Business needs to do more to improve Asian business ‘literacy’: Report

Businesses are putting pressure on the Government to help them expand into Asia, with a new report revealing Australian companies lack experience and skills when doing business in the region.

The report, titled Engaging Asia: Getting it right for Australian business, is based on a survey by industry body Australian Industry Group and Asialink, which promotes Asian countries and Australia’s role in Asia.

Asialink and AIG surveyed 380 Australian businesses to explore the extent to which Australian businesses are expanding into Asia, and whether they have the skills and capacity to support this growth.

Of the businesses surveyed – not all of which are currently operating in Asia – 74% indicated an interest in expanding into the region, with almost 50% actively planning expansion within 12 months.

Of the businesses with current dealings in Asia, 56% rated at least one of their Asian operations as “extremely important” or “highly important” to their overall business success.

China was rated as having the most impact on business success, with 69% of businesses with operations in China saying it is important to their overall performance.

The survey indicates Australian companies’ current dealings in or with Asia are dominated by trade activities more so than production or consultancy.

When asked about the importance of various business factors and skill sets when doing business in Asia, “quality product at accurate price point” and “quality partnerships” were identified as priorities.

But according to the survey, businesses believe a better understanding of local culture and staff is more important when engaging in production in an Asian economy.

According to Asialink chief executive Jenny McGregor, Australia’s trade performance with Asia is strong, but business investment in Asia is comparatively low.

“Australia still invests more in Europe and the US than we do in Asia… despite the growth opportunities,” she says.

McGregor says Australian companies’ hesitance to do business in Asia is not limited to language barriers.

“It is not just about languages… but about understanding the local culture, the legal and political hurdles – what has been termed ‘Asia literacy’. These are what gives investors confidence,” she says.

AIG chief executive Heather Ridout says the perceived skills gap presents some major challenges for both companies and public policy.

“The report recommends an Asia Ready Workforce strategy, which includes getting more Asia skills including languages… and support for existing programs aimed at encouraging and developing capabilities related to international business engagement,” Ridout says.

“This includes enhanced funding for what we see as the critically important Export Market Development Grants Scheme.”

Among the report’s other recommendations is the suggestion that the Prime Minister should appoint a “champion” for an Asia Ready Australian Workforce.

“The champion would be an opinion leader for business and drawn from outside politics to build awareness and galvanise action in the business community,” the report says.

Speaking at the launch of the report, Trade Minister Craig Emerson acknowledged the problems but said balancing Australia’s budget is a higher priority.

“It just comes down to the old-fashioned issue of money and being able to give priority to these things when we do need to consolidate the budget position,” he said.

This article first appeared on StartupSmart.