Go East, Big Boys: Asia, Autos and High Tech Rule 1996's Location Leviathans

1996 was a year of very rapid change in global business location.

To underscore how fast things are changing, consider one of the centaurs among 1996?s announced new facilities and expansions: South Korean multinational LG Electronics? US$2.5 billion, 6,100-employee semiconductor/TV monitor manufacturing facility, which will sit on a sprawling 250-acre (100-hectare) site in Cardiff, Wales.

The Wales whopper was 1996?s second biggest global capital investment, but it symbolizes much more than that.
LG Group (LGG), LG Electronics? parent, is hardly the first name many would drop in describing today?s most influential global players. But last year?s Welsh location leviathan was only the peak of LGG?s location mountain that scaled Intel-like heights in capital investment.

For example, LGG in 1996 also announced a $1.3 billion semiconductor manufacturing plant in Malaysia, a $1.2 billion oil refinery in Vietnam, a $1 billion memory-chip joint-venture plant (with Japan?s Hitachi) in Malaysia, an $800 million mixed-use project in Indonesia and a $700 million electronics plant in Bulgaria.

Add to that LGG?s recent acquisition of a controlling interest in U.S.-based Zenith Electronics, the No. 3 U.S. TV manufacturer, plus myriad new alliances including Compaq, IBM and GE Appliances.

That?s a supremely full, almost surreally diverse plate. And though it may seem Byzantine, LG Group?s fast-growing, decidedly dispersed operations are in many ways the essence of today?s leading-edge global firms — and the how?s and why?s behind where they?re locating their facilities.

Asia, Autos and High Tech

Other major trends in 1996?s global business location patterns include:

The dominance of Asian locations: Horace Greeley today might rework his famous admonition to say, ?Go east, young man.? Of 1996?s top 20 capital investments, 70 percent went to Asian sites. Singapore was the region?s most popular site, landing three of the year?s location monoliths, while China, Japan, South Korea and Taiwan each landed two.

The dominance of Asian firms: Asia-based firms accounted for a substantial chunk of 1996?s biggest location projects, including 60 percent of the 20 largest capital investments.

Like some Cabbage Patch Snacktime Kid run amok, South Korean firms turned in the top performance by any one nation?s business community. Based in a country roughly the size of Mississippi with a population a tenth the size of the United States, Korean corporations accounted for an eye-popping one-third of the year?s 20 biggest capital outlays. Very quickly, South Korea has become a major business location player whose impact rivals Japan?s halcyon ?bubble economy? days. Korea?s ?miracle economy? is now the world?s 11th largest, with a living standard rivaling many European nations.

Like Japan, South Korea has risen through manufacturing and exports, its fortunes rising and falling on the strength of the chaebol, a powerful corporate quartet including Daewoo, Hyundai, LG Group and Samsung. All were major players in 1996?s biggest locations, with Samsung alone figuring in three of the top 20 capital outlays.

The dominance of high tech and transportation: High-tech connectivity not only powers today?s ever-dispersing globalization; it?s also a key industry in today?s global surge, accounting for more than half of 1996?s top 20 capital investments.

But substantial international action is still powered by old-fashioned travel by land, not wireless electronic waves: New transportation facilities accounted for one-third of 1996?s 20 biggest capital investments.