PERSPECTIVE: Asian economies are suffering but it won’t last forever

I’m very grateful to the G8 group of political leaders, assorted Kings of Madison Avenue, Martin Sorrell and a delightfully camp steward on Thai International Airways. Their obsession with the current Asian crisis legitimises my ’what I did on my holidays’ column.

I’m very grateful to the G8 group of political leaders, assorted

Kings of Madison Avenue, Martin Sorrell and a delightfully camp steward

on Thai International Airways. Their obsession with the current Asian

crisis legitimises my ’what I did on my holidays’ column.



How bad it is in Asia depends on your perspective. If you’re Joe

Bangkok, it’s not too bad. Countries like Thailand are largely

self-sufficient food producers, so prices haven’t rocketed. However,

mass unemployment is just beginning to bite. Inevitably, one of the

first reactions is to blame immigrant workers (Laotians, Burmese) and

take steps to kick them out.



If you’re Thai International Airways it’s painful and embarrassing.

Painful, because you’ve announced a massive first-quarter loss, and

embarrassing, because no-one likes passing on that pain to consumers -

like not being able to serve food on certain flights. In the stores,

stocks of foreign goods are low - they can’t afford to import any.



Nowhere is the situation worse than in the media industry. As a gauge of

just how bad is bad, commercial television in Thailand has just suffered

a 50 per cent drop in revenues in one year. The result is a lack of

commissioning of new shows, and existing shows hopping around both

schedules and channels in search of audiences to satisfy

advertisers.



And yet, despite the abandoned, half-finished skyscrapers and empty

stores, there is no long-term panic. Those Kings of Madison Avenue made

light of the situation. Remember the comment of Grey’s Ed Meyer: ’If

England or Germany went down I’d be in despair and walking on a ledge. I

feel sorry for my people in Asia but it’s not a tragedy for us yet.’



That’s because, as Meyer quipped, Asia is either 8 per cent of your

business or the rest of the world is 92 per cent, according to the

necessary PR spin.



Sorrell didn’t really need a PR spin announcing last week’s pounds 177

million full-year profits. Asia Pacific accounts for 14 per cent of

WPP’s group revenue, yet the world outside the mature markets of North

America and Europe still managed revenue growth of 17 per cent. It is

still the fastest-growing significant marketplace. The only real

difference is that while the likes of the UK, France and Germany can be

in boom or recession independently of each other, the less mature

South-east Asian economies remain more inter-dependent. Let’s not

forget, WPP’s revenue growth in ’booming’ Britain was only 5 per

cent.



Another effect of the crisis will be an increased onus on Dentsu and

Hakuhodo to seek greater growth outside their troubled domestic mainstay

- particularly once the former floats. Expect both to make moves

here.



Also expect to find many of the better opportunities in advertising to

be in Asia for years to come.



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