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expanding their operations into the region over the
next two years. Of Australia’s large companies, half
are doing business in Asia, but only 23 per cent have
staff on the ground.
Tim Harcourt, J.W. Nevile Fellow in Economics at
the Australian School of Business at the University of
New South Wales, says the performance of Australian
business is patchy. ‘We are good in China, we are
underdone in Japan and ASEAN, about right in Korea
and doing very well in emerging Asia: Myanmar,
Kazakhstan and Mongolia. We have a particular strength
in services around mining and agriculture, moving from
the mining boom to the dining boom. We have many
people managing mine sites and agriculture.’
Australia has established three free trade agreements
in Asia: with China, Japan and South Korea. Harcourt
believes that this will help facilitate business activity.
‘The trade deals are going to help. I think in the case
of Japan it is great, because there are only about 100
Australian companies in Japan, or with offices in Japan.
There are about 3000 in China. So it will give Japan a bit
more profile,’ says Harcourt.
‘In terms of Korea, on the agricultural side,
particularly beef, it really helps. Our competitors in
North America have come out of the BSE [mad cow
disease] scandal, so now Korea is getting used to the
foreign beef and is more accepting. So that is useful.
In China, everything is government-to-government
badged, so if we had not had a free trade agreement,
it would not have been a good look because so much
business in China is conducted by the Party. So, it is
good to have an official relationship with the country.
China ultimately needs food security and energy
security. They are pretty proud when it comes to their
position in the region, no doubt about that.’
IMA Asia’s Martin says that the impact of the trade
deals will not be as dramatic as it was with some
other countries – notably China, New Zealand and
vietnam. ‘None of Australia’s FTAs will have such a
high impact. That’s largely because our internationally
traded sector is characterised by massive mineral
and energy exports, and the small scale of Australia’s
manufacturing base. So, unlike vietnam, we won’t
jump from zero to US$20 billion per year in mobile
phone exports, and we won’t get the massive
economic kick that New Zealand gets in its dairy
sector,’ he says.
‘What the FTAs will do is help broaden Australia’s
competitive range. Beef exports to Korea will do
well from a tariff cut, as will an array of other rural
1. Make sure you take reasonable risks. Establishing a business in a
developing country that has a different business and consumer culture
is always a risk, so be prepared to adapt if things do not go well.
2. Spend a lot of time sourcing the right talent. Hiring the right
employees is always the greatest challenge in business, but in a
foreign market this imperative is even more crucial. It is important to
get local help to identify the best staff.
3. Develop a policy for different staff in different countries. Some
companies run cross-cultural teams in order to develop a more
global understanding among the staff; others run the teams
discretely. It is important to have a strategy before you start.
4. Don’t rush. Many businesses are seduced by the great growth
opportunities in Asia, and fail to properly understand the
difficulties before they go in. Being well prepared is absolutely
essential, in terms of understanding both the company’s
competitive differentiation, and how it can retain its core values.
Taking your time usually pays off.
5. Find the right partner. Many Asian countries require foreign
companies to have a local partner, and this is a common reason
that things go wrong. Conducting thorough due diligence on a
prospective partner is absolutely essential, because the pitfalls are
many. It is important to triangulate information; check the validity
of what you are told from other sources.
6. Set clear objectives. There are different business cultures in Asia,
and in order to develop a strong relationship with local partners
and staff, it is crucial that the aims and objectives are made
7. Develop an Asian approach. What works in the domestic
Australian market may not work in an Asian market. Companies
expanding into Asia have to ensure that they understand the
differences in consumer behaviour, and where they can develop a
point of difference.
8. Look for unexplored opportunities. The Asian markets are
modernising fast, but there are always areas where there are
openings for entrepreneurial companies. Make sure it is targeted to
the more high-value customers in Asia’s emerging middle class.
9. Understand the key drivers. The factors that make a business
successful in Australia may not be the factors that are important
in Asia. There needs to be constant monitoring of the local
environment to find out what really matters.
10. Engage with the local community. It is important to develop a
good reputation with the local people; they will notice, and it will
improve the business environment. Engaging with the community
will also help when it comes to understanding and relating to the
entrepreneurs in Asia
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