How Australian SMEs can thrive in this high growth region
Over the past couple of years, Australia has signed free trade agreements with Japan, South Korea and most recently China, adding to the strong trading relationships Australia has with many countries in the region. As a result, Australian businesses are well-placed to take advantage of the tremendous opportunities Asia offers.
In the coming 15 years, China alone will contribute 30 per cent of growth in global consumption. India has surpassed the USA to be the world’s second largest online population. Indonesia’s e-commerce sector is growing rapidly as mobile connectivity spreads through its population of 250 million – in a globalised world where technology enables Australian businesses sell to customers from Melbourne to Mumbai and Newcastle to Nanjing, the potential for growth is endless.
Every business needs to understand the landscape in which they want to operate, but for small and medium enterprises it is even more critical because of the relative costs to the organisation of expansion. Doing business in Asia can seem daunting, so companies need to prepare if they are to correctly identify growth opportunities, overcoming some of the challenges in their target markets.
This is where a new study from the Economist Intelligence Unit (EIU) and Telstra can help. Connecting Capabilities: The Asian Digital Transformation Index analysed 11 major Asian economies, with comparisons made against Australia, the UK and the USA. It helps businesses understand the characteristics of the countries across three factors - digital infrastructure, human capital, and industry connectivity. For SMEs looking to enter Asia or expand their business there, it offers four key insights.
First, it demonstrates that Australian providers offering digital services enabling transformation are speaking to a receptive audience. Digital transformation is on the agenda of nearly all organisations in Asia, and they understand the benefits. Eighty-seven per cent of businesses say digital transformation will be important to their organisation over the next three years, while 72 per cent agree that investments in digital transformation have already proved their value.
Second, countries in Asia offer different standards of digital infrastructure, government policy and industry connectivity, which can make expanding across Asia a complex proposition. While Singapore, South Korea and Japan lead the way regionally in creating the conditions for digital transformation, the comparison data shows they still lag behind countries like the US, UK and Australia on many key measures. Large developing countries such as China, India, the Philippines and Indonesia have made great progress, but still have far to go in providing consistently high standards for infrastructure and talent.
Third, differences exist at an industry level too. Understanding the current digital capabilities of a target sector can help Australian businesses calibrate their offer accordingly. For example, the most globalised industries, including financial services and manufacturing, are further ahead in digital transformation. Other sectors such as transport and logistics are playing catch up.
Finally, skilled talent across the region is in short supply. Less than one-fifth of organisations find it very easy to identify employees with the right digital skills, opening up an opportunity for Australian firms to fill the skills gap. However, organisations that want to take advantage need to keep in mind how important in-country expertise will be to navigating the local business conditions.
Three steps to thriving in Asia
Businesses are often told they need a ‘strategy for Asia’. Yet Connecting Capabilities makes clear that any strategy has to a nuanced combination of different plans to fit the diverse economies of the various countries. Based on the insights from the EIU research, and my own experience of many years working across Asia, I have identified three pillars that should underpin an Asia strategy.
- Invest in partnerships
Partners are absolutely critical to succeeding in Asia. It’s important that you choose those who know your business as well as understanding how business in Asia works. At Telstra, we, have built key partner relationships such as the PBS joint venture in China and telkomtelstra in Indonesia, complementing our decades of experience in the region.
- Choose technology that enables efficient business growth
Technology should enable your business to expand across borders and communities quickly and efficiently, rather than being a barrier to your business growth. Organisations should look for and select, scalable, common frameworks that break down boundaries to provide access to chosen markets, but minimise management and scaling-up costs.
- Prioritise data security
Keeping valuable intellectual property and customer data secure when expanding into new countries will be top-of-mind for every business, especially when 46 per cent of organisations in Asia Pacific are affected by a security incident every month. Businesses need to consider security vendors that can put in place solutions that are appropriate for their organisations, while also being able to adapt to changing threats.
Connecting Capabilities is just one example of how we are empowering businesses to grow in Asia. The region is integral to our future plans and we are investing heavily in connectivity, expertise and solutions that enable our Australian business customers to make the most of the exciting opportunities that Asia offers.