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Tuesday, May 21, 2024
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The Asian Shift: What it Means for Orange County

Editor’s Note: Henrik Cronqvist last August became the dean of Chapman University’s Argyros School of Business and Economics. Robert Koepp, who in January started as Chapman’s first director of its new Asia-Pacific Geoeconomics and Business Initiative, has extensive experience in Asia, including leading the Corporate Network in Hong Kong for The Economist Group, where he was chief economist advising more than 200 Asia-based C-suite executives. A fluent speaker of Mandarin and Japanese, Koepp has authored two books and was Marvel Entertainment’s chief representative in Asia before its acquisition by Disney.

U.S. trade in goods with Asia totals nearly $2 trillion annually, an astounding number that exceeds by over 50% our trade with Europe. Even compared to trade with our next-door neighbors of Canada and Mexico, our Asian exports and imports are almost 20% greater in value.

The momentum of global economic growth indicates that America’s engagement with Asia will only increase. There is a genuine “Asian Shift” afoot.

East Asia’s GDP has consistently surpassed that of the U.S. since 2009. Currently at $30.9 trillion, versus $23 trillion for America, Asia is expanding faster than any other major economic territory. It represents the present and future growth of the global economy.

What does that mean for Orange County?

Chapman University’s Argyros School of Business and Economics has established the Asia-Pacific Geoeconomics and Business Initiative (APGBI) to address that very question.

 

Asian-Linked Companies

The Walt Disney Co.’s biggest theme parks are in Tokyo, Hong Kong and Shanghai. Notably, Disneyland, Orange County’s largest employer, attracts visitors from Asia as well. Before the pandemic, Orange County’s top five sources for overseas visitors (an indicator of theme park tourist flows), included China, 1st, Japan, 2nd and South Korea, 5th.

The county’s other best-known narrative media producer, Irvine-based Blizzard Entertainment, generated $522 million from the Asia Pacific region in 2022—almost one-third of the total sales for this unit of Activision Blizzard.

The Asian market for gamers, estimated at $82 billion, or 55% of the global market according to research firm Niko Partners, offers enormous growth opportunities for Blizzard and other local video game developers, such as Irvine’s Ready at Dawn Studios, Irvine’s Bonfire Studios, and Lake Forest’s Turtle Rock Studios. Turtle Rock has a unique vantage point on Asia since it’s been owned by China’s Tencent since 2021.

The commercial and cultural district of Little Saigon, evolving from a handful of strip malls, over time has grown to span parts of Westminster, Garden Grove, Santa Ana, and Fountain Valley, serving now as an internationally recognizable Asian-themed landmark of Orange County.

Today, Little Saigon-originated businesses include nationally franchised 7 Leaves Cafe, and the Boiling Crab, whose Vietnamese-Cajun cuisine has expanded as far abroad as Melbourne and Shanghai.

Medical technology is another prominent homegrown industry cluster where the leader is Edwards Lifesciences, which earns nearly half-a-billion dollars in revenue from Asia.

Companies like Konica Minolta of Japan have invested in the sector through a $1 billion acquisition of Aliso Viejo’s Ambry Genetics. Traveling across the other direction of bilateral trade, companies such as Irvine-based CathWorks, a medical device maker, operates in Japan and is expanding there following Japanese regulatory approval for its latest generation products.

Next-generation wireless communications chipmaker Skyworks, the area’s most highly valued locally based semiconductor company, earns one-third of its revenue from Asia, representing 90% of all its foreign sales.

Chinese and Taiwanese Americans living in Orange County have started firms that annually generate billions in sales: Kingston Technology (founded by John Tu and David Sun), Viewsonic (founded by James Chu), Linksys (founded by married couple Janie and Victor Tsao), and Vizio (founded by William Wang). These IT firms closely track Asian trends through their overseas supplies and sales while illustrating the economic contributions of Asian Americans.

Orange County has developed strengths in the global automotive industry through ties with Asia. South Korea’s number one and two automakers, Hyundai and its Kia subsidiary, established their North American headquarters in Fountain Valley and Irvine, respectively. Irvine has been home to the North American headquarters of Japan’s Mazda since 1987.

Among the new wave of EV carmakers clustering in the area are Irvine’s Rivian and Anaheim’s Phoenix Motorcars. Rivian does not yet sell product to Asia but is expected to launch there, especially as management repeatedly references the importance of China and Japan in its annual report to shareholders.

Phoenix, under the leadership of CEO Lance Zhou and other key senior managers who hail from China, draws on their valuable technological and sales experience from China’s position as the world’s largest EV car market.

 

OC Magnets

Orange County has other notable factors of attraction relating to Asia. In particular, the county’s largest city, Irvine, boasts quality planning and great schools along with low crime to make it a magnet for Asian immigrants and Asian Americans.

More than 40% of Irvine’s residents are either Asian or of Asian descent, compared to a non-Hispanic white population of 38.3%.

Irvine now is only second to Honolulu as a major American city with a proportional Asian majority. The extent of Irvine’s Asian shift is all the more remarkable considering that as of 1980 the percentage of Irvine’s Asian population was less than 8%.

The county’s campus for the University of California, the cornerstone of the 1960 Irvine Master Plan’s vision for a “city of intellect,” has a 37.6% enrollment by those of Asian descent.

The county’s two other large-scale universities, California State University, Fullerton and Chapman University, along with a strong base of community colleges and smaller universities, also feed a pipeline of educated talent supporting global competitiveness in advanced technology.

C.J. Segerstrom & Sons’ South Coast Plaza and Irvine Co.’s Fashion Island are buoyed by many Asian tourists, many who have shopping as a primary objective of their travel experience.

 

The Asia Shift

Our Asia-Pacific initiative aims to deliver insights to support the business community through mass media such as this Leader Board, corporate presentations, seminars, events and a forthcoming Index of Asia-Pacific Geoeconomics and Business.

On March 16, we will host a presentation on Asian investing by Cynthia Wang, who led China initiatives at Bridgewater Associates, one of the world’s largest hedge funds.
We look forward to serving businesses in the county and beyond.

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