If you follow Chin Communications on social media or receive our newsletter, you know we’ve been progressing along with an impressive portfolio of projects, translating heaps of things into Chinese as well as other Asian languages and getting busier as the years have gone by. The spread of businesses small and large that we work with is huge: food and beverages, commodities, the arts, mining, tourism, education, real estate, investment, biotech, law, environment, health, horse racing … – I can’t think of a sector that we haven’t assisted at some time – and a mixture of small and large – inwards investment and export; goods and services; research and commercialisation; culture and exchanges.
While producing all of this good work you make the assumption that Australia is doing pretty well – we’ve grown from a handful of staff to around 13 full timers now and look after diverse language needs from written work to spoken interpreting, social media and branding – our clients have been taking a serious approach to China (and Asia) making inroads and signing deals. Australia’s engagement with Asia is doing well, we assume.
Free Trade Agreements with China, Japan and Korea have been shouted from the rooftops as game changers for us and the interest appears to be huge if numbers of attendees at seminars, op-eds, and our workload tell us anything. If you read the @chincomms twitter feed there is good news after good news story concerning deals with China, growth in investment, rises in visitors, the promise of the middle class, etc.
But, Opportunities are Passing Us By
So I was genuinely shocked this week at a seminar at the Australian Institute of International Affairs to find that perhaps things aren’t all that rosy on the Asia front after all!
PricewaterhouseCoopers published their “Passing Us By” report earlier this year, but it hadn’t really dawned on me that Australia was doing poorly in Asia. PwC Partner Andrew Parker was there to enlighten us. There were some staggering numbers. Despite Asia set to produce half of the world’s output by 2025, currently only 9% of Australian businesses are operating there, and worse, despite all the hype, 65% of Australian businesses have no intention of going to Asia in the next 2 – 3 years. Experts suggest that we are already way behind Europe and the rest of Asia in our engagement and may struggle to catch up. Take our level of investment in Asia – only 5.7% of our FDI went to the ASEAN countries last year ($28 billion) while $46 billion went to New Zealand (remember a population of 4.5 million and GDP growth of 2.5%). Also much of our export is built around bulk commodities (six of our top ten export partners in the region are dominated by this).
British PM David Cameron in Jakarta this week said “When Indonesia announced its 276 billion pound [$430 billion] infrastructure plan, the next opportunity for British businesses became clear … The scale of the opportunity here is immense.” Meanwhile here in Australia we look further north or east; Jakarta looks north too – that won’t surprise you.
Indonesia was Cameron’s first stop on a four-day trade mission in our backyard (Southeast Asia) to spur lucrative business deals. Britain is Indonesia’s fifth-largest foreign investor; Australia is tenth – yet Indonesia is one of our nearest neighbours. Last year only 800 VCE/HSC students in Australia studied Indonesian Language, making it almost extinct in our school system.
Another important point made by Andrew Parker (PwC) was the rise of successful Chinese businesses – there are some big names arriving in Australia that haven’t really hit our radars yet: Greenland, Huawei, Lenovo, Alibaba – formidable competition and huge in scale – Alibaba is 2 times the capitalisation of our largest company, CBA.
PwC’s report sums it up: “Globalisation, fuelled by technology, is changing traditional business models and removing the protections historically offered by geography and borders. Australian companies are not only dealing with traditional competitors from developed markets – they will also face increasing competition from world-class businesses from emerging markets, including those in Asia. These competitors have significant advantages, bringing formidable scale, low cost bases, strong brands and innovation to the market.”
So why are we lagging?
A lack of knowledge, fear of the unknown, culture, language, and traditions are frequently cited (but Europe and the rest of Asia seem to do OK); Chinese companies are arriving in Australia and learning fast too; PwC’s research goes deeper and suggests that we have had it a bit too ‘cushy’ here – things have been good for a long time and we’ve become complacent. Fear of failure and fear of change are strong, but surely fear of falling behind and failing before you even try will be the bigger problem.
Short-term-ism is a factor too – businesses expect a quicker pay off, but we’ve all heard about the long-term Asian perspective and the need to be patient; a bit like the political lifecycle – the short-term perspective that pervades our society is not helping with vision and the potential rewards to derive from a long term relationship and commitment.
As Harold Mitchell AO says in the report: “We don’t know them, we need to understand them.” Get over the fear and learn about the culture. Andrew Parker reminded us of the huge breadth of talent coming out of universities – international students who can work across both cultures. Governments sprout on about the importance of being Asia-ready, but need to address falling numbers of students studying languages and their transition into work, for example under the new Colombo and other plans we frequently see students left high and dry and their new language and cross-cultural skills not valued.
Almost no consumer-facing business in China can succeed without an online and offline strategy today (Gordon Orr, McKinsey, Shanghai). From a practical point of view – not everyone has the need or capacity to set up shop in China, the rise of e-commerce makes it easier and there are plenty of portals to help – JD.com launched in Australia recently as a rival to Alibaba (the biggest online market); Baidu is an important search engine, and social media – Weibo and WeChat – are vital – all of these can be accessed here with local experts.
Australia has plenty to offer at all levels of government from local to federal and organisations like the Australia China Business Council can assist with introductions, and education; there are endless numbers of consultants, digital gurus, advisers and, yes, translators too all claiming to be able to help get that deal done. You just need to ask around; network, research and visit.
Robbie Burns, China Sales Company, is an expert in digital engagement with China and reminded us at an ACBC seminar recently that the Federal Government’s EMDG grants will cover half of all expenditure on digital expenditure such as website and social media (up to $150,000 of expenses).
Sam Clohessy, founder of online marketing and e-commerce services Web Presence In China (WPIC) says: “Australian producers are missing huge and growing opportunities in China because they simply do not understand the transformational impact that China-based e-commerce and social media platforms have had in the past several years.
“It seems extraordinary that Australians can be so backwards about these opportunities. We are, after all, a nation of technology-loving, early-adopting, smartphone-using, Facebook-procrastinating, eCommerce-buying, technophiles.”(Innovation Australia)
Time is running out – successful companies in Asia have been there for considerable time and have made their models work, ‘get’ the culture and can now compete with the world. Help is at hand, it is time to take the plunge.
“The greatest risk is doing nothing” Andrew Parker, Partner, PwC
Sources: Passing Us By, PWC, www.pwc.com.au/asia-practice/assets/Passing-us-by.pdf