We are in the early phase of the growth cycle. The broader business environment is still characterised by heightened caution and a degree of uncertainty, particularly in advanced economies following on from the European debt crisis.
So business is still somewhat nervous, which is good news for those are prepared to be adventurous.
Why wait until it is really obvious that the world economy is growing? By then markets are more crowded and capital gets more expensive.
From a growth perspective, this opportunity is right on our door step. In the next ten to 15 years, growth in Australia is going to pale in comparison with growth in Asia.
Really, forget the old advice of lining up meetings and hopping on a plane. There are plenty of highly competitive companies from around the world operating in Asia and Chinese entrepreneurs are a force unto themselves. But the growth opportunities are there and it is only going to get more crowded as the world recovers.
A recent AsiaLink survey called 'Engaging Asia' showed that finding and building relationships with local partners in Asia was the primary concern for Australian companies doing business in the region.
Many of the top challenges relate to cultural capability, human resource strategies, negotiating, making sales and finding partners. But two out of the five companies surveyed had sought assistance and advice from industry associations and Austrade. And professional services firms including accounting, legal and management consulting firms are the next most popular form of assistance.
One of the best ways to build relationships is to use existing relationships. Following your existing customers to other countries where they operate is a very risk-adverse approach and makes is easier to start building out your circle of influence.
You still have to choose your partners very carefully and you want to know them personally. One client of ours, which is a small business, has spent 25 years investing in relationships and that has really paid off.
The opportunity on our door step was reinforced by my fellow speaker at the conference, IBIS chairman Phil Ruthven.
Ruthven makes the great point that China, on its own, has averaged 8.25 per cent real growth in the last 55 years.
“We have never seen that in the history of the world and it will keep growing at about 8 per cent,” he says.
I see no reason it will stop, either. Sure, the economic and regulatory institutions are still developing and it can be hard to execute in a developing country. And the regional governments in China can be problematic. But we are constantly getting reliable evidence there is political commitment to reform and if China’s going to continue to generate higher living standards, that reform has to continue.
That will also mean concern about how to do business in China is going to ease.
It’s not just China that offers great opportunities. The same urbanisation and development trends we are seeing in China and India are occurring in smaller markets, too, as South East Asia comes to the fore.
There are great opportunities if businesses focus on the next wave of goods and services the rapidly expanding middle and upper classes in ASEAN will buy.
Trade between China and ASEAN economies has grown at an average of 20 per cent a year, reaching around $400 billion in 2013. This growing integration has implications and opportunities for both Australia and New Zealand.
As Ruthven said, Asia is now 41 per cent of the global economy, and 'lucky country' Australia is still lucky due to its close proximity.
ASEAN is made up of a very young population, with the rise of the consumer and development of the service sector.
That’s good news, because you don’t just want to conquer China. It is less risky to have a focus on more than one market. In fact, a complementary market strategy is best.
More good news is the free trade agreements being negotiated with the Australian Government and other countries. Although they are sometimes dismissed as largely symbolic, such agreements open up many opportunities and get momentum in train. One worry is that inspections are increasing, but with FTAs come responsibilities and opportunities.
What’s also changing is the recognition that it takes resources and time to put the rigour into assessing new opportunities, although there are now more resources and assistance to help companies explore.
A conversation with the bank at an early stage on how to handle a multi-geographic strategy is essential.
Many banks can provide trade finance, but not corporate accounts or transaction banking platforms. This can mean you have limited visibility on offshore accounts, and other limitations which can hurt at a time when you want to focus on business growth.
Click here to read AsiaLink's 'Engaging Asia' survey.