TOPIC: DIVISION, CONFLICT AND POLITICAL RISKS WITHIN ASIAN –PACIFIC REGION THAT AFFECTS BUSINESS RELATIONS

INTRODUCTION

Asia and Pacific countries (APAC) include Australia, Bangladesh, Cambodia, China, Fiji, French Polynesia, Guam, Hong Kong, India, Japan, Korea-South Korea, Laos, Malaysia, Micronesia, Myanmar, New Zealand, Pakistan, Singapore, Taiwan, Thailand, and Viet Nam. The Asia and Pacific countries are defined by the Human Development Index that represents a significant share of the world’s economic production and population to assert power as an economic block. They include the BRIC (Brazil, Russia, India, and China) and the MINT countries (Mexico, Indonesia, Nigeria and Turkey)(Burkle, 2019).

Businesses spend significant amounts of time on building and maintaining a host of relationships with their key stakeholders(Abosag et al., 2016). As such,  it is not surprising to see that much of the business-to-business literature has been devoted to enabling relational parties to invest in activities and strategies aimed at building positive relationships. However, to ensure overall success, investing in positive elements of relationships alone is not enough, as business partners must protect against detrimental perceptions, actions and behaviours  (Fang et al., 2011).

Vulnerability in the Asia and Pacific Region

Since 1945, the reasons for crises and how the world responds to them have changed every 10-15 years or sooner. These crises vary significantly across regions, and the economic, environmental, ecological, social. Disease crises are increasingly under the influence of widely integrated global changes and forces that are more often slow-moving, but increasingly severe and massive in that they affect larger populations across many borders (Veenema et al., 2017). These slow-moving crises are unseen powerful and encompassing, where public health infrastructures and protections become overwhelmed over time with the emergence of increasing population-based, preventable health emergencies related to water, sanitation, food, shelter, energy, and related health illnesses, not casualties of war (Burkle et al.,  2014) Health impacts are often characterized by four major categories: weather-related morbidity and mortality, waterborne diseases/water-related illness, vector-borne and zoonotic diseases, and psychiatric/mental health effects (Burkle, 2019)

 DIVISION AND CONFLICT

Conflict is a disagreement between partners which can be resolved as part of on-going business. It is a clear indication of dark-side of business relationships that are irritating, often costly, and cause increasing worries of opportunism, high levels of conflict can be detrimental, leading to reduced productivity, cooperation and performance(Finch et al.,  2013). It can also serve to destroy any value co-creation. High levels of conflict often result in unhealthy behaviour such as hostility, distortion, distrust and withholding of information to the detriment of the relationship partner. Therefore, although routine and expected conflict can exist in most relationships, it may be useful for helping business partners to correct, modify and change their ways to enhance value (Wang & Yang, 2013).

Rivalry or rather conflicts have been compounded by new competition for energy supplies. China has moved quickly from being a net energy exporter to heavy dependence on imports for its burgeoning energy needs. India’s rapid economic growth, meanwhile, has caused it to rely increasingly on foreign sources of energy. And Japan remains highly dependent on imported energy, a vulnerability exacerbated by the nuclear accidents of 2011. All three countries have engaged in increasingly assertive energy diplomacy, a product of their securitization of energy supply issues. Concerns over energy security have exacerbated tensions between China and Japan this century with conflicts, not just overexploiting resources in the East China Sea, but also in Siberia. China and India have engaged in increasingly bitter contestation for concessions for their state-owned oil companies in Myanmar. The Asian energy consumption revolution, Phillips concludes, has the potential to destabilize regional order. However, he argues, there is nothing inevitable in such an evolution: the demand for energy security is common to the entire region and could sustain cooperation rather than generate conflict. But intergovernmental agreements have produced few practical outcomes that reassure governments about the safety of their supplies or the behaviour of their neighbours (Ravenhill, 2013).  Fang et al. (2011) has described the conflict in terms of the degree of darkness, has emphasized that if the conflict between countries increases might go to the tolerable dark side to the intolerable dark side (Figure 1). To clarify further the interpretation of multidisciplinary risk factors common to the current crisis and their management, this report uses a Venn diagram (Figure 2) to illustrate the overlapping and shared relationships between forces, both natural and human-made, that represent the already established or emerging public health emergencies and their unique propensity for conflict generation. Global public health crises have increasingly focused attention on four frames: climate extremes, essential scarcities, biodiversity losses, rapid urbanization and evident in defining the cruciality of the course of any conflict, rather than a single infectious disease for example, which arises out of disturbances in biodiversity.

