The vast majority of ASX 200 companies are not in a position to make the most out of doing business in Asia, a new study has found.
Corporate Australia urgently needs business leaders that understand and are experienced with Asia if the nation’s top companies are to thrive in the future.
However, new research undertaken by Asialink Business, with the support of PwC and the Institute of Managers and Leaders (IML), reveals 90% of the country’s top businesses are not fully ready.
With only 10% of the ASX 200, and just 18% of the BRW top 30 private companies demonstrating a high level of Asia skills and knowledge, Match fit: Shaping Asia capable leaders is something of a wakeup call to Australian business leaders.
Asialink Business CEO Mukund Narayanamurti said: “Having a long term growth strategy and the right capabilities is essential for succeeding in Asia, but many business leaders feel constrained by a lack of information, pressure to show short term results, negative public perceptions about Asian investment and analysts’ aversion to overseas investment.
“Asia is a competitive playing field. Just as we wouldn’t send our top athletes onto the field without ample training, we shouldn’t expect business leaders to kick winning goals in Asia until they are ‘match fit’.”
The research found that on the ASX 200, only 19% of board members are Asia ready, when assessed against six key Asia capabilities. These are:
Senior executives performed even more poorly - only 14% were Asia capable. The study also revealed trends based on market capitalisation and industry: large public companies out-performed smaller ones. Energy and resources and financial services sectors were the best performing industries, while manufacