By Karen Coombs
Australian businesses are ignoring the world’s fastest growing region when looking offshore for growth, according to a report released by accounting firm PricewaterhouseCoopers today.
The opportunity to invest is right on Australia’s doorstep but Australian businesses need to act now before it’s too late the report urges.
The report surveyed 1000 businesses and found only 9% of Australian businesses are currently operating in Asia.
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Andrew Parker, deals Asia desk leader at PwC, told SmartCompany that Australia’s level of investment in the Asian market is “woeful” and at the moment it is largely a trade relationship.
The report shows this kind of bilateral relationship does not include direct investment in business and markets in the region and if Australian businesses are to participate in the growing consumer markets in Asia, they need to actively engage and invest more in Asian countries.
“The Australian economy is 70% to 80% a service economy but only 20% of our exports are service,” Parker says.
“The consumer market is enormous and growing very fast and the number of consumers is growing every day. By 2030 there will 3.2 billion middle-class consumers.”
Parker says the critical thing with Asia is there is no quick dollar to be made and businesses need to commit to a long-term strategy.
He says small companies have limited resources compared to large companies and therefore need to be careful about the markets they enter.
“I think for small and medium-size companies, one of the key things they need to think about is what their role is in Asia, what is the product that they are selling and why do they have a competitive advantage over a local.”
Parker says one of the challenges with Asia is it is a very broad region with a very diverse set of markets that range from western-style markets such as Singapore all the way through to the very new market of Myanmar.
“Many conversations that happen around Asia focus on China,” Parker says.
“China is very large but we often overlook that there’s other very high growth markets. Indonesia is a good example; it makes up nearly half of the ASEAN region and is definitely worth considering as an option for small to medium business.”
Parker says Australian businesses have to understand these are very different markets to the ones Australians are used to and so need to find trusted local staff that know the market and can put in a proper governance framework.
Parker advises: “Don’t bet the house on one investment, make a number of smaller investments, take your time, do your research carefully, and make sure that you get advice.
“It will cost money but it’s worth getting.
“And be prepared for the long haul.”