Asia-Pacific governments need to keep a close eye on what the bosses of America’s largest companies are saying and doing about President Donald Trump’s protectionist drive.
Companies that for years have said they wanted equal access to markets and investment opportunities are now falling over themselves to embrace Trump’s reversal of the open trade that the US has encouraged for decades.
Take the Ford Motor Company, an old time Detroit giant that has seen its market shares around the world shrink in the face of Japanese, German and Korean competition. In 2015 it was boasting thus of its Asian markets:
We expect 60 to 70 percent of our growth in the next 10 years to come from the Asia-Pacific region. Accordingly, we have increased (and are planning to increase further) our dealer networks and manufacturing capacity in the region. We have 10 new plants in Asia Pacific, including new vehicle assembly plants in and Hangzhou, China, and Sanand, India, that were inaugurated in March 2015. Combined together, the Ford assembly plants in Asia-Pacific will have the capacity to produce 2.7 million vehicles by the end of 2015. These new state-of-the-art, highly flexible manufacturing facilities will help us reach the goal of increasing worldwide sales to about 8 million vehicles per year.
In 2015 the company made a pre-tax profit of US$765 million in these markets, even though it market shares was a feeble 3.6% – and that is including its Chinese affiliate Jiangling Motors Corporation.
Given the prospects in the Asia-Pacific market, one would expect this multinational company to be disturbed by the cancellation of US participation in the Trans Pacific Partnership as indicative of a protectionism which would rebound on themselves, with nationalism rising elsewhere in response.
The Trump doctrine of protecting old metal-bashing industries immediately persuaded Ford to abandon a plan for a new plant in Mexico – though whether it would build more cars in the US instead remained in doubt.
Yet instead of standing up for the principles of open trade and lowering costs for consumers, the chief executive of Ford, Mark Fields, said he appreciated “the president’s courage in walking away from a bad deal.” Asia take note: Ford has joined the Trash TPP brigade.
Ford meanwhile is withdrawing from Japan following Trump’s claim that Tokyo “makes it impossible to sell anything in Japan”. The bitter fact that Ford and other US manufacturers cannot face is their products lack appeal. Even the British manage to sell more cars in Japan than the US. As do the French and Italians. The Germans can hardly be blamed for the fact they account for 70% of car imports!
Or take a small and completely open car market, Hong Kong. The US innovator Tesla dominates the electric car segment, but Ford (and General Motors) lags far behind Japanese, European and Korean brands despite the fact that Ford’s model range includes the once globally popular Focus model which elsewhere has competed with the likes of the Honda Civic and Volkswagen Golf.
Ford sometimes gives the impression that it is mainly interested in developing-country markets where it can operate behind protective walls. Yet the trend in Asia-Pacific is – with or without TPP – is to encourage inter-dependence, particularly within the ASEAN free trade zone. Indeed, Ford’s investment in expansion in production in Thailand, notably of pick-ups, is predicated on the rapid growth of demand in neighboring ASEAN countries. What hypocrisy!
Other US companies reportedly embracing Trump’s protectionism in the form of a border tax include Boeing and General Electric. It is obvious that such actions by globally involved companies are simply an exercise in crude protectionism aimed in the Boeing case at the Europeans and in the GE case at Japan and Germany.
This may not specifically concern other countries but it will surely be taken on board when they face demands from the US not to impede access for its brands in industries where it is a leader, whether it is hard merchandise like Apples’ iPhone and pharmaceuticals or software from Google and Microsoft.
The US has some genuine complaints against protectionism in many Asian markets but there is no good reason not to approach them on a case-by-case basis.
As for TPP, its critics in Asia believed it would give too many advantages to US companies! Mutually exclusive conclusions about TPP’s consequences just go to show how companies like Ford who should know better are locked into the belief that trade is a zero-sum game.
Either that or Fields is trying to ingratiate himself with Trump and the new xenophobia. Whatever the cause, it sends a message to Asia: beware of the commitment of corporate America to open markets.