Business and Economy
in the Asia Pacific
(1) Globalisation
s.yamamoto@APU
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Opening Cases
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Case 1. Medical Tourism
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Adrienne and David went to India
In the fall of 2008, Adrienne De Forrest of
Colorado had hip surgery in Chennai, in
India.
 Texan, David Jones had triple bypass
surgery in New Delhi.
 Both patients were uninsured!!

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 2p.
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Soaring Medical Costs in the US
De Forrest’s surgery cost $8,000, while
Jones’s cost $16,000 (in India)
 Had those operations been done in the
US, they would have cost $45,000 and
$250,000 respectively

5.6 times
15.6 times
Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 2p.
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Medical Insurance Issue in the US
Over 45 million Americans are uninsured
and many more are underinsured, and
face high co-payments for expensive
procedures.
 In the US, coverage is provided mainly
through private health insurance, and
53% of the population had this for their
basic coverage in 2011.

(Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011,3p.)
(OECD, Health Care at Glance 2013, the Organisation
of Economic Cooperation and Development, 21 November 2013, 138p.)
Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 3p.
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Universal Health Care System
In 59 countries, “universal health care systems” which cover more than 90% of
population with legal basis have been established as of 2009
Most of OECD member countries have universal (or near universal)
medical care, except for the US and Mexico.
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Publicly Financed Coverage
Publicly financed coverage in the US
insured 32% of the population
 This was provided only to 1) the elderly,
2) people with low income, or 3) people
with disabilities
 Although the Affordable Care Act was
adopted in 2010 (so called Obama Care),
there exists strong oppositions.

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OECD, Health Care at Glance 2013, the Organisation of Economic Cooperation and Development, 21 November 2013, 138p.
Problems on the US Medical Insurance
Basic primary health coverage, provided
through private insurance, generally
covers a defined “basket” of benefits
 Those health care left after basic coverage
costs a lot in the US (under-insured)
 If one is unemployed (uninsured), he or
she faces very high medical care costs by
himself/herself

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OECD, Health Care at Glance 2013, the Organisation of Economic Cooperation and Development, 21 November 2013, 138p.
Health Expenditure per Capita
OECD, Health Care at Glance 2013, the Organisation of Economic Cooperation and Development, 21 November 2013, 155p.
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Emergence of High Quality
Private Hospital Chains
1. High quality private
hospital chains
2. Lower medical costs
1. High medical cost
2. No universal
coverage
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American Medical Travellers
In 2007, some 750,000 Americans
travelled abroad for medical treatment
 It was forecasted that those numbers
would reach 10 million by 2012!!??

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 2-3p.
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Factors Driving this
Globalisation Trend
1.
2.
3.
4.
5.
High cost of medical care in the US
45 million Americans are uninsured and many
more are underinsured
Emergence of high-quality private hospital
chains in India and Singapore
Rising costs of insuring their workforces are
starting to persuade some large American
companies to look abroad
Some insurance companies are starting to
experiment with payment for foreign treatment
Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 3p.
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Implications of the Case
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Changing Situation for
Service Industry
Health care has long been considered one
of the industries least vulnerable to
dislocation from globalisation
 Health care is normally delivered where it
is purchased

We will discuss this in further detail later !!
Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 2p.
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Radiologist
Serious shortage of Radiologists (reading
and interpreting diagnostic medical images
such as X-rays, CT scans, MRI scans and
ultrasounds) in the US
 Skyrocketing American Radiologists’ salary
(as much as $400,000)
 New business model : to send images
over the internet to India where Indian
radiologist interpret them

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 2p.
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MRI Diagnostic Image (example)
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Cyber Medical Services
1. Lower labour cost
for radiologist
2. Qualified experts in
Private Medical
Service
Organisations
1. Serious shortage of
radiologists
2. Skyrocketing
radiologists’ salary
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Case 2. Ippudo
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Ramen

Ramen is booming in many major cities in
the world such as London, New York,
Singapore and Bangkok
Ippudo, Bangkok, Central Embassy
Chabuya Tonkotsu, Bangkok
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Ippudo in Bangkok
Ippudo, Emporium, Bangkok
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Ippudo
Ippudo was founded in 1985 in Fukuoka.
Currently it has over 80 stores in japan.
 Ippudo is one of Ramen restaurant chains
which aggressively expand their outlets to
overseas markets. It opened its first
international outlet in New York in 2008
 Ippudo has its outlets in 12 countries and
regions such as the US, the UK, China,
Taiwan, Korea, Thailand, and Indonesia

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Reasons behind Overseas Development
Population decline and shrinking Japanese
market
 Aging society
 Japanese food is booming in the world

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Intermission
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Introduction
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New and Old World
Globalisation
Process
Old World
1. National economies were
relatively self-contained
entities, isolated from
each other by barriers to
cross-border trade,
2. by distance, time zones,
and language;
3. by national differences in
government regulation,
culture and business
system
New World




