Yoshikami: Here's What's Really Happening in Asia

business Asia China investing
Jack Hollingsworth | Brand X Pictures | Getty Images

I just returned from a short four-day trip to Asia. I'm a professor for the National University of Singapore MBA Business School and it was my annual teaching adventure. The students are not your typical students new to the business world. This is a senior executive MBA program and so I have a chance to discuss business conditions with leaders from around Asia that are attending the program.

While I was there I had a chance to meet with business leaders, strategists from around the region, as well as government officials. I wanted to share their insights with you and my judgments about their opinions.

First, let's set some context about emerging-market investing. Over the last four years it's been unpleasant. The Emerging Market Index has underperformed the U.S. equity markets by 50 percent.

(Read More: Emerging Market Stocks Now at Cheapest This Year)

Of course, it's important to remember that if you look at emerging market performance over a longer period of time, emerging markets have outperformed U.S. equities by 50 percent. So as is often the case, it's a matter of time frame.

We don't expect emerging markets to collapse. The momentum of emerging markets will play out; they just need to be given some time. This belief was apparent in my discussions with a variety of sources during my recent trip to Asia.

It's pretty clear that business conditions in Asia are slowing. With China attempting to rotate their economy from exports to internal consumption, growth rates are bound to drop. There's a reason why so many Chinese billionaires are moving money out of China and into other countries in Asia; they see better return opportunity in surrounding nations.

This is not to say that China is a dead economy; far from it. In fact, China is a country that still boasts a 7 percent GDP rate on an annual basis. This is a far cry from previous 14 percent returns in GDP but is still the envy of more established economies.

(Read More: China Cash Crunch Turmoil Could Be Just the Start)

As China slows down, the rest of the region will slow as well. Other countries are already starting to feel the pinch as economic growth on a global basis is negatively impacted by the reality of debt levels of governments and consumers. But again, growth rates are still attractive and we believe will lead to significant returns over the long-term.

What was perhaps most interesting in my discussions with my contacts in Asia is a confirmation of our belief that Asia is a continuum of maturity where some economies are still emerging and some have fully emerged. For example, Myanmar is an emerging economy as is Mongolia. Economies such as Singapore and Korea have already emerged. China is somewhere in the middle. Thailand is emerging more so than China, but it's farther along the maturity scale than Myanmar.

This is an important insight to digest; Asia has a variety of different markets each with its own return and risk levels, and one needs to recognize this when investing in this region.

(Read More: Brutal Quarter for Asia Stocks – Here's the Score Card)

Internal consumption in surrounding regions continues to grow as middle-class incomes rise. Granted, the definition of middle-class is different than that of the United States, but on a relative basis wealth is still being created in these regions. See the chart below which illustrates the growth expectations for the middle class in emerging markets. Pretty incredible.

So what's the net result from an investment standpoint?

Asia and emerging economies, with the exception of Japan, still hold tremendous long-term opportunity. After four years of pretty disappointing returns in the Asia region, a long-term perspective is obviously still needed. But remember that returns can snap back in a heartbeat.

So look at the Asia/Latin America emerging market investments in your portfolio as the more long term piece of your strategy. It will impact your short-term performance but in the long term we believe it will provide you with profit opportunities not available in more established economies.