Business expansion - Asia on the horizon - Business Works
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Business expansion - Asia on the horizon

Tom Homer, CEO EMEA, Telstra Global Despite the global downturn, economies across Asia have gone from strength to strength as the world becomes increasingly dynamic. Asia has become a driver of the global economy, which is expected to support a population of nine billion by 2050. As international businesses look for expansion overseas, the region presents some of the best opportunities for growth. With middle class spending power expected to double to $56 trillion by 2030, the increasing demand for scalable infrastructure and services and agile business models for sustainable growth will require an investment of over $7.5 trillion by 2020.

Whilst accounting for more than half of global output by 2050, Asia also presents unique challenges: it is incredibly diverse, with wide cultural differences in each country and varying levels of political maturity, governmental regulation and technological infrastructure. As the centre of the world economy moves east, global businesses must shift strategies to take advantage of the opportunities presented.

An uncertain future

As businesses look to Asia for growth, they must also be aware that the future of Asia is uncertain. It’s a young economy which, although growing quickly, involves a number of factors that affect its outlook.

First are the demographic considerations of each country. The population of Asia is divided between wealth and poverty. How this develops depends on a number of political and cultural factors, such as health and education. Businesses looking to engage with communities in markets across Asia must be aware of these factors, not just in understanding the market place, but also the ‘people factor’. The growth of the region needs to be inclusive by addressing wealth and poverty.

A convergence is imminent between the developed and developing parts of Asia Pacific. There are two sets of economies in the region: advanced economies such as Australia, Japan, Singapore, Hong Kong, Taiwan and Korea; and developing economies like Indonesia, Malaysia, Thailand and the Philippines. This diversity presents a challenge to western businesses looking to operate in Asia Pacific.

Harnessing diversity

The diversity and uncertainty involves significant differences, opportunities and drawbacks for companies to be aware of when expanding into Asia. Global organisations must adapt strategies to account for differences between the markets, tackling economic, political, cultural and geographical challenges. Companies in Europe need to understand these better in order to be successful in the region.

There are also more profound challenges for western companies around law, business practices and cultures. As a managerial challenge, businesses need to develop an Asian mindset, becoming aware of local necessities and their effect on business practice. This was most recently evident for telecommunications providers in India, operating in an extremely challenging regulatory environment. New management strategies are emerging which present an alternative model where values like collective wisdom and engagement are becoming more important.

Businesses should never approach the whole region as one because each market presents unique challenges. This can only be achieved by taking a practical approach to market entry and being flexible and adaptable.

Within Asia there is also much diversity in maturity of the economies. The difference between developing and developed markets can be vast. For example, Vietnam is seen as having huge potential for growth, but its early growth stage can also present huge risks to businesses if there is a lack of practical knowledge.

There are significant differences between Asian countries in terms of economic growth, culture and language - with many pitfalls that businesses need to be aware of. It’s important to get a clear picture of the nuances of these regions, from either building direct experience within those countries or leaning on the wisdom of trusted partners to ensure approaches are well informed.

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