The journey for multinationals in forming these partnerships, navigating the numerous cultural and regulatory nuances of the Chinese markets and implementing the ‘Think Local, Act Global’ mantra, has not been without its headaches.
Some global multinationals have ran afoul of Chinese cultural norms when the advertising run on television and in print was considered offensive and insulting by Chinese viewers, requiring, in some instances, a full public apology for their missteps.
In most instances, companies which have seen success in China have acknowledged this type of mistake, while costly, are part of the landscape of doing business in the country and have had to reshape their corporate thinking along these lines in order to survive.
“The key to success is to have fully assessed your markets and risks, and be invested – really invested – in knowing your customers and partners, your government touch points and stakeholders,” PWC said in a 2013 report.
Australian business in ASEAN now
Australian business experience in ASEAN to this point would suggest similar maxims for success can and should be applied to approaching business in ASEAN.
Anecdotally it can be seen business which has invested in longer term ‘ride-it-out’ strategies across the ASEAN region have seen most success.
Australian logistics giant Linfox has been in the ASEAN region since 1992 and has carefully invested time on the ground in each of the countries in which they operate to properly understand the operating environment before entering.
International CEO for Linfox Greg Thomas noted the company’s plans for expansion in the ASEAN region in early 2018.
“Investigating strategic acquisition opportunities and joint ventures as well as building capabilities internally…and committing resources to gain a better understanding of the logistics requirements in these countries,” he said.
Similarly Blackmores which, having recently weathered a substantial drop in its share price as a result of the changing regulatory landscape in the ever shifting Chinese consumer market, continues to pursue opportunities to expand its footprint across ASEAN.
Peter Osborne, Blackmores Managing Director Asia, said the company views its key to success in the region as being driven by three factors.
“We employ very good country managers, typically from a multinational fast-moving consumer goods background, and build very strong local teams because they understand the market,” he said.
“Furthermore, we’re a brand that focuses on quality and we believe you have to educate your consumers and your partners about that.”
Missing the opportunity
Whilst these two examples of Australian success in the region highlight these companies’ commitment, strategic planning and corporate resilience, the reality of Australia’s engagement with the ASEAN region and in Asia more generally appears to be far less rosy.
PWC’s report Passing Us By: Why Australian businesses are missing the Asian opportunity presents a stark view of Australia’s lack of engagement with the region, which policy makers and business leaders have noted with increasing unease.
It states as at 2015, only 9 per cent of Australian businesses were operating in Asia and only 12 per cent had any experience of doing business in Asia at all. Perhaps more worryingly, the majority – around two thirds – of Australian business have no intention of changing its stance to doing business in the region in the next two to three years.
Australia’s hesitancy to engage means we are also falling behind other countries in our investment in the region.
Japan has more than doubled and China more than tripled its investments in Asian countries since 2007. And the EU contributed 22.4 per cent of total FDI inflow to ASEAN countries from 2011 to 2013.
Whilst Australian business has stepped up its engagement, its lack of on-the-ground presence in many ASEAN countries and preference for investment in lower growth markets like New Zealand, indicates a general reluctance to commit to the differing way of doing business the region requires for success.