Language Differences Hold Back U.S. Companies In Fast-Growing Asia: KPMG Economist

KPMG senior economist Ken Kim showed a slide at a U.S. business conference on Monday that highlighted the economies where Americans have staked the largest amount of direct foreign investment. From the top down, they are the United Kingdom, the Netherlands, Luxembourg, Ireland, Canada, UK islands, Singapore, Bermuda, Switzerland and Germany.

Yet further back in his talk about business trends, Kim displayed another slide that showed a list of countries with the fastest projected economic growth this year: India (6.3%), Vietnam (6.3%), China (5.2%), Japan (1%) and Mexico (0.9%). None of the five are among the countries where the U.S. has put the most investment dollars to work.

What accounts for that mismatch between economic growth on the one hand and U.S. direct foreign investment on the other?

Partly what’s holding U.S. companies back, Kim said, is language and culture in Asia.

“Common language goes a long way in terms of facilitating business, especially when you have to facilitate business across languages,” Kim said at the Vermont Economic Conference organized by the Vermont Chamber of Commerce in Burlington on Monday. “If you have a common language, it’s much easier to do business.”

Another explanation: supply chains are being shifted to countries in Asia beyond China at a faster pace than overall investment by U.S. companies has been able to catch up. That’s true even for fast-growing India, where English is spoken widely, he noted.

Among other observations from Kim’s talk on the “State of the Economy,” CEOs surveyed by KPMG expect higher U.S. inflation this year than American consumers – 6% compared with 4%, he said.

Other conference speakers included Gus Faucher, senior vice president, and chief economist for PNC Financial Services Group; U.S. Senator Peter Welch; Eva McKend, national political reporter for CNN; Vermont Department of Labor Economic and Labor Market Information Chief Mat Barewicz; and Vermont Budget Commissioners Adam Greshin and Craig Bolio.

The Vermont Chamber of Commerce’s annual Vermont Economic Conference, held in-person for the first time since 2020, attracted more than 200 business and policy leaders to the University of Vermont Dudley H. Davis Center for a look at national, global, and state perspectives on the economy.

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@rflannerychina