As a nation, Australia is linking with Asia in more ways than ever before. It’s a development opening up a wealth of opportunities for the business community in the region, particularly small- and medium-sized companies.
Business leaders from around the country came together recently to discuss opportunities. Below are five insights they shared.
1. The opportunities have never been greater
Businesses of all sizes are eager to tap into the opportunities of a changing Asia. As new Prime Minister Malcolm Turnbull said recently, businesses recognise the global economy is bigger and more open than ever before and is changing more quickly than ever before.
A succession of bilateral and regional free trade agreements are opening the door more widely to one surging consumer market after the next across the Asia-Pacific.
2. The China-Australia free trade agreement (ChAFTA) is critical
ChAFTA will be critical to Australia’s prosperity. As a platform for growth, it opens-up access to the world’s largest consumer market.
Take a sector like dairy. China is the world’s biggest dairy import market and a key target for the Australian dairy industry.
ChAFTA is a platform to enable this growth. It will give Australian businesses the option to play at every level of the product and distribution network to take advantage of the enormous consumer market opportunities China represents.
The agreement will also benefit businesses that already have a strong foothold in China. The Old Colonial Cookie Company, which makes Butterfingers biscuits, is one such example. The company has seen their orders from China pick up after being introduced to buyers in 2014.
Under ChAFTA, the current Chinese tariffs of 15 per cent to 20 per cent on biscuits will be eliminated within four years of the FTA’s entry into-force. This means Australian biscuits like Butterfingers will be more competitive than ever before.
3. But it’s not just about China
While businesses recognise the potential in China, Australian companies are increasingly looking to engage other emerging Asian economies.
Consider Indonesia, with a population of over 250 million (of which half are under 30) and a GDP growth rate of more than 5 per cent. Indonesia is emerging as an Asian giant. It is the largest economy in South East Asia and the 15th largest economy in the world.
More and more Australian businesses are recognising the market potential of our closest neighbour.
South Australian jam and condiment maker, Beerenberg, for example, has been selling jams to Indonesia since the mid-1990s, and initially targeted luxury hotels.
But Indonesia’s surging middle classes, and developing appetite for premium food products has meant Beerenberg now markets and distributes its products throughout Jakarta’s supermarkets.
“The opportunities for Australian business in markets like Indonesia are diverse, but access to practical information and market insights is critical to success,” Asialink Business Director of Research and Information, Megan Mulia, who has overseen the Country Starter Packs said.
4. Embracing innovation is key
“Technology has changed the way we engage with others all over the world,” federal small business minister Kelly O’Dwyer said at the launch. “We all know changes in technology have presented – and are still presenting – enormous opportunities for businesses. We just need to make sure we’re able to seize them.”
Businesses need to be nimble and entrepreneurial, and see themselves as innovators, not just exporters if they are to claim their share of opportunity in Asia.
Those that are stuck in the mindset of Australia solely as an exporter of surplus product or bulk commodities will go by the wayside.
Being innovative involves having the customer front and centre of mind. It involves tailoring products to match the distinct tastes and attributes of Asia’s diverse markets and consumers. China’s population, for example, is over 50 times bigger than Australia, and profound differences exist from region to region, province to province and city to city.
Emerging channels such as e-commerce can offer an innovative avenue for sales and marketing. In China, the number of online shoppers is expected to reach 350 million people this year and will be worth $A840 billion by 2020.
5. Business needs to take the lead
With opportunity Asia firmly on their horizon, businesses in all sectors increasingly understand that they need to step-up to the challenge.
Take the Australian services sector. Recent research by Asialink Business, ANZ and PwC showed that if we invest in building the right skills and knowledge now, Australian services exports alone to Asia could be worth over $A160 billion and create more than one million jobs, by 2030.
Yet companies all around Australia have told us that it is not a lack of awareness about the opportunity in Asia that is holding them back – it is a lack of market insights and practical tools.
In fact, in a survey by Asialink Business in 2014, supported by the Business Council of Australia and the Australian Industry Group, business told us that a gap in comprehensive information about Asian markets was one of the biggest hurdles they faced.
The statistics speak for themselves. Small and medium businesses still constitute only a tiny slice of Australia’s total merchandise and service exports.
Australian Bureau of Statistics data from 2013 to 2014 shows of Australia’s two million companies, only 45,000 exported goods overseas. Of these exporters, 338 were responsible for the export of more than $A233 billion (or 85 per cent) of Australia’s $A273 billion of goods exports that year.
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Source credit: Mukund Narayanamurti is the CEO of Asialink Business