Australia, act now!
Since the Gillard Government released an insights piece in 2012, the Asian Century White Paper, Australian businesses have talked about the Asian opportunity. This has turned into ongoing and regular dialogue about the benefits of doing business in Asia. It is not a new concept or phenomenon. However, there has been much lip service to the Australia and Asia relationship over the years which hasn’t necessarily translated into action.
In 2018, I was invited by the Perth USAsia Centre to speak at the WA-ASEAN Trade Dialogue and I had the opportunity to discuss the need for growing engagement with the region. I presented to leaders the evidence of an increasingly sought-after opportunity and challenged them to think of the economic benefit to pursuing this.
Most recently in 2018, ANZ identified a significant incentive in their Asia Opportunity Report. According the research, Australian businesses could gain close to $400 billion in additional revenue to flow into their Australian operations if they make plans to operate in Asia. The greater ASEAN presents even more opportunity. ASEAN, has a combined population of approximately 660 million and, more significantly, a combined GDP of $2.4 trillion. It is the 3rd fastest growing major Asian economy after China and India and the 5th largest in the world. It is outpacing our own economy, with rapidly growing middle classes and a burgeoning young population.
These countries are hungry for many of the services, innovations and products that Australia produces and can provide. Yet, despite the inarguable benefits, less than 10% of Australian SMEs are exporting or operating anywhere offshore, let alone Asia or ASEAN.
So, what’s going on?
Lack of awareness is one key problem and lack of expertise is another. Many companies are unaware of the scale of the opportunities while many others know these exist, but don’t know what they look like or how to capitalise on them.
Like Gemstar, the Perth USAsia Centre is driven by a mission that recognises this gap. Professor Gordon Flake joined me at the information night for Gemstar’s 1st ever Asian Immersion Program to impress this upon our guests.
Our time is running out. Although Australia is perfectly poised to seize the ASEAN opportunity, we have been slow on the uptake and other economic powerhouses are taking notice of the region. Needless to say, competition is fiercer and ASEAN has more trade and investment partners to consider now outside of Australia. Australia still boasts old views and perceptions of the region – outdated opinions while the region has moved on. The truth is, it is a dynamic and vibrant region with growing sophistication and international appeal.
We must change this and seize the opportunity.
Many things have to change for us to move forward as a nation and business community, and leverage the advantages that have been in front of us for at least a decade. Unfortunately, we don’t have time on our side. We need to act quickly.
We need to think differently and shift our perception. Firstly, Government needs to change its mindset and policy direction. This involves moving away from a short-termism view, because succeeding in Asia takes time, it doesn’t happen overnight. Short-termism is not naturally aligned with what it really takes to build closer Asian ties.
I have to say it is wonderful to see the WA State Government appoint an Asian Engagement Minister, in fact WA is the only state in Australia that has created such a role. However this is only a start – there is still a long way to go.
While governments across Australia talk about more SMEs growing into ASEAN, the challenge that we see and that we come up against regularly, is that businesses don’t have the funds to explore international growth. The problem is that you have the Big 4 consultancies who charge exorbitant fees for advice on how to move into markets like Asia that are out of reach for most companies. Companies often don’t know how to go about international expansion especially into foreign markets with culture differences and tend to throw it into the too hard basket if it doesn’t pay off immediately.
There appears to be a disconnect. On the one hand, we want out businesses to start prioritising Asia and seize the opportunity. However, to be successful in doing business in Asia, it takes time, commitment, energy and financial resources. The majority of businesses (and start-ups) either don’t see the value of the opportunities or are not prepared to invest the time and money that they simply don’t have in the first place to get a ROI from an Asia strategy. There is also a lack of understanding of the importance of adding value to the region too – just as much as taking the opportunities.
Bridging loans or other incentives would help address this. Perhaps an Asian expansion grant to help companies get the kick-start that they need for ASEAN expansion is something for governments and even the banks to consider.
Education must be the beginning of change
Education is everything and sometimes it is the lack of education and awareness of the region that prohibits successful business expansion. It is important to make the region more attainable and accessible to begin with and not so foreign and unfamiliar. Greater Asian literacy and deeper cultural intelligence is critical.
As part of a mindset shift, we also need to ensure that Australia shows up and is genuinely open for regional business. For this, you need new players and new perspectives. Some cities, such as major metropolitans like Sydney and Melbourne, might be more equipped for this. However, regional cities also have the opportunity to be involved in as long as education, knowledge and support play a part in achieving this.
Businesses must step-up to update their views. We find many Australian businesses lack the culture awareness and intelligence to do business in the region in the first place. They approach expansion into ASEAN with an Australian lens, often without empathy and acknowledgement of local business practices.
Doing business in Asia is vastly different than doing business in Australia, and it also changes depending on what Asian country you are dealing with. Across the board though, deals aren’t done in 3 meetings. It is all about peer-to-peer, and people-to-people relationships, respect and commitment to the local market. They want to know that you have done your due diligence and research and are committed to doing business in a way that fits with them. If you think you can be an overnight success in Asia, then think again.
And underpinning all of this, is the need to create a more collaborative and inclusive ecosystem that creates value for both markets. One that promotes co-creation, adds value to supply chains, promotes partnerships and has local knowledge front and centre.
In summary, Australia need Asia more than Asia need us for our future survival. The questions we need to ask ourselves: are we really serious about doing more business in Asia? Is government prepared to put long-term policies in place to foster greater Asian engagement? Are businesses prepared to learn how to do business in the region and adapt their ways to make it happen?
I certainly hope so.
This article was first published in my LinkedIn page here.