I am now returning from a 10-day-long trip to North Asia. The three economic superpowers are grappling with each other and the rest of the world on tariffs, security, rights of women and sustainability. It is a time of nationalism, populism and a new embrace of history that governs policy. Here is a country-by-country analysis:
Korea — The Moon Administration is part way through its term. As in many countries, there is deep division between right and left. President Moon is seen as anti-business but also as a white knight cleaning up a corrupt system that had too much coziness between business and government. He is pursuing the dream of one Korea, with ongoing discussions with his counterpart in the North.
Korea is deeply anti-Japanese at the moment. Consumer boycotts of Japan's brands have been implemented causing a drop in sales. While I was in market the Koreans nearly pulled out of a mutual defense pact including advance warnings on missiles. Japan has reacted in kind by banning export of a key semiconductor necessary for Korean-made cellphones. Korea is trying to find an economic strategy for the next 50 years. In a world of protectionism, it is difficult to sustain an export driven approach based on autos and electronics. Korean companies are investing in local manufacturing near large consumption markets. I love this country in the same way I love Chicago. The people are hard-working, straightforward and competitive.
China — I attended the Bloomberg New Economy Forum in Beijing for two days. The event attracted high-ranking members of the Chinese Government and many former U.S. Government officials. The most significant contribution came from Dr. Henry Kissinger, who was interviewed for an hour about the state of U.S.-China relations, proclaiming: “It is no longer possible for one side to dominate the other. We are in the foothills of a new Cold War…We do not at present have a mechanism for political discussions with China. It is all being done through trade talks…China is a continental power, the U.S. a naval power. If the two superpowers are forced to take opposite positions, conflict is likely.”
Hank Paulson, former Treasury secretary, said that the technology world risks being Balkanized into Chinese and U.S. on AI, 5G and quantum computing. The Chinese should rethink their drive to indigenize tech and stop protecting financial markets and state-owned companies. Meanwhile the U.S. should keep its financial markets open to Chinese listed companies, allow Chinese students to study in the U.S. and stop weaponizing export controls.
Wang Qishan, vice president of China, was blunt and reflective, stating: “We need a more equitable system of global governance and a more multilateral approach. We need to know each other’s history. There will be trust only with understanding.”
China is clearly being affected by trade issues with the U.S. Car sales are down 11 percent this year after a 10 percent drop the year prior. But the tech sector is burgeoning. I had dinner with Kai Fu Lee, AI impresario, who told me that the advent of 5G will only accelerate e-commerce and entrepreneurship. China is to be amazed at and awed for the ambition, perseverance and success of state capitalism.
Japan — It is now less than a year until the 2020 Olympics in Tokyo. Prime Minister Shinzo Abe is into his third term, popular and reliable. But Japan too is trying to find a model for the next 50 years with a dominant neighbor and receding ally.
Sustainability seems a promising area. I visited MHI, which is convinced of the potential of wind turbines. Ajinomoto is looking to the future of food as plant-based, developing partnerships with food startups in the U.S. and Europe. Nissan has created a zero-emissions ice cream truck now launched in the UK.
The visual arts is another growth opportunity. I went to the new teamLabs Planets installation in Tokyo. This is a 650-person firm started two decades ago with the dream of producing projection-based art. I saw them first in the Milan Expo at the Japan House. They are now ready to launch in force in the U.S. with three major projects in New York City and two in Las Vegas.
For our business in Asia, the future is now because the business climate is more complex and our classic competition, the ad agencies, are weakened by local firms. We will be encouraging our client CEOs to speak up and push their companies to work for the betterment of society while remaining profitable. We will do more local creative work that is based on Earned Creative. We will invest in digital production and data skills to target the content as media continues to shrink. I leave inspired and more convinced than ever of our potential. Thanks to all my colleagues who made this trip a delight, including my fellow bowlers in Korea and VR survivors in Japan.
Richard Edelman is CEO.