Barriers to cross-border trade
and investment are declining
Perceived distance is shrinking
due to advances in
transportation and
telecommunication technology
Material culture is starting to
look similar the world over
National economies are
merging into an
interdependent, integrated
global economic system
Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 4p.
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Globalisation
The process by which these are occurring
is commonly referred to as “Globalisation”
1. Active cross-border trade and investment
2. Actual distance is becoming shorter,
regardless to physical distance
3. Individual national economies are merged
into the global economic system and
become highly interdependent

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 4p.
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Daily Life under Globalisation
An American might drive to work in a car
• designed in Germany
• that was assembled in Mexico by Ford
• from components made in the US and Japan
• that were fabricated from Korean steel and Malaysian
rubber
Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 4p.
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Cross-Border Transactions
$4 trillion in foreign exchange transactions
are made everyday
 $14 trillion of goods and $3.7 trillion of
services are sold across national borders

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 4p.
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Global Business Activities
It is a world where the symbols of
material and popular culture are
increasingly global:
 from Coca Cola and Starbucks to Sony
Play Stations, Nokia cell phones, MTV
shows, Disney films, IKEA stores, and
Apple iPhones.

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 4p.
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Historical Aspect of Globalisation (1)
In “the Cold War,” the world was divided
into two (East (socialists/communists)
camp and West (capitalists) camp
 The collapse of communism at the end of
the 1980s (collapse of Berlin Wall, 10
November 1989)

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 5p.
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Historical Aspect of Globalisation (2)
Collapse of Berlin Wall triggered the
worldwide trends of liberalisation and
deregulation
 Regulatory and administrative barriers to
doing business in foreign nations have
come down
 Privatization of state-owned enterprises,
deregulating the market, increasing
competition, and welcoming FDIs

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 5p.
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Health Care as a Part of
Service Industry
Health Care has long been thought to be
immune from the effects of globalisation
 Basic nature of service industry is that
service is provided where it is purchased
 This is not true anymore
 Medical tourism is becoming a significant
business with Americans in particular
because of lower costs and good quality
care

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 5p.
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Tradable Goods and
Non-Tradable Goods
Foreign Country No
Home Country
International
Non-Tradable
Non-Tradable
Trade
Goods
Goods
No
International
Competition
Tradable Goods
Tradable Goods
Export
Downward
Pressure on
Wages
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Trade Liberalisation
GATT (General Agreement on Tariffs and
Trade) (currently WTO (World Trade
Organization)) was founded in 1947 to
promote international trade
 It aimed to replace quantitative trade
restrictions (such as import prohibitions)
by import duty through multilateral
negotiations throughout the post 2nd
World War period

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Consequence of Trade Liberalisation
Trade liberalisation :
1. lowering import duties
2. elimination non-tariff barriers
(including quantitative restriction)
1. International competition to be
intensified
2. Lower prices for consumers
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US Car Manufacturers
For three decades, US automobile
companies have been battling foreign
enterprises, as Japanese and European,
and now Korean companies have taken
business from them
 GM (General Motors) : Market share in the
US has declined from more than 50% to
around 20%

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 5p.
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New Situation
A part of “non-tradable goods and
services” became “tradable” !!
 Technological progress in
telecommunication technology (internet
and high speed data communication)
made new situation possible

Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 5p.
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New Business Model
under Globalisation
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1. Back Office Business
(BPO : Business Process Outsourcing)
High labour cost country
Lower labour cost country
Companies Outsourcing
and individuals in
industrialised countries
outsource “labour intensive
jobs” to developing countries
Accounting firms : outsourcing routine tax returns
calculations to India and others
Large corporations : outsourcing salary and benefit
calculations for their HR divisions
Law firms : Case research
Charles Hill, International Business, 8th edition, McGraw-Hull/Irwin, 2011, 5p.
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2. Software service business
Indian software industry exported $306
billion in 2011 (approx. 20% of India’s
total exports)
 Indian software companies started in the
80s as subcontractors to dispatch
computer programmers to the US clients
with lower prices (on-site services)
 In the late 90s, the main business moved
to “offshore businesses”

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Software industry as
labour intensive service industry
Maintenance of computer systems and
software programming are highly “labour
intensive”
 TCS (India’s No.1) employs 320 thousand
people, while 160 thousand work for
Infosys (No.2)

Nihon Keizai Shimbun, 25 April 2015, 9p.
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What we have studied today
1.
2.
3.
Globalisation brings us many
unprecedented business models and
opportunities
Globalisation has also created new
threats by introducing tougher
international competitions
Factors driving globalisation are 1)
collapse of Berlin Wall, 2) technological
progress, and 3) trade liberalisation
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