Home' Forge : Vol 1 No 1 Contents 52 // FEATURE
products, including in our dairy sector. The manufacturing base
will also stay in the game, even though it’s hard to get Australian-
made products into the volume, value, price point zone for
international competition. A handful of Australia’s high-tech
manufacturers excel at that: Cochlear, ResMed, and CSL.’
For Australian companies looking to Asia, there are a number
of strategies available. One is to simply export, which is the
preferred option for Australia’s mining giants BHP Billiton and
Rio Tinto. Both companies have only small local presences in
China, despite their massive exports to that country.
Another option is to establish discrete operations to produce for
the local market. Harcourt notes that BlueScope Steel, a former
division of BHP, has taken this route. ‘BlueScope does quite a
good job in steel within China. They make it outside Shanghai
and ship it across the country. Rheem Hot Water has set up in
China. They have set up outside Chengdu, and they have still
got operations around Australia and Malaysia.’
Such a ‘localisation’ strategy was pursued by Mack valves,
an Australian manufacturer of specialty valves, which has
established operations in India. Shaun Miller, head of global
business development, said the company started modestly,
taking advantage of the fact that the Indians liked the product
being sourced locally. ‘There were big Made in India campaigns,
and I guess we were very keen to be a part of that while also
ensuring that we were supplying a product that was Australian.
We obviously started off as an Australian manufacturer, and still
are an Australian manufacturer.’
The flexibility of being able to work directly with the local
market has great advantages, says Miller. It creates an
environment conducive to the development of new product
ideas, and the time to delivery is greatly shortened. ‘You can
really limit the delivery delays and the things that were big
problems for these industrial gas companies beforehand; it is
very beneficial to be working locally.’
Another advantage is the indirect effect on the Australian
workforce. Miller says that integrating the Australian and
Indian businesses has been challenging, but there are benefits.
Many staff members have not had the same exposure to the
international marketplace as the management team, and can find
the adjustment difficult. ‘We are trying to ensure they are all part
of the training and development process of the new talent over in
India, as well. It starts to open their eyes to the global landscape
and the opportunities for the business, as well,’ says Miller.
Another strategic option is to develop discrete offshore
operations. That is the approach of Midway Metals. Managing
director Paul Batty says that the company originally tried to
replicate its stainless steel business in vietnam, distributing
into the local market. But the strategy did not work. The
Asia by the numbers
Asia’s GDP in 2015: $35 trillion. Asia’s
projected GDP in 2025: $60–65 trillion.
Average growth rates in the region in
the period 2012–25 – All Asia: 5.75–6 per
cent. Developing Asia: 6.5–7 per cent.
China: 6.5–7.25 per cent. India: 6.75–7 per
By 2025, four out of the top 10 economies
in the world will be in Asia: China (1),
India (3), Japan (4) and Indonesia (10).
Asia’s projected share of world
merchandise trade by 2025 will be 52 per
Asia is ageing. In Japan, South Korea
and Singapore, the proportion of the
population that is of working age has
peaked or is peaking. In China, retirees
account for a high and growing share of
Income per person in Asia is set to rise
from US$7000 per person in 2010 to
US$15,000 per person in 2025.
India has developed a larger services sector
than other economies at the same stage of
development. By the early 2020s, information
technology and business process outsourcing
are projected to employ around 7.5 million
By 2030, there will be a middle class in Asia
of 3.2 billion people.
Only nine per cent of Australian businesses
are currently operating in Asia.
Singapore is rated as the top country
in the world for ease of doing business.
Hong Kong is rated third and Australia
10th. Japan is 29th, vietnam is 78th and
China is 90th.
The number of millionaires in Asia is
increasing rapidly. There are 6.5 million
of them today, and it is forecast that there
will be more than 11 million by 2018.
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