What is driving the internationalization of Asia’s business groups?
Diversiﬁed business groups (BGs) played a central role in early phases of Asia’s industrial growth by organizing export-oriented ﬁrms and industries. Protected from foreign competition, BGs acquired and assimilated Japanese and Western technology in order to establish high-volume and high-quality manufacturing capacity. The stronger BGs stabilized their ﬁnancial resources and were able to enter into a wider range of domestic product markets such as property development, ﬁnancial services, and media and communications. The export-oriented phase of development is now passing with the growing liberalization of the international investment regime. BGs are now facing pressures to restructure and refocus their business portfolios under growing competition from new arrivals, including both Western multinational enterprises and enterprises from other emerging economies that are targeting their increasingly prosperous markets and investing directly in them. However, liberalized investment policies in the region also provide Asia’s BGs with the opportunities to expand the scope of their international activities by investing in other countries.