Tariffs, Trepidation, and Truth – What Insiders are Saying About Navigating US-Asia/Pac Business Climate by Jacqueline Ganim-DeFalco

The Asia-America Chamber of Commerce (AACC) held its monthly Executive Interchange Breakfast this past week with the focus on preparing operating executives to deal with the current business climate.  The attendees had wonderfully diverse connections to the region as companies or service providers (accounting, law, consumer goods, industrial and insurance companies) with clientele doing business in this part of the world.  New England based companies included heavy industrial to retail.  Many of these companies are private and likely to be off the radar screen of other industry groups. Kudos to AACC for hosting this gathering and to keynote speaker Hari Nair who led large multinationals like Procter & Gamble, Kimberly Clark and Sime Darby’s efforts to mitigate multiple risks (political, financial, and societal) in Asia.

The core topics that the forum was to focus on were: The escalating tariff wars, South China Sea skirmishes, and the rapid reconfiguring of the manufacturing eco-systems.   The issues presented by the executives, however, were even broader and some reflected challenges that will always exist in a global economy.

• Innovation “end running”
• Currency Fluctuations
• Nationalism
• Regulatory/Compliance issues
• Committee on Foreign Investment (CFIUS) issues – resulting in brain drain
• Standards & Compliance
• Cybersecurity

To his credit, Hari took a step back to talk about “globalization” and the pendulum swing that has occurred in recent years.  Historically, US Companies set up to manufacture overseas, lower costs, and increase shareholder value.  These early global strategies disintermediated workers in the US and at the same time, depended on the US market to absorb the goods.   It was a short term view that rewarded the companies well.  What we are seeing now is a “correction” that will balance the benefits.  If you are doing business in countries subject to high tariffs, hedge the impact by investing locally and sell at least some portion of your goods in the country where you have set up shop. Look to invest in that economy or community as… Share on X   In terms of nationalism, Hari quipped that many countries are now moving adopting the US model of “Make (insert country name) Great Again”.  The real issue here is that China and India as an example, watched what happened in the US “globalization” model and learned from it – its main focus is to serve its own market first and ensure that the middle class grows.   Hari predicts a new type of globalism, one with bilateral or regional relationships that creates win-wins in the respective countries.   You can see that with the recent South Korea-US partnership or the new Mexico-Canada-US trade alliance.

Furthermore, he reiterated what we all should know doing business in this part of the world.   The far eastern point view is of the long term.  The “quarter to quarter” outlook we take in the US is irrelevant in the context of cultures that are thousands of years old.  Furthermore, trust is the more important cultural asset that will determine your long term viability in the market.  Having worked in Asia earlier in my career, it was great to hear these “truisms” reinforced.

With regard to the other issues of concern – his most crucial piece of advice was not to take any of the highly filtered, sound bite coverage of international events at face value.  He encouraged to invest in on the ground research presence and/or listening post to digest information in a local context and encouraged taking news from international outlets diverse organizations.  For example the BBC is often an great source of insights with their long term feet on the street and/or cultural ties to the Asian markets.   To get to know a culture, there are multiple layers of nuance.   Using creativity, innovation, and risk taking as an example, Hari took a page out of his own experience being educated in India.  The strong discipline around education and following a tight curriculum almost defies the risk taking necessary to innovate at the pace, depth, and breadth that can be achieved in the US.   His experience in Korea and China further confirms this hypothesis – with pressure on these students having serious consequences in the society.

In terms of the next “Black Swan” in Asia?  He half-jokingly said, ask your local driver when you arrive about these concerns.  He will be able to provide the “on the street” wisdom that you need to avoid falling into the media trap and fear-mongering that will happen.  Relationships and on the ground tenacity, trust, and track record remain critical components of success.  Be in it for the long term.

Many thanks to my host, Tony Zhang, Middlesex Bank and to  AACC Board Director James McSherry Hub International New England, LLC for the support of this program and their kind invitation to attend.