While Asia is growing fast and becoming an economic powerhouse, Australian businesses are missing an even greater opportunity to participate directly in the growth of the region – this is what Big 4 accounting firm PricewaterhouseCoopers (PwC) concluded in their report Passing us by: Why Australian businesses are missing the Asian opportunity. And what they can do about it.
PwC conducted a survey of more than 1000 Australian businesses to understand the extent of their involvement in Asia, and what, if anything, was holding them back. They found that even though Asia will account for half the world’s economic output in 10 years, only 9% of Australian businesses are currently operating there and just 12% of Australian companies have any experience of doing business in Asia at all.
Moreover, 65% have no intention of changing their stance towards Asia in the next 2-3 years. Of Australia’s large companies, half are doing business in Asia but only 23% have staff on the ground in-market. For those large companies that did have an Asian strategy, the total contribution of it to their bottom line was only 12%. Australian businesses say they are looking offshore for growth, yet they are largely ignoring the world’s fastest growing region.
“Companies that are now successful in Asia arrived there up to 15 years ago, and they made their business plans and investments work. Along with large local businesses, they are now the competition – and they are world-class competitors,” PwC Partner Andrew Parker said.
According to Harold Mitchell AC, Founder Mitchell and Partners, “We are already running late in engaging with Asia while so many parts of the world are already there, more than successfully, and well ahead of us.”
Parker, who is also the leader of PwC Australia’s Asia Practice, oversees the Asia team in Australia and is responsible for the Firm’s interaction with Asia on a number of levels including client and business development. According to him, misunderstanding of the Asian culture is what holding back Australian businesses from taking a leap of faith.
“The mistake foreigners make in Asia is believing that silence in a meeting means acceptance,” he said. Parker also cited typically “forthright and outspoken” Australian executives are still tripping over their words in Asian boardrooms because in Australia, “you’re not left wondering what an executive’s opinion is,” unlike in Asia where confrontation is not a part of corporate culture.
Fundamentals for Success
To make it possible for AU businesses to succeed in Asia, PwC believes they need to be well aware of the unique risks and challenges, and plan ahead. Based on their own experience, these are the eight fundamentals that companies need to get right in developing their growth strategy in Asia:
PwC believes that this may well be the last chance for AU businesses to grab the opportunity in Asia as it continues to be an important source of growth.
The Outsourced Accountant supports Australian and New Zealand accounting firms by helping them understand and implement outsourcing solutions to help them become more proactive and truly add value to their clients. If you want to know more about outsourcing, call us at 1300 896 522 / 0800 452 853, and download our e-book.