03 October 2011

Trade And Export, Asian Style

Trade means the business of buying and selling commodities. Export means goods and services that are produced domestically and sold to buyers in another country. Countries like to think that they all are into trade, for the betterment of world commerce and living standards. However, while outwardly espousing two way trade, some countries show they only really want to buy locally made, and to export products. The car industry has certain Asian countries as proficient exponents of this one sided mentality. Let's look at these nations.

Japan: The locals loyally buy Japanese brands and only really stray into import makes at the premium end of the market. Because of this import marques cannot get past a glass ceiling of a market share of a few percent. Exporting on the other hand has been aggressively pursued, with much success.

Korea: Imports are obstructed by import tariffs, so again imports are relatively rare. However, with fewer local brands to defend the home market, the potential to have more imported cars is there. The local product is now much better, so do they really need protection? Again vehicle exports are strong compared to what is brought into the country.

Taiwan: This Asian island has no indigenous brands but the majority of cars sold there are assembled locally. I don't know much about the situation in Taiwan, but it seems a protected car market against imported vehicles.

China: A country that has a history of export over trade. High import duties mean is isn't economically viable to import volume car models; they are all made within China. Premium brands can absorb the duty better and some are imported, but only in modest numbers. China wants to get a trade surplus in this industry segment also. Talk about greed having no bounds. The Chinese market could now sustain little or no import duty, but the duty will remain and everyone is too scared to question it. The only thing holding back vehicle exports are that Chinese brands are essentially rubbish. But they won't be for much longer.

Summary: The world wants trade, some Asian markets only want exports.


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