson, G. and Deeg, R., 2008. Comparing capitalisms: Understanding institutional diversity
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