NEW YORK -- With corporate America scrambling to fatten its profits amid a fledgling U.S. economic rebound, Asia's rapidly emerging markets are fast becoming a staple for growth-hungry U.S. companies.
U.S. corporations have increasingly turned to Pacific Rim countries, especially China, to fill in the gaps in demand at a time when global economic sluggishness was forcing U.S. and European companies to rein in spending.
The latest batch of corporate scorecards show that the 2003 fourth quarter was no exception, and that an even broader array of companies are turning eastward.
"We've gone from a situation in the 1980s and 90s where China was a marginal player to one now where it's become center stage," said Denis Simon, dean of the Lally School of Management and Technology at Rensselaer Polytechnic Institute in Troy, N.Y., and a former director of consulting company Accenture Ltd.'s China operations.
China's rapid economic expansion and its massive population have lured a growing number of foreign investors who are anxious to get their piece of what many believe could be a lucrative pie. At the same time, U.S. companies, hungry for customers, are licking their chops at the prospect of about 1.3 billion potential consumers.
U.S. aviation and information technology companies have been among the biggest beneficiaries of China's voracious appetite for industrialization and expansion in recent years. But China's taste for U.S. products is quickly expanding beyond airplanes, computers and cell phones to consumer goods and even agricultural products, analysts said.
While active Chinese consumers are mostly clustered around the country's coastal regions, he said 250 million to 300 million buyers is still nothing to sneeze at.
"China has become the playing field for the playing out of global competition," Simon said. "A win or a loss in the China market now becomes significant for the global positioning of the company."
General Motors CFO John Devine recently pointed to China as an area of strength for the world's largest automaker.
In 2003, China ranked fourth in terms of GM sales, behind the United States, Canada and the United Kingdom, and third in overall industry sales behind the United States and Japan, Devine said.
"We obviously would like the German market to bounce back, but the China market has a lot of plus," Devine said on a recent conference call. "We expect that to continue very strongly in the coming years."
Diversified manufacturer 3M Co. reported last week that volume rose 28.7 percent in the Asia-Pacific region, while it dropped 1.4 percent in Europe in the fourth quarter of 2003.
"Geographically, Asia-Pacific continued to lead the way," 3M CFO Pat Campbell said in a conference call.
In 2003 growth in China was also "very, very good year over year" for industrial conglomerate United Technologies Corp., the company's director of investor relations, David Porter, said in a recent conference call. The company's 2003 sales in China were a little more than $1 billion, representing double-digit percentage sales growth over 2002.
China's outbreak of Severe Acute Respiratory Syndrome last spring sent a shudder through corporate America, highlighting U.S. companies' growing reliance on the region both as a manufacturing center and a market for their goods.
U.S. film giant Eastman Kodak, for one, took a hit as the epidemic spread through China, the company's second biggest market for consumer products. It is also counting on consumers in China and other emerging markets to prop up sales of its traditional cameras, while it focuses on digital products in other markets.
"There aren't too many, if any areas left in the world with the type of growth potential that China has," said Steve Kolano, an equity trader on the international desk at The Boston Company Asset Management.