Five years after the release of the Asian Century White Paper, the nation’s top 200 companies are not “Asia ready” and not using local talent to tap into a rapidly growing market.
This is the finding of research by Asialink Business in partnership with PwC and the Institute of Managers and Leaders, which shows Australia’s top business leaders lack the skills needed to achieve business results in Asia.
The Match Fit: Shaping Asia Capable Leaders report analysed 1223 board members and 489 senior executives from the ASX 200. It also looked at the top 30 private Australian companies.
It found that 67 per cent of ASX 200 board members show no evidence of extensive experience operating in Asia, and 55 per cent demonstrate little to no knowledge of Asian markets.
It said 80 per cent of companies with board members and senior executives that have a high level of Asia capability report that more than 40 per cent of their revenue is derived from Asian markets. But only 55 of the ASX 200 report revenue from the Asian region.
The report also noted the lack of local Asian talent being deployed. It found female senior executives on the ASX 200 were at least four times more likely than their male counterparts to demonstrate Asia capabilities, but overall companies were not tapping into Asian talent.
Only about 4 per cent of the ASX 200 board members are of Asian descent, well below the 12.2 per cent of Australians declaring their Asian ancestral background from the top 30 countries in the 2016 census.
PwC Asia practice leader Andrew Parkers said it was unfortunate that many Australian companies did not value such skills and expertise.
He said a major reason why business was not moving into Asia was due to fear.
“There is a kind of a dominant logic that says, ‘it’s just too hard and just too risky’,” Mr Parkers said.
This fear was exacerbated by frequent media reports about risks of doing business in countries like China – such as the recent case against Crown Resorts’ staff as China’s authorities crack down on gambling as part of a wide campaign against official corruption.
While we shouldn’t underestimate the complexity of working in countries like China, he said, ignoring such a major growth opportunity on our doorstep would be a mistake.
Growth rates for some Asian countries were 5 per cent to 6 per cent annually, he said, which if tapped into would see Australia’s GDP rise. And despite a slowdown in China, for 2018, the IMF sees Chinese growth at 6.4 per cent.
“If you look back over the past 25 years we [Australia] have done well by putting our commodities in boats and shipping them to the region, and that’s helped feed a growing middle class,” he said.
“The big question for Australia is whether we can expect that environment to continue for the next 25 years. I would suggest it won’t.”
Institute of Managers and Leaders chief executive, David Pich, said there needed to be “a shift in industry mindset towards pursuing long-term growth instead of short-term returns”.
“Asia offers businesses the chance to achieve double-digit growth but these returns are characteristically seen in the medium to long term. If you want results in Asia, it’s important to have the right frameworks in place to foster these capabilities.”
The report notes that not all Australian businesses will choose to trade with or invest in Asia, but says “by making themselves more aware of Asian cultural values and mindsets, businesses will be better able to connect with a significant and growing level of Australia’s consumer demographic”.
Companies were judged against six capabilities: sophisticated knowledge of Asian markets, extensive experience operating in Asia, the existence of long-term trusted relationships in the region, the ability to adapt behaviour to Asian cultural contexts, capacity to deal with government, and a useful level of language proficiency.
By Nassim Khadem
Sydney Morning Herald