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How to make your long-distance relationship work
Finding a suitable business partner, like most aspects of doing business, takes effort and time.
It is also the first shift in mindset Australian businesses will need to understand if they are to succeed, especially in an Asian market.
"There is simply no substitute for getting on a plane and meeting someone.”
Finding a good and trusted partner can help a business navigate regulatory changes, better understand consumer sentiment and assist in a competitive market with different cultural and business norms.
A good business partner knows the missteps to avoid when it comes to tricky issues, from the mundane such as cultural practices to the serious such as corruption - while understanding government policy trends.
In my experience, Australian businesses don’t understand how valuable this relationship is and how to go about finding someone. However there are steps they can take.
The first step is to commit to creating a genuine partnership. And again, this takes time and effort.
Businesses should take a curious approach, talking and learning, and seeing where different ideas may work. Learn about the potential partner’s background and the work they have put into their own business.
It would be easy to think you are alone. But for businesses going into a market in South East Asia or China for the first time, resources are available to find people to talk to about possible partnerships.
Reaching out to the Australian government trade offices (Austrade) in the local region creates access to local staff who are highly knowledgeable about industries and key contacts. They can suggest where there could be a business match.
Add to that the many private consulting businesses (with on-the ground experience) which help guide the process and steer parties together in a constructive way.
There is a lot of talk about the value of face-to-face conversations, especially in a country like Indonesia where it is essential.
There is simply no substitute for getting on a plane and meeting someone - especially for traditional industries.
Newer industries, fueled by young entrepreneurs, can kick-start a conversation a different way and are comfortable with distance. However in the end there is nothing more powerful than taking the time and effort to meet someone.
Stay in touch
Taking a step into the Indonesian market is a bold move, especially as a first foray into the country. However Pnors Technology was looking for ways to grow the company and a new chairman with Indonesian experience opened the possibility.
CEO Paul Gallo had to overcome his own, and a common Australian perception, that Indonesia was unsafe and dangerous. He has since made many trips to meet potential partners, learn about where the technology could be used, and start to understand a complex nation.
“In Asia, it’s very important to build a relationship," Gallo says. "It’s even more important than having those products. Effective relationship building is very, very important as well as face-to-face interaction.”
Gallo travelled in-country with two Indonesia-based Australian affiliates, an adviser and the chairman to help him navigate the new territory and build an effective relationship. He relied on his affiliates to maintain the business relationship when he could not be there.
After entering the market alone, Pnors has now signed on two customers in the region. Gallo suggests finding a good partner early on was a smart business strategy.
Looking back, Gallo says he would not have gone into the region alone.
“I would find a suitable partner because then you can go to market much quicker," he says.
Although Pnors entered the market with an idea of where its technology would be of most use, they then found it could actually be applied elsewhere, in a sector that was more willing to take it on.
An achievement for a company that committed itself to meeting people and creating relationships.
When considering a move into a new country, it’s helpful to understand the background of a company, its people and its credentials. This is exactly the same for an overseas business looking in to Australia.
This may take longer than expected due to the different complexities of business in the region.
Reaching out to private advisory firms, including legal and financial, can help provide background information and detect possible hurdles, especially in keeping the business aligned with the laws of both countries.
There are also a growing number of Australians who have lived and worked in Asia and have incredible capability and networks, the true value of which many Australian businesses do not yet recognise or understand.
However, it’s important for businesses that have met a potential partner and found what seemed like an enthusiastic opportunity to make sure it doesn’t quickly slide away.
Large and well-organised trade delegations may be great for making initial introductions but not so good on the follow-up. Some extra help may be required.
Once a potential relationship has started and feels right, it is vital not to let it slip. It can take multiple visits and calls to maintain a relationship to the point where the business is actually on the table.
A senior trade official in Asia once remarked, "a third of our time is spent dealing with problems, usually through miscommunication with partners".
This may not always be physically possible but there are other culturally meaningful ways to stay in touch and develop trust and respect.
Finding a partner with a shared intent, who has similar values and a shared vision, can help pave the way to a stronger presence in-country.
For some, this seems like too much trouble; all that time and money on an opportunity cost for an unknown return.
However by getting to know someone, in market, the opportunities will become clearer.
ANZ’s 2017 Opportunity Asia Report indicates 33 per cent of Australian businesses preferred a joint venture method of market entry into Asia.
In the report, about a third of businesses with established Asian businesses entered the market via joint ventures or through direct exporting.
However, 47 per cent of businesses planning to commence exporting list joint ventures for establishing Asian operations as their primary choice.
Joint ventures can lower barriers to entry with lower establishment costs, less hassle and the joint venture partner can provide a better understanding of the local market and customer base.
They also enable Australian businesses to access local finances, human capital and other resources while spreading business risk across other companies in the event the business is unsuccessful.
The 2018 ANZ Opportunity Asia Report is due to be released in October 2018.
Helen Brown is managing editor at Bisnis Asia and a former Indonesian correspondent for the ABC and regular commentator on the region.
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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