The tigers may be bruised and battered, but they're far from buried. The woes of Asia's plastics industries have mirrored those of the region's economies, which in mid-1997 took the equivalent of a high dive into a waterless pool.
As documented in our Page 1 story this week, the numbers are staggering, with resin demand in some key end markets plunging by more than two-thirds last year from pre-crisis levels. That's gotta hurt. A lot.
Not surprisingly, the recently concluded ASEANplas 99 trade show in Singapore — Southeast Asia's largest plastics exhibition — saw attendance slip nearly 29 percent from the January 1997 edition of the event. But a mood of cautious optimism more than gloom or pessimism pervaded the four-day show, which attracted 6,751 visitors from 51 countries.
And, as usual, where there is pain, there also springs hope and opportunity. Projections for gross national product and plastics demand in the region are inching back up into positive territory.
To many, China is the wild card. This developing nation of 1.23 billion people largely has managed to avoid catching the Asian flu to date, with GNP growth continuing in the 7-8 percent range. But that will change.
``China will go off the boil later this year, there's no doubt about that,'' claims industry consultant Kelvin Fahey, managing director of Canberra, Australia-based Sira International Corp.
Even so, Fahey believes the time is ripe for North American and other Western plastics companies to stake their claim in Asia. His prime targets: Thailand, the Philippines, Indonesia (once the coming elections are behind us), Australia (for those who seek stability) and China (provided you will consider a joint venture). Other markets worth exploring: India, Malaysia (especially for tooling), Vietnam and even (for non-U.S. companies) North Korea.
``The window of opportunity is really the current two years,'' says Fahey, who also serves as president of the Asian Plastics Research Association in Canberra. ``Because after that, the tariff barriers are coming down very fast. ... If you wait too long, like until 2001, it's probably too late. The Europeans are there now.''
Fahey, whose 18-person Sira consultancy provides due-diligence services for acquiring companies, said bargains can be had, but one must shop carefully. He suggests seeking out target firms that have good market share and distribution channels, decent technology, a solid work force and compatible product range, but which are wallowing in debt. Some can be had for a song right now. ``Buy low and buy smart,'' he counsels.
When the expected implementation of the Asian Free Trade Agreement causes trade barriers to start tumbling and the tiger economies resume firing on all cylinders, one thing is sure: today's bargain-basement business opportunities will evaporate.