- The economic prosperity of both Australia and New Zealand is deeply intertwined with Asia’s.
- Although bigger businesses have been building a presence in Asia for years, small to medium businesses have been “holding back”.
- Businesses that invest in developing Asia-capable teams are significantly more likely to achieve success in Asia.
By Mukund Narayanamurti and Luke Hurst
The world’s fastest growing markets are in Asia and tremendous opportunities, but also challenges, await businesses in Australia and New Zealand keen to trade with our closest neighbours.
In our roles as CEO and director of research at Asialink Business, we travel extensively in the region and have seen first hand the scale, pace and diversity of Asia’s growth.
Asia’s remarkable rise has been unfolding for decades, and the economic prosperity of both Australia and New Zealand will be deeply intertwined with Asia’s for decades to come.
About 61% of the world’s consumers, some 4.7 billion people, live in Asia, compared to just 25 million people in Australia and 4.8 million in New Zealand.
Australia’s trade in services with Asia (including education, tourism, financial, professional services and others) is on track to support one million Australian jobs and contribute more than A$160 billion to the Australian economy by 2030.
In New Zealand, international trade makes up 60% of the country’s total economic activity and Asian nations including China, Japan, Singapore, Korea, Thailand, Malaysia and India are among its largest trading partners.
What’s holding back our SMEs from Asia?
Businesspeople in Australia and New Zealand’s small and medium enterprises (SMEs) are more aware than ever that Asia holds opportunities, but many are still struggling to convert this into financial outcomes.
New research by Asialink Business, sponsored by Commonwealth Bank of Australia (CBA), finds more than 80% of surveyed Australian SMEs have Asia on their radar, yet 55% generate less than 5% of annual revenues from Asia.
The research, which focused on SMEs, surveyed 130 participants from 94 companies on their engagement with Asia. It concentrated on the services sectors including scientific and technical services, education and training, financial and insurance services, the arts and recreation.
However, it’s alarming that this many chapters into Asia’s growth story, many of our small and medium businesses are “holding back”. This could be due to challenges in assessing market opportunities, understanding the local business environment, localising and tailoring product and service offerings, building partnerships, and other factors.
“It’s alarming that this many chapters into Asia’s growth story, many of our small and medium businesses are ‘holding back’.”
So, what is needed to translate this awareness of Asia into meaningful business outcomes?
The three essentials for SMEs to succeed in Asia
Picture: Mukund Narayanamurti, CEO of Asialink Business, Australia’s National Centre for Asia Capability.
A stocktake of high achievers in the region reveals three common traits for successful small and medium businesses.
1. Fast reactions. You can’t win over Asian customers unless you understand and continually customise for their fast-changing tastes. Businesses that tailor their products and marketing to particular regions earn 63% more, on average, than those that use the same product offering and marketing everywhere.
Sydney-based skincare company, G&M Cosmetics, for example, tailors its products to suit local tastes. Its key markets include China, Hong Kong, Taiwan, Singapore, Malaysia and Thailand. The company has found that emu-oil based products are bestsellers in Taiwan and Malaysia, but in China, the first preference is for lanolin. An awareness of market differences has helped ensure its success, with G&M now exporting 600,000 units of skincare products per week to China alone.
2. You must be on the ground. The ability to respond quickly is a crucial component of success, and businesses need to be able to adapt to fast-changing conditions. The survey revealed that a third of Australian businesses that earn more than 5% of their revenues from Asia undertook in-country visits at least once a month.
Medical technology company, Proteomics, which focuses on protein-based diagnostics, has staff on the ground to connect with local partners, distributors, clients and others. Speaking about the company’s expansion into India, Proteomics’ Shane Herbert says: “Having someone in-country has dramatically changed our outlook there, and really helped our growth… It’s helped make a clear upswing to opportunities.”
3. You need to embed skills for success. Businesses that invest in building, retaining and developing Asia-capable teams are significantly more likely to achieve financial results. For example, organisations that include Asian language capabilities or experience in Asia as a job prerequisite earned 64% more revenue from Asian markets than those organisations that don’t mention these skills.
Accounting firm ShineWing Australia has found a competitive edge within Australia by leveraging the Asia capabilities within its team – including language skills, cultural competency and deep insights into ShineWing’s regional network across Asia.
Out of a team of 250 people, 100 staff speak an Asian language. This has helped the company tailor its services to Australian clients with diverse cultural backgrounds, as well as focus on strengthening its regional network.
In contrast, companies that fail to embed Asia capabilities will find it increasingly difficult to remain competitive, identify growth opportunities and activate strategies to win in Asian markets.
Draw your roadmap to Asia
Picture: Luke Hurst, Director of Research and Information at Asialink Business.
There are now more tools and resources SMEs can access to build their roadmap to Asia, from the suite of recent free trade agreements, to insights and advice from organisations such as Austrade and Asialink Business, to e-commerce channels such as Alibaba, and the talents of our own culturally diverse communities.
It’s time for businesses to take up these tools and seek support where they need it. Let’s ensure we headline the next chapter of our role in the Asia growth story with “activating opportunities”, instead of “holding back”.
Mukund Narayanamurti is the CEO of Asialink Business, Australia’s National Centre for Asia Capability. Dr Luke Hurst is the Director of Research and Information at Asialink Business.
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