Winning in Asia digital launch event

11 August 2020: Australia’s Minister for Trade, Tourism and Investment, the Hon. Simon Birmingham formally launched the major new report – Winning in Asia: Creating long-term value – during a digital event that attracted an online audience of almost 1,000 participants.

Two years in the making, the report is the result of a partnership between Asialink Business – the National Centre for Asia Capability – the Commonwealth Bank of Australia (CBA), the Australian Institute of Company Directors (AICD), Chartered Accountants Australia and New Zealand (CA ANZ) and The Sid and Fiona Myer Family Foundation.

The launch event was hosted by Asialink Business CEO Mukund Narayanamurti with contributions from report authors, including Daniel Selikowitz, Partner Boston Consulting Group; Qiao Ma, Portfolio Manager, Cooper Investors and Mary Manning, Portfolio Manager, Ellerston Capital.

It also featured a panel discussion involving Christine Holgate, Managing Director and CEO, Australia Post; Tony Lombardo, CEO, Asia, Lendlease; Diane Smith-Gander AO, Non-Executive Director, Wesfarmers and Chair, CEDA; Sid Myer AM, Chair, Myer Family Investments and closing comments from project taskforce member Ainslie van Onselen, CEO, CA ANZ.

Mr Narayanamurti said the report comes at a challenging time for the Australian economy, with the findings and recommendations to be considered in the context of mapping a sustainable, long-term recovery from the coronavirus pandemic.

Considering major questions

Winning in Asia seeks to dispel many of the commonly held misconceptions of the challenges of doing business in the region. Based on 300,000 data points of analysis complemented by over 250 consultations, it considers major questions posed over a long period of time by Australian business leaders, policy makers and investors.

For instance, does offshore expansion lead to superior returns for the shareholders of Australian companies? Which companies both Australian and non-Australian have grown market share, profitability and returns in Asian markets? What are the capabilities that boards and senior executive teams need to engage or to enable their respective organisations to succeed in Asian markets? And how can Australian companies best manage the risks associated with doing business in the region?

Mr Birmingham said that despite the shocks associated with COVID-19, Asia will continue to be a major source of economic potential for Australia and commended the report’s comprehensive, strategic approach to outlining how to succeed in Asia.

“The 14 strategies identified are relevant to business, to government, to intermediaries, business councils and industry groups. It provides a roadmap for us all to work collaboratively to increase the dividends from working with Asia.”

Does offshore expansion lead to superior returns?

In his presentation, Daniel Selikowitz outlined three key findings in response to the question: Does offshore expansion lead to superior returns?

  • Australia’s largest public-listed companies are becoming more internationally diversified, increasingly driven by exports to the Asia Pacific region.
  • Australia’s largest listed companies are in fact more internationally diversified than the largest companies in the United State and United Kingdom.
  • Australia’s large internationally diversified companies create more value for shareholders and tend to outperform domestically focused companies.

Business models for success in Asian markets

China

Qiao Ma examined the evolution of domestic brands in China to develop learnings about what is required to be truly competitive in the Chinese market. She said the Chinese market had reached a point of incredible maturity with China’s consumption upgrade, the rise of the internet, cultural change in business, the acquisition and integration of international brands, sophisticated marketing and distribution strategies and the effective use of data.

For Australian companies to be competitive in China it was concluded that:

  • Proper levels of investment are essential.
  • A focused and empowered team is needed on the ground.
  • IT infrastructure is a must.
  • Local offices need to have an entrepreneurial culture.

India

Mary Manning considered how the best multinationals invest in India and drive market share, profitability and returns. At a headline level it is important to recognise that India is not the next China and in terms of effective business models and strategies there is no ‘one-size-fits-all’ approach.  

The research finds that with proper execution, India can provide multinational companies with superior shareholder returns and when specifically compared to the Australian market, higher returns on equity in all sectors except materials.

Similar however to China, India also requires meaningful investment and a localisation strategy with ‘boots on the ground’.

Selection of new case studies

Winning in Asia also features eight case studies of Australian public and private companies from different sectors that have succeeded in Asian markets in addition to 14 other case studies of non-Australian companies.

The Match Fit 2.0 section of the report analyses the Asia capabilities of 1,705 board members and senior executives across ASX 200 companies and finds that more than 90 per cent of senior leaders would not qualify as Asia-capable. While the headline number does not appear strong, a high benchmark was set for being considered Asia-capable.

The report also dedicates a section to best practice in external affairs and how to best manage stakeholders, brand and reputation in Asia. It concludes by detailing 14 evidence-based strategies for business, government, intermediaries, peak bodies, business councils and industry bodies for winning in Asia.

​Panel discussion snapshots

Christine Holgate:

“The days of just putting it on someone’s web site here and hoping it sells in Singapore or China are over. You really need to invest in a local presence and you need to have done your risk assessment for your board which really underpins the whole legal and operating environment, your cash perspective and how you are going to manage your inventory. It is really critical that your board and shareholders are brought in on your journey. It’s not a quick win, it requires patience and it requires investment.”

Tony Lombardo:

“You then assess your own capabilities that you have, and I think this is important about competitive advantage. You have to understand what you bring to that market, either from a service or a product level, and why people are going to deal with you. And Australian brands do have a level of trust, so it’s making sure you go in with the appropriate purpose to really drive what you are trying to deliver.”

Diane Smith-Gander AO:

“Until Australian boards start telling their nomination committees and search consultants that they need an Asia-capable director, we are not going to get very much action. Of course, the intriguing thing about this is, the point you realise you need an Asian [capable] director … that is probably two years past the point that you needed that director.”

Sid Myer AM:

“Private companies tend to be family companies. The interrelationships between family and business in Asia is strong, if not very strong and I think families like doing business with families, hence I think the notion of a family orientation to business unions within the region is a very strong positive and that’s possibly part of the underbelly of what makes family businesses connect well and do well in the region.”

The road to recovery

In closing the launch, Ainslie van Onselen said looking beyond COVID-19 and down the road of long-term recovery, Australia’s future prosperity will rest in part with its ability to trade with and invest in Asia.

The proof is to look at the superior shareholder returns in recent years from companies investing in offshore expansion. In the past five years, the number of ASX-listed companies exporting to Asia increased by 10 per cent evidencing the growing significance of exports to a company’s revenue performance.

One single unified action that all companies can do to strengthen their chances of success is to be Asia-capable. “So, there is a key opportunity there as senior leaders to develop the cultural skills needed to execute on the opportunities, particularly as Australia transitions to more service-driven outbound investment,” Ms van Onselen said.

View the full launch event video here:

Download a copy of Winning in Asia.