Asia key to global business game

The contest for business growth has become a global game, and Asia is the main playing field. But where are our Australian businesses?

With their economies forecast to grow by 5.9 per cent this year — more than double the global average of 2.7 per cent, according to the World Bank — many Asian markets are the engine room of the world economy.

This is by no means a new story. The region’s remarkable rise has been unfolding for decades, and has seen 600 million people from India through to China move into the middle classes (a figure which, as I explained in The Australian earlier this year, is expected to rise fivefold in 20 to 25 years).

It is a story that has powered government efforts, and my own work in my previous career, to finalise free trade and investment agreements that open the door for Australian businesses to our largest Asian trading partners: China, Japan and South Korea.

So it is concerning that many of Australia’s top business leaders are yet to arm themselves with the skills needed to walk through these doors, as research to be released this week by Asialink Business in partnership with PwC and the Institute of Managers and Leaders reveals.

“Match Fit: Shaping Asia capable leaders” examines the composition of boards and senior management of Australia’s 200 largest listed companies and top 30 private companies. It found that only around 10 per cent of business leaders are equipped with the specific insights, capabilities and skills needed to succeed in Asian markets or win over Asian customers.

Complacency won’t do

Clearly, corporate Australia is facing a mismatch between skills and opportunities.

With Australia’s own economy growing at around 2 per cent (less than the global average and significantly less than the forecast for Asia), bridging this gap to tap new sources of growth is critical to our long-term economic prosperity.

As the Business Council of Australia asserted recently, Australia sits adjacent to the largest and fastest-growing market for premium goods and services in human history.

While we can’t pin all of our hopes on the Asian middle classes, we cannot be complacent and expect these opportunities to fall into our lap.

Leadership that is domestically focused will not win a globally competitive game. It will be blind to global opportunities. It will be vulnerable to disruption from global forces.

Fortunately, there are success stories that demonstrate the case for change.

The research found that companies with leaders that understood Asian customers and economies derived more of their revenue from Asian markets. And while many businesses are underperforming when it comes to Asia capability, the research identified pockets of strengths in key industries where leadership teams have been equipped to seize opportunities and achieve results in the region.

Mining and financial services are both high on this list. This is not surprising. Australian energy and resources firms built up global expertise during the mining boom, and a number of our financial services companies have a long history of proactively engaging with Asia.

Take Australian insurance giant QBE, which has maintained operations in Singapore dating back more than 100 years.

With leadership that brings mutual respect and intimately understands the nuances of the market, the company is well placed to leverage this long history to succeed in other Southeast Asian markets, tap into the region’s rapidly growing middle class and benefit from moves to harmonise financial services under the ASEAN economic community.

At the small-cap end of the scale, it is also promising that an increasing number of companies are cultivating Asia capable leadership and are driving local employment, revitalising regional communities and achieving financial returns as a result.

Take Tasmanian salmon farmers, Huon Aquaculture. By investing in the right team and a long-term Asia strategy, they have taken Tasmanian salmon to diners in Singapore, Japan, Indonesia and beyond.

Huon identified their niche capabilities, and aligned these with specific niches in the market. They recognised that building in-house talent that understands and is experienced with Asia will be critical to winning the loyalty of new customers to enable growth.

Global mindset

So what is needed to get our businesses match fit for highly competitive global markets and for Asia specifically?

If Australia is to adapt to a global playing field, it needs a global mindset.

Asia is not a collective market — its economies and customers are diverse and unique.

Businesses are unlikely to see equal growth from disparate Asian markets, and so should match their products and capabilities to the customer base most suited to their strengths.

It is also crucial to ensure that myth does not override fact when discussing returns from specific Asian markets.

A market-specific approach should be reflected in financial reporting, so growth in one market is not overshadowed by poorer performance elsewhere.

Leadership and talent that understands how to assess these opportunities and design and execute Asian customer-focused growth strategies is the key. A shift in mindset towards pursuing long-term growth instead of short-term returns is also needed by boards, senior executive and the investor community alike.

On a practical level — and complementing our highly diverse population — Australian expatriates returning from Asia are a goldmine of regional expertise that often goes untapped. By 2030, 450,000 Australians will be living in Asia, representing one third of Australia’s total expatriate community.

As well, our Australian businesses need to make the most of the existing two million Asian-Australians who speak an Asian language in the home.

Decision-makers wanting to ensure their businesses are fit for global competition might also consider engaging an Asia-capable advisory board to support their strategic positioning in the region. So rather than just sounding the alarm bells, we need a critical call to action to our top business leaders.

Now, more than ever before, it is time to get on with doing business in Asia, if our top companies are to grow, innovate and thrive in the future. I urge our business leaders to get match fit for this challenge.

 

Source : theaustralian

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