Figure 1: The Spectrum of Increased Darkness.

POLITICAL RISKS

Southeast Asian leaders have not had to make substantial bargains on property rights with their populations because the threat of interstate warfare has been substantially reduced and because they have enjoyed relatively easy access to resources through the international system. Southeast Asian rulers have formed specific bargains over property rights with a limited group of investors. This   set of relationships that have been sufficient to sustain them in power  directly through the violence involved and indirectly through the inefficiencies of the model of resource extraction (Ravenhill, 2013)

Solutions to division, conflicts and political risks

There should be cooperation involving Asian countries on raw materials at the global, regional and bilateral levels.  This cooperation should be typically deepest at the global level, where both the International Energy Agency (IEA) and the WTO have legally binding arrangements and the authority to impose sanctions on states that fail to comply with their obligations. Unfortunately, both agencies have weaknesses concerning commodities. Membership in the IEA is limited to countries that are members of the Organisation for Economic Cooperation and Development (OECD). Consequently, it excludes some of the region’s major energy producers (such as Indonesia) as well as consumers (notably China and India, although the IEA has established a dialogue with them). The WTO acknowledges that its rules were not designed to regulate trade in natural resources; consequently, significant regulatory gaps exist on issues such as export restrictions. Its members, to date, have failed to reach agreement on appropriate rules to fill these gaps.

At the regional level, institutions have more comprehensive memberships but impose few legally binding constraints on their members. ASEAN reproduces many of the functions of the IEA through its Energy Cooperation programme, including a scheme for coordinated emergency response measures. But members’ obligations are cast in conditional language: compliance with the standards is on a ‘voluntary’ rather than mandatory basis. Although cooperation on energy issues has been effective in raising capital for building infrastructure, ASEAN’s work programmes are full of ‘aspirational’ goals to be achieved through voluntary action, rather than mandatory targets. Similar conclusions apply to the Asia Pacific Economic Cooperation (APEC) grouping, whose Energy Working Group (EWG) has been among its most active committees. Most of the EWG’s activities have taken the form of information dissemination and/or the staging of training workshops. APEC’s agreements on energy consist of non-binding principles: countries set their targets, which are often subject only to self-assessment. At the bilateral level, governments’ attempts to enhance resource security through minerals chapters in preferential trade agreements have had little success. Investment protection measures have frequently exempted resource sectors: in none of the agreements do the parties make a binding commitment to refrain from imposing export restrictions. There is one form of bilateral agreement where countries have entered into significant legally-binding arrangements that have the potential to reduce uncertainty and conflict: bilateral investment treaties, the number of which has increased rapidly and which substantially surpasses the number of trade agreements involving countries of the region. How effective such treaties have been remaining a matter of debate. Still, it is clear that in many instances, political considerations, rather than legal provisions, are dominant factors in determining investment disputes (Ravenhill, 2013).

Conclusion

Division, conflict and political risks have affected dearly not only the business relationships in Asian-pacific countries but also in other regions around the world. It has caused poverty, deadly illnesses and many other things.

Referencing

Abosag, I., Yen, D. A., & Barnes, B. R. (2016). What is dark about the dark-side of business relationships? Industrial Marketing Management, 55, 5–9.

Burkle, F. M. (2019). Current Crises and Potential Conflicts in Asia and the Pacific: Challenges Facing Global Health or Global Public Health by a Different Name. Prehospital and Disaster Medicine, 34(6), 653–667.

Burkle, F. M., Martone, G., & Greenough, P. G. (2014). The changing face of humanitarian crises. The Brown Journal of World Affairs, 20(2), 19–36.

Fang, S.-R., Chang, Y.-S., & Peng, Y.-C. (2011). Dark side of relationships: A tensions-based view. Industrial Marketing Management, 40(5), 774–784.

Finch, J., Zhang, S., & Geiger, S. (2013). Managing in conflict: How actors distribute conflict in an industrial network. Industrial Marketing Management, 42(7), 1063–1073.

Ravenhill, J. (2013). Economics and security in the Asia-Pacific region. The Pacific Review, 26(1), 1–15.

Veenema, T. G., Thornton, C. P., Lavin, R. P., Bender, A. K., Seal, S., & Corley, A. (2017). Climate change–related water disasters’ impact on population health. Journal of Nursing Scholarship, 49(6), 625–634.

Wang, X., & Yang, Z. (2013). Inter-firm opportunism: a meta-analytic review and assessment of its antecedents and effect on performance. Journal of Business & Industrial Marketing.