Asia business hacks: 6 key skills you need to grow your business in the fast-expanding markets
By Luke Hurst, Director, Research and Information Asialink Business
Asia is home to some of the fastest growing markets in the world, rapidly rising middle classes and young, mobile and increasingly tech-savvy populations. In fact, 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 growth of more than 11 times the size of Australia’s current GDP.
Yet beyond a general awareness of the potential, Asia has remained too challenging for most Australian small and medium business. 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. And collectively, they only account for 4 per cent of the total value of all Australian exports.
So, what are the top skills that small and medium business needs to overcome the common challenges and leverage more of emerging Asia’s growth potential?
A new study by Asialink Business sponsored by Commonwealth Bank identified six capabilities that are key to competing in Asia for small and medium businesses.
One: A deep understanding of the local market
From Vietnam, to China, India, or Japan, Asia is far from a homogenous market. Great diversity and distinct strengths exist 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.
SMEs often find themselves relying on easily accessible online information, or capabilities within their own team. But this information may not be up to date on major policy and economic movements on the ground, and it will rarely be useful in key business decisions like selecting a distribution partner.
Melbourne-based productivity and tech start-up, Tiller, experienced these challenges when they expanded into China. They initially resorted to online ‘how-to guides’ to select a manufacturing partner. But after several dead-ends, they realised there was no substitute for on-the-ground knowledge and engaged an agent based in China.
“There’s no book on how to do this from start to end. As far as we were concerned, we were doing something that hadn’t been done before,” Ed Thomson, Tiller’s co-founder, said.
Two: Strong and trusted relationships
Trusted networks and relationships are key to business success in Asia, no matter the size of the business.
The challenge is that developing genuinely meaningful relationships takes time and resources, making it even harder for smaller and medium businesses who cannot support a fulltime presence in their target market.
But 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.
After winning a major global contract in 2016, Digivizer expanded rapidly from no physical presence in Asia to establishing a regional network with a hub based in Singapore.
Digivizer CEO, Emma Lo Russo, said “the way to grow as an organisation is to make it personal.” She says the company’s investment in hiring local talent helped win new work.
“We went from having none to having 14 staff throughout 14 countries in Asia within one month. Since then, we have won a lot more business in Asia because we have that footprint.”
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, present your business cards the right-way or remember the importance of Chinese numerology for business interactions in China and elsewhere.
Four: Leadership and vision
The Asialink Business study suggested that for small and medium businesses, global success relies more heavily on the entrepreneurial spirit of the company’s leaders, as compared with larger organisations.
Entrepreneurial knowledge, relationships, experience, training, skills, and the ability to coordinate resources are obviously important. But these individual capabilities, at an employee level, will be of no benefit unless management are 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 customise 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).
The Adelaide-based company, founded in 2014, has become one of Australia’s fastest growing food and beverage exporters thanks to its savvy approach to entering new Asian markets. By undertaking extensive research into local tastes and consumer preferences in Thailand, for example, Beston developed new types of snack cheeses that appeal to the Thai palate, while staying true to its production methods.
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 identify the ideal location and grow a business presence in a new Asian market. You can’t do Asia “fly-in fly-out.”
Taking the first step into a new market is always the hardest and building these six key 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.
Find out how Asia Capable you are
In a new partnership with the Commonwealth Bank we have developed a free and publicly available online tool to enable businesses to self-assess their preparedness to enter Asian markets and access practical resources to build Asia capabilities. Take the quiz now: www.asiacapabilityassessment.com