Asia Pacific: Endangered tigers still burn brightly - The Pacific Rim economies, riding the quest of a wave a year ago, now seem to be on a downward turn. But PR agencies seem bullish about what the future holds for the region

Only a year ago the Tiger economies of the Pacific Rim were being hailed as an economic miracle.

Only a year ago the Tiger economies of the Pacific Rim were being

hailed as an economic miracle.

Double digit growth rates lured multinational companies to countries

such as Malaysia, Indonesia and Thailand and where big business went,

their PR agencies followed.

Just last week Fleishman-Hillard announced the opening of two new

offices in Tokyo and Shanghai and plans to expand into Thailand,

Malaysia, Indonesia and India within the next year.

But in the past two months the dream has collapsed. In early July the

Thai baht plunged in value and was quickly followed by the Filipino,

Indonesian and Malaysian currencies. Equity markets also took a dive on

the back of the collapse.

So are international PR companies worried about their investment in Asia

or are they confident that they can ride out the storm?

Daniel Edelman, chairman and founder of Edelman Worldwide, believes that

some economies may have overstretched themselves.

’These countries have been too euphoric and have borrowed too much

money. It’s not necessary for Malaysia to have the tallest towers in the

world, but they got carried away.’

Despite his worries, he says that the agency will continue to expand

operations in Asia. There are already nine Edelman offices in the region

and clients include Procter and Gamble, UPS and Bayer. There are plans

to open offices in Thailand, Indonesia and India. But isn’t he worried

about going into Thailand and Indonesia when have been hit so badly?

’No, not at all. We have just had the annual results from our Malaysian

office and it has been a record-setting year for revenues. I am bullish

for the long haul. Asia is going to be a very important place for us. It

already provides ten per cent of our overall volume, only slightly less

than Europe.’

One area of confusion is how much impact the currency and equity

turbulence will have on the real economy. According to economists,

growth in Asia is expected to slow down to around three or four per cent

in 1997 and 1998 - compared to an average of eight per cent or more

during the early 1990s.

A dramatic fall, but it is still a better prospect than the UK which has

a long term average growth rate of 2.25 per cent.

Gavin Anderson, chairman and chief executive of Gavin Anderson and Co,

says he is ’absolutely confident’ about Asia’s future prospects. ’There

may be some economies slowing down, but others like China will grow at

double digit rates. China has a billion people living there, much more

than any other Asian country. If an economy like Singapore, which has

three million citizens, slows down it means nothing.’

Gavin Anderson, which already has offices in four Pacific Rim regions -

Tokyo, Hong Kong, Singapore and Australia - is planning to expand over

the next five years. Its best known clients are Coca-Cola, BZW, and


Paul Philpotts, managing director of Burson-Marsteller UK, is also


’If you talk to people working out there, you get the impression that

this is more of a rapid adjustment than a meltdown. This has not been an

easy year by any means, but we believe it will settle down.’

He adds that the Pacific Rim economies are only doing badly compared to

their previous phenomenal performance.

There are other reasons for B-M to be upbeat. Like many other

international PR agencies, most of their clients are large

multinationals and they have limited exposure to Asian currencies.

Philpotts says: ’A lot of our business is bullet-proof because we are

paid in dollars. Many of our clients have also taken out insurance

against currency movements.’

While Shandwick is also paid in dollars by its multinational clients

such as Mastercard and North West Airlines, some of its Asian clients

pay in local currency. Michael Murphy, regional director of Shandwick in

Asia, insists this is not as great a problem as it would appear. ’Most

of our costs are in local currency, so it balances out.’

He adds that it is foolish to panic over something that may prove to be

short term. ’Stock markets are always cyclical. We have seen better days

and we will see better ones again. You have to remember that we factor

these cycles into our planning. The PR business is so immature in Asia

that there are far more opportunities for growth than in more mature


As someone who has first hand experience of Asia - he is based in Hong

Kong - he believes it is a mistake to bunch Asian countries


’They are all at different points in the cycle. The one country that

really sticks out is Thailand. The economic problems there are more

fundamental and long-term. We have a very big interest out there and

have revamped the business to meet the challenge.’

Despite the panic on the currency and stock exchanges, it looks highly

unlikely that any of the multinational PR agencies will be tempted to

pull out of the Pacific Rim. They firmly believe the Asian Tiger will

roar again.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in