“For a nation so focused on being internationally competitive at sport — it amazes me that we have this conservative attitude in business.”Alex Thursby, CEO,
ANZ Asia Pacific
As transparency and market sophistication increases, so too does Asia’s attractiveness as a destination for Australian and New Zealand companies. Despite this, our investment into Asia is actually declining. The numerous political and regulatory regimes, cultural differences and language challenges have deterred some. But the local CEOs with successful Asian operations we interviewed had one overriding message: the return outweighs the effort.
No time to be timid
“Asia has so much potential for anyone who’s bold enough. And, right now, the Australian brand is attractive: we’re seen as a beautiful, friendly, non-colonial power — a place not attached to a view of how the world should be run,” said Thursby.
He believes services companies without an Asia strategy are missing out on both offensive and defensive plays.
“Australia’s integration with Asia is a two-way street. We’ve got international players coming in with disruptive new business models.
In retail, they’re getting around the tax rules and using technology, logistics and great supply chain management to offer Australian consumers a very attractive proposition. If companies don’t act soon, they’ll be out-played. Asia used to be a follower — now it’s a leader.”
“You can’t underestimate the Western educational influence on Asia, the sophistication of its institutions and the engagement and entrepreneurship of billions of people wanting to progress and take responsibility for themselves.”
Thursby is impatient with much of corporate Australia’s timidity in the face of Asian growth opportunities.
“For a nation so focused on being internationally competitive at sport — it amazes me that we have this conservative attitude in business. Everyone here talks about the risk of failure in Asia. You don’t fail because of the market. You’ll fail if you don’t understand where you can compete and what you have to do differently.”
He says Australian companies have to figure out how to package what they have for the Asian market and then work to fill in the gaps.
“You won’t have all the competencies you need in Asia — so you have to build them. We had to build our people competency. We also had to become more proactive around managing risk. Things happen at such a pace, the first line of the business has to take responsibility for risk and be very strong and assertive.”
“Has it been easy? No. Have we been successful in the last three years? Yes.”
John Spence’s advice is: “Just do it!”
“You don’t have to put in years of research before dipping a toe in the water. People spend too much time looking at statistics — which are almost certainly out of date — and going round in circles,” said Spence. “Get on a plane, spend some time there, find the opportunities and launch in.”
Spence says it is surprisingly easy to quickly set up a workable trading structure for very little money: “It’s very different from the costs in Australia. You can get fantastic serviced offices very cheaply for an exploratory operation.”
He believes Australian companies are cautious of operating in Asia, despite its proximity and growth potential.
“I’m always surprised that Australian business leaders talk quite happily about investments in Europe and the US, but Asia seems to send a shiver up their spine.
Likewise, Tim Harcourt believes the perception that Asia is a risky proposition still persists in some industries:
“People are put off by language, intellectual property (IP) issues, not having good networks and the difficulties of dealing with foreign governments. They have to remember, there’s plenty of help out there to make introductions.”
Keep an eye out for new opportunities
Spence says Australian companies can’t go into South East Asia and expect business as usual, “But the rewards and opportunities make the extra effort worth it,” he said.
He says Australian companies shouldn’t worry too much about local competition: “Australians assume they won’t get any market share because of local competitors. But the market is moving so quickly here, there are blatant gaps opening up all the time. It’s amazing the number of times we see big gaps in the consumer market for products and services we take for granted in Australia.”
“Wine is a great example. In Mumbai restaurants, the only people drinking wine are the Indian business people, who are paying $500 for a bottle of French wine with a fancy label. The rest of us drink beer, because you can’t get decent wine at sensible prices,” said Spence. “The wine market is poised to go through the roof.”
“I heartily encourage anyone in an Australian consumer business to keep an eye on the Asian markets. You never know when the consumer base will tip for your industry.”
Be prepared
Thursby believes Australia as a nation needs to prepare its workforce for this increasing Asian engagement.
“Australia should continue to build its Asia knowledge base, not just in terms of languages, but with regard to broader education, experience and understanding. It’s coming. Already, 45% of the graduates coming into the bank in Australia speak an Asian language.”
Looking to the future, Thursby believes it was a major win for Australia when the G20 finally replaced the G8.
“Collective economic growth builds social and political stability,” said Thursby. “The expansion of the G8 into the G20 group of wealthy nations is bringing new opportunities for Asia-Australia relations. It offers us a new forum for engagement and the opportunity to shape and influence international outcomes for the benefit of the region.”
He hopes that more Australian services companies will see the light.
“Asia is our biggest growth engine. I’d like to see more financial, accounting and legal services taking the plunge — UK and US law firms are already there — why aren’t ours?”
He believes Australia’s marketing and branding, engineering, environmental and professional sciences could also flourish in the world’s biggest growth region.
“The potential gains for Australian companies in expanding engagement with Asia are significant.”
<< Previous | Next >>
