The Asia Investor

I have a confession to make. I like to read books. My goal is to try to read one book a month. There are years in which I easily reach that target, but in other years I fail miserably. Most -let’s say at least 75%- of those are work related in some way, and the rest consists of travel literature, John Grisham (I read everything the man writes) and the like. Given that I’ve recently finished “The Asia Investor – Charting a course through Asia’s emerging markets” by Aaron Chaze, I’d like to share some of my thoughts on that book.

The book starts off with the frequently asked question whether emerging Asian nations will be able to sustain their pace of growth in the future. The author asks himself whether the booming Asian economies have what it takes to move away from an export-led, external-trade dominated economy and truly embrace a free-market philosophy. Asia is buoyed by several trends that drive this region’s opportunities and it is the analysis of these trends that forms the core of this book. In what follows, I’ll briefly highlight some of the more interesting topics. (As the book was published in 2010, all figures date from before that.)

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The first chapter discusses many ongoing trends and is loaded with facts & figures. For instance, you may or may not know that Coca-Cola and other foreign companies were forced to leave India in the 1970s when the Indian government began to make its presence felt on the private sector’s turf and banks and other industries were nationalized. But even during the darkest days of state control, the Indian private sector continued to grow even as companies sought government patronage and entrenched players succeeded in keeping out competition. This phenomenon allowed the blossoming of several private conglomerates and turned them into industrial behemoths. Indian managers, companies and brands continued to develop and when India’s experiment with socialism and nationalization ended in 1991 and the economy was reopened to foreign competition in 1993, the stage was set for a tremendous release of entrepreneurial energy. This is a big contrast with China which grew only state-owned enterprises and thus lacked the history of strong private-sector growth. Everything remained in the hands of the government until recently and even now a big part of the industry is state controlled or somehow state driven. Nevertheless, from the mid-1990s onwards there began to emerge a growing entrepreneurial layer within the domestic economy that is beginning to transform the state-dominated economic model into a hybrid economy, more like India’s.

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As recently as 2003, China did not have a single billionaire on the Forbes list, but by 2009 it had 28 (edging India with 24 into second place on the Asian billionaires list). The reasons why until recently India had a larger number of billionaires despite China’s economy being three times larger is that India’s private sector represents a much larger percentage of its economy. Indian private industry has been around since the early 1900s, and well before independence from Britain in 1947 the Indian private sector controlled steel and cement plants, airlines, hotels, insurance companies and banks. By 2009, the Indian private sector was contributing more than $800 billion to GDP as compared to only $600 billion contribution from the Chinese private sector, despite being 1/3 the …



This article was written by Gino Delaere

on 29 April, 2012 about China, Emerging East

Gino Delaere is master in Applied Economics (University of Antwerp) and holds an MBA (Xavier Institute of Management in Bhubaneswar, India). For over a decade he has been specializing in emerging markets worldwide and traveling the world looking for interesting investment opportunities. Previously he worked for several large asset managers where he was actively involved in several thematically inspired equity funds. Today, as the head of the Econopolis office in Singapore, he spends a significant amount of his time in Asia and Latin America, and is responsible for the stock selection in the emerging markets funds.

 

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