Aussie businesses set to gain $138 billion if they take up Asia opportunity

In 1900, Australia exported goods valued at £40 million to our primary trading partner the United Kingdom. The total trade with the UK was more than five times the total trade with Australia's second-largest trading partner, the USA – a strong reflection of Australia’s close historical association with the British Empire.

Unsurprisingly, Australia’s trading profile has shifted dramatically. Australian trade is now firmly centered on sizable and growing Asian markets. The key trading partners of ChinaJapan and Korea accounted for $A147 billion of Australia’s exports in 2015 – in stark contrast to the relationship with the UK where exports stood at $A3.8 billion.

" Asian consumers are increasingly demanding high quality products and services."
Fred Ohlsson, ANZ Group Executive, Australia

For Australian business, the weight of numbers is obvious.

ANZ’s latest  Opportunity Asia report, which surveyed 1000 companies, including ones which have succeeded in Asia, identifies some critical elements of success in what is a complex and challenging region.

Businesses with existing operations in Asia have a turnover 16 per cent higher than those who were domestically focused. Nearly three quarters of the businesses ANZ spoke to acknowledge their profit margins from the Asian region are higher or comparable to their domestic profit margins.

The lure of Asia is clear: 87 per cent of companies who are planning to embark on Asian expansion say they will do so within three years. If they act on these intentions they stand to gain $138 billion in additional revenue.

The Asian Century

Bolstered by rising disposable incomes, increasing urbanisation, improving infrastructure and consumer affluence, Asian consumers are increasingly demanding high quality products and services, with many Australian businesses capitalising on the demographic shift.

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In September, Wine Australia reported China has surpassed the United States as Australia’s most valuable wine export market. Exports to mainland China grew by 51 per cent to A$474 million - just a decade ago, Australian wine exports to China were valued at $A27 million.

PwC research indicates that by 2030, four of the world's five largest economies in purchasing power parity terms will be in Asia, with the region accounting for more than 50 per cent of global GDP.

Asia will be home to 3.2 billion members of the consuming class, many of whom will live in 21 of the world’s 37 megacities, which will be located in Asia.

The sheer size of growth is difficult to fathom, however, it’s abundantly clear sizable opportunities await for Australian businesses.

Size of the prize

More Australian businesses can benefit from all that Asia has to offer.

Coates Signco, a visual communications business in the quick service restaurant and broader retail industry, is one Australian business who has experienced the benefits of Asian expansion.

Starting Asian operations in 2011, Coates Signco now has 35 people on the ground and has experienced 100 per cent growth, driven by a culture of innovation, committed people and investment into technology.

Opportunity Asia - Coates Signco

Not as hard as many perceive

We understand taking a business across borders is a big decision. Encouragingly, the report indicates businesses like Coates Signco which do make the move into Asia find the transition comparable to, and in some cases more straightforward, than seeking growth in other markets.

Sixty per cent of businesses surveyed said accessing capital for their Asian expansion was no different than securing funds for other markets.

Over half of those surveyed said managing the business and marketing activities in Asia were on par with other international experiences:

- The challenge of predicting demand (57 per cent);

- Mastering eCommerce (63 per cent); and

- Deploying marketing strategies (56 per cent).

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With the seismic demographic shift across the region, many Australian businesses already have a strong, profitable presence in Asia.

Demonstrating sustainable returns will encourage other Australian businesses to consider how they too can create a business which realises the benefits of growth into Asia.

Fred Ohlsson is Group Executive, Australia at ANZ

To read the 2017 Opportunity Asia report click here.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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