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very hard forthem tounderstandadifferent philosophy thatlacksthesevery basicelementsof

absolute "Good" and "Evil".

Butincaseone wantstohavesuccessfulinteractions with Asian (business)peopleitisimportantto

startunderstanding this firstbasicelementof Asianlife.

MNCs in Asia Investing in Future

Theunparalleledsizeof Asia's marketshasalwayscaughttheeyeof multinational

corporations. Morerecently,as government policiesandculturalattitudesintheregion

continuetoevolve,thestrategiesof multinationalcompanieshavechangedas well.

Whatarethecurrenttrendsin MNC investment,andhow docorporationskeep theirbearings

inabureaucratic mazeofregulations? Doesthe promiseof payoffexceedthechallengesof

doing businessincountriesthatareinthe midstofreform?

Those questions wereconsideredby panelistsatthe Asia Business Conference 2002,held

February 2 at Harvard BusinessSchool.

Nicholas Howson,a partnerat Paul, Weiss, Rifkind, Wharton & Garrison, focusedhiscomments

ondevelopmentsin China. Corporateinvestmentin Chinausedtobelong-term andbrand-

focused,hesaid, withan MNC dreaming thatall Chineseorevenhalfofall Chinesewould

usetheir particularbrandofshampooafterdecadesofinvestmentin productdevelopment

and marketing.

The dot-com bubble brought practices, ambitions, and goals to China that are here to stay

Nicholas Howson, Paul, Weiss, Rifkind, Wharton & Garrison

That'schangedoverthe pasttwenty years,said Howson, who focuseson mergersand

acquisitions, project finance,andcapital marketsinhis firm's Beijing office. Thecreationof

domesticcapital markets,increasing accessto foreigncapital,legalchangesincorporate

structuring,andthesaleofsharesinstate-ownedenterpriseshaveallcontributedtothe

developmentofabusiness-orientedsociety withincreasedshort-term opportunity for MNCs.

"Thedot-com bubblebrought practices,ambitions,and goalsto Chinathatareheretostay,"

headded. "Increasingly, MNCs willseecorporatized Chineseassets withshareholdersinboth

stateand privateenterprises."

No single Asian market

Mark Newman,vice presidentand CFO for GM Shanghai,thelargestSino-U.S.jointventure,

presentedstatisticsthatclarifiedthecorporation'ssignificantinvestmentin Asia. "Eight

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countries willaccount for 60 percentoftheautomotiveindustry's growthoverthenextten

years," said Newman,noting that fourofthosecountriesChina, India, Thailand,andSouth

Koreaarein Asia. Protectionism isoneof GM'sbiggestchallenges, Newmansaid, with market

barriersvarying from country tocountry,andinsomecases, from city tocity.

"Thereisnosingle Asian market," agreed Mark Takahashi,vice presidentandtreasurerof

Intergen,a globalenergy company specializing in greenfielddevelopment. "Therules

consistently change,andthey changeinthe middleofthe gamebutthat'sactually truein

California,too. From our perspectiveasaninvestor,capital flows will follow structuralreform."

How muchofadeterrentareshape-shifting regulationsto MNCs who wanttoinvestin Asia,

wondered HBSassistant professorMihir A. Desai.

"Governmentintervention makes my lifevery difficult," responded Anthony C. Hooper,

presidentof Bristol-MyersSquibb Intercontinental Region,recalling how last-minute pricinginterferenceby the Chinese government wreakedhavoc withthe financialshe'dbeen

preparing forashareholders meeting.

"Thesearetransitionalcircumstances," said Howson. "In China,regulatorsandshareholders

areoneandthesame,butthey'reslowly separating. There'sstillsomeconfusionofrolesasto

how privatized firmsaresupposedtoact."

"It'simportanttohavea goodjointventure partnertohelp negotiatethebureaucracy and

influence government policy with yourinterestsin mind," remarked Newman.Successful

partnershipsareundertaken withclearly definedcommon goalsandorganizationalstructures

in place,headded,sothatnegotiationscan focusonimplementing,notdefining,the

company's mission.

"A goodjoint partnerhastounderstandthe goalsofindividualshareholders," added Hooper.

"It'salsovery importanttobeclearaboutbusinessethics," Takahashisaid.

Whoneeds partners?

Occasionally,a go-it-aloneapproachis possible,too,suggested Hooper. "Insomeareas,themarketshaveevolvedtothe pointthatjoint partnersaren'tasnecessary."

Panelistssaid China'sentry intothe World Trade Organizationcreatedsomewhatinflated

expectations fortheregionasa whole,evenasthey emphasizedthevery realopportunities for

growthavailableto MNCsin Asia.

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"Youhavetoberealistic," said Newman. "Youalsohavetounderstandthatthere willbeacost

forcorporationsthatdon't participateinthis market. Thekey istoinvest prudently,andto

expandcapacity overtime."

"Bristol-MeyerSquibb'sannualunit growthishighestinthe Asia-Pacificregion," said Hooper.

"Tobea major global player, youhavetotake partinthis market. My biggestchallengesin Asia

arecurrency devaluation, government pricerollbacks,and patentinfringementsbut we'dbe

silly nottobethere."