The trans-Pacific trade lane is finally starting to return to normal following a number of setbacks earlier in the year. The deadly virus SARS, combined with continued fears of terrorist attacks, were the biggest hits to trans-Pacific trade and sourcing. It has also prompted many manufacturers who had come to rely on Asia as their primary source of goods, such as toys, electronics, and other consumer products, to search for new suppliers. Still, despite the devastating impact of SARS, companies that source in Asia, as well as many Asia economists, are optimistic about Asia's long-term potential.

Combined with other factors inhibiting trade, such as terrorism and continuing economic deflation in Hong Kong, SARS hit hard. In April, during the height of the SARS outbreak in Asia, trans-Pacific airline traffic fell by nearly 40 percent. Hong Kong's storied flagship carrier, Cathay Pacific, considered shutting down entirely, and Singapore Airlines reported its first-ever quarterly loss. Shipping lines cut routes as SARS and the threat of terror delayed customs procedures in the U.S. and in Asia, while manufacturers in Asia found it more difficult to transport their products. Hong Kong's export growth slumped drastically in spring 2003, while Chinese exports, which had been growing by more than 25 percent per year, also fell. Singapore, Thailand, Taiwan, and other leading Asian economies also suffered plummeting export numbers.

American companies dependent on Asia were hit as well. "American firms have come to rely on China for nearly all manufactured exports-China is becoming dominant in lower value-added sourcing," says Ming-jer Chen, a China expert at the University of Virginia.

What's more, some companies began to question their heavy reliance on China and other Asian nations as sources of most manufactured goods. According to the World Trade Organization, China's share of world exports nearly doubled between 1995 and 2001, as a series of major intellectual property theft cases emerged in China in late 2002 and early 2003 and as Asia's economic growth sputtered.

Nonetheless, experienced manufacturers and traders are not overly worried by these short-term obstacles. Despite the slowdown in China's economy, China's trade deficit with the U.S. probably will top $100 billion in 2003, and Chinese and other Asian manufacturers reacted relatively quickly to the impact of SARS and the threat of terrorism, increasing their factory schedules and juggling shipping schedules to keep many orders moving smoothly. Furthermore, China's government has made massive improvements in its ports and rail infrastructure in recent years, making it much easier for ocean carriers to transport goods more quickly in and out of China. In addition, China's upgrades have spawned a kind of bidding war in Asia, with Singapore, Malaysia, and other Asian countries upgrading their port facilities in the past two years in order to compete for shipping traffic. In fact, given the upgrades to Asia's ports, as well as the quick response to the threat of SARS and the possibility for America's economy to recover in the latter half of 2003, some Asian shippers predict that there will actually be a shortage of trans-Pacific shipping capacity in late 2003 and 2004, forcing ocean carriers to restore routes they had cut in early 2003.

In the long run, increasing consumption within China and other Asian countries will be a boon for American companies, as the region will grow into not only a source for manufactured goods but also a market for them-and for services. China has already become the second-largest market in the world for major automobile companies such as Volkswagen, as well as for mobile phone firms like Motorola and Nokia, while Thailand is developing into one of the world's leading markets for Mercedes and South Korea has become one of the strongest markets for broadband Internet products in the world. Considering that Asian countries, including China, have some of the world's highest savings rates while Asian consumers are increasingly adopting Western purchasing habits, these initial successes seem like harbingers of the future. "One of the lesser-studied impacts of globalization is the kind of cultural globalization that goes on, in which people in Asia adopt Western cultural habits," says Hudgins. "This change could be the most important of all."