Asia’s problems are giving a new meaning to the phrase “cash-less” society. Not only do consumers have less to spend, a rising number have nothing to spend at all. And banks, from Tokyo to Bangkok, are in no position to provide credit to individuals with an uncertain economic future.
What then might be the future for marketing in countries where money is hard to come by and of doubtful value? Solution: Barter.
Thailand’s liquidity crisis is boosting the prospects of Bartercard Thailand, a start-up business-bartering venture with the Australian-based Bartercard International.
Bartercard was launched in Australia in 1991 as the country slid into recession. The company and its international affiliates act as conduits for bartering, enabling traders to exchange goods and services for credits that can be traded for other goods and services offered by the membership pool.
Australia’s recession brought strong growth to Bartercard as cash-starved companies investigated the options for survival. The Australian operation recorded a 34 per cent increase in trade volume for 1997/98 – up $A313.8m (112m) to over $A1bn (357m).
The small and medium enterprises that make up about 98 per cent of the registered businesses in Thailand have had declining access to cash since Thailand’s financial sector reined in lending in summer last year.
Thai newspaper reports suggest Bartercard Thailand has won friends in high places. The deputy prime minister, in charge of economic affairs, volunteered to preside over the official opening of the company, endorsing it as a way of reducing currency outflows.
Bartercard’s network encompasses about 25,000 business members with offices in Australia, New Zealand, Hong Kong and Sri Lanka.
Tourism is shaping up as a growth business for barter. Hong Kong’s Pruton Prudential Hotel in Kowloon takes bookings from customers who pay by Bartercard, using “trade dollars” earned by bartering their own products. It has been worth HK$70,000 (5,000) in extra business since March. The hotel uses the barter trade dollars for such things as buying wine and paying for printing.
Another operator, Hong Kong’s Pacific Barter handles larger deals, usually worth about HK$200,000 (14,400). Most Fortune-500 companies are involved in barter to some extent, according to Pacific Barter.
One Asian government – Myanmar – now relies almost wholly on barter to stay afloat. Indonesia also appears to be heading that way. More surprisingly, Singapore is attracted to the idea, holding a forum on the subject earlier this year. Indeed, for Asian countries that are still solvent, barter is becoming unavoidable if they wish to trade with an increasing number of their neighbours.
But closer to home, could managers of growth funds and unit trusts invested in Malaysia, for example, be offering their investors barrels of Palm oil instead of dividends? At least such offerings would be more tangible than the distant promise of cash of uncertain value.