Asia is home to some of the fastest growing markets in the world, rising middle classes and young, mobile and increasingly tech-savvy populations. By 2030, Asia’s lower-middle income countries (including India, Indonesia and Vietnam) will have middle-class markets that are US$15 trillion bigger than they are today – that’s 11 times the size of Australia’s current GDP.
Yet Asia has remained too challenging for most Australian small and medium businesses. In fact, of the more than 2.23 million small and medium businesses registered in Australia, only 13 per cent are engaged in any international trade, either as exporters or importers. Collectively, they only account for 4 per cent of the total value of Australian exports.
So, what are the top skills that small and medium business needs to leverage more of emerging Asia’s growth potential?
A new study by Asialink Business sponsored by Commonwealth Bank identified six key capabilities.
One: A deep understanding of the local market
From Vietnam, to China, India, or Japan, Asia is far from a homogenous market. Great diversity exists within and between individual countries. This presents opportunity – but it also makes it difficult for small and medium businesses to get the information they need to enter and succeed in a foreign market.
Two: Strong and trusted relationships
Trusted networks and relationships are key to business success in Asia, no matter the size of the business. As digital marketing business Digivizer discovered, investing in relationships and a business presence on the ground will not only demonstrate your long-term commitment but can help you reap the rewards.
Three: Adaptability and cultural understanding
Understanding the cultural context of your target market is essential to adapt your management style to the local work environment, and account for subtle local cultural norms and nuances. This cultural adaptability can be as simple as ensuring you pay staff in Singapore for their “13th month” as an annual bonus or presenting your business cards the “right-way”.
Four: Leadership and vision
For small and medium businesses, global success relies more heavily on the entrepreneurial spirit of the company’s leaders, as compared with larger organisations. But these capabilities, at an employee level, will be of no benefit unless management is committed to nurturing that capability and deploying it. This requires a formal strategic approach to Asia that is communicated throughout the business.
Five: Customised offerings
In any of Asia’s diverse markets, where consumer tastes are continually evolving, it is crucial to offer customised products to the local environment, based on data-driven customer insights.
“Companies looking to establish themselves with new consumer groups must adapt to the local environment and keep innovating according to local demand,” says Jock Tulloch, General Manager, Beston Global Food (Thailand), which has become one of Australia’s fastest growing food exporters.
Six: Bridging the gaps through “on the ground” experience
Each of these five capabilities will be best developed in conjunction with the sixth key capability, a strong presence “on the ground” and extensive experience operating in the region. Extensive research and planning is needed to grow a business presence in a new Asian market.
Taking the first step into a new market is always the hardest and building these six capabilities may seem costly and daunting for many small and medium businesses. But in today’s global marketplace, where businesses of all sizes must fight for customers, those agile SMEs that do make the investment to identify their skills gaps and build-up their Asia skills and capabilities will be well placed to achieve the financial reward that comes with growing in Asian markets.
Luke Hurst, Director of Research and Information, Asialink Business