Most Australian businesses are yet to seize the opportunities in some of the world’s fastest growing markets, says Asialink Business, a group established to assist SMEs expand into Asia.
Often, businesses lack the capabilities needed to succeed in these competitive economies, it says.
According to Asialink Business, only 13% of Australian small and medium enterprises are currently exporting internationally.
Yesterday, Asialink Business, in collaboration with the Commonwealth Bank launched a new thought leadership project into the opportunities for Australian small and medium businesses in Asia.
The first phase involves a new (free) online tool for businesses to self-assess their readiness to do business in different Asian markets and access practical resources.
The new tool is accompanied by a discussion paper, Growing with Asia, underlining the specific skills, knowledge and networks that Australian small and medium business need to win in the region.
Resourceful and innovative
“Australia’s small and medium businesses are diverse, resourceful and innovative, but they often still overlook opportunities offshore, especially in emerging Asia, where the scale of growth significantly exceeds domestic prospects,” says Asialink Business CEO Mukund Narayanamurti.
“If our economy is to prosper, we can’t only be focussed on keeping the lights on at home,” he said.
“By 2030, emerging Asian economies, like Indonesia, India and Vietnam, will have middleclass markets that are more than $20 trillion bigger than they are today – this forecast growth is more than 11 times the size of Australia’s current GDP.”
Mr Narayanamurti says previous research has focussed public attention on how our largest companies engage with Asia.
“But it is now time to take the microscope to small and medium businesses,” he says.
“We need to spark and prioritise a national conversation on how to overcome the unique challenges they face.”
SMEs unsure how to enter Asian markets
CBA Head of Asian Business Banking, Jonathan Yeung says: “Australia’s small and medium businesses are truly the engine room of the Australian economy.
“Representing 99.8 per cent of the total number of Australian businesses, small and medium businesses employ more than 7 million Australians and contribute more than 56 per cent of Australia’s GDP.
“However, while many of these businesses are growing or looking to expand, just 13 per cent are exporting to markets outside of Australia.”
Mr Yeung says most businesses are aware of the opportunities that Asia presents, but many are unsure how to enter these highly competitive environments.
“Through our partnership with Asialink Business, we are excited to be launching Growing with Asia and providing Australia’s small and medium businesses with the knowledge and support they need to develop the capabilities required to capitalise on these opportunities.”
Six specific capabilities SMEs need to develop
The discussion paper highlights six specific capabilities that small and medium businesses need to develop to succeed in the region. These range from deep insights into individual Asian markets, practical experience ‘on the ground’ in the region, the ability to adapt behaviour to different cultural contexts, and the ability to form long-term trusted relationships.
They also include leadership commitment to an Asia focussed strategy and an ability to customise product or service offerings, which are especially important for medium-sized companies.
The second phase of the research, expected to be released mid-year, will provide fresh thought leadership and a detailed scorecard on Australian business performance, and recommendations on how small and medium businesses can better compete and achieve growth in Asia.
Access the self-assessment tool and the Growing with Asia discussion paper here:
- By 2030, Asia is expected to account for more than 50 percent of global middle-class consumption – India, Indonesia and Vietnam are collectively expected to grow their middle-class markets by $20.7 trillion (or more than 11 times Australia’s current GDP)
- Currently, only 13% of small and medium Australian businesses export internationally
- Businesses that engage with Asia are more likely to experience revenue growth.
Four Asia capabilities are most critical to small and medium business
- Sophisticated knowledge of Asian markets
- Extensive experience operating in Asia
- Long-term trusted relationships
- Ability to adapt behaviour to Asian cultural contexts.
Two additional Asia capabilities are priorities for medium business
- Leadership committed to an Asia focused strategy
- A customised offering based on customer insights.
An ‘on the ground’ presence in Asia will boost success
- A presence in Asia helps businesses develop capabilities and enhances success
- Successful small and medium businesses employ a spectrum of engagement models, ranging from hiring an agent to conduct in-country operations and regular business trips, to establishing satellite offices or a full-time presence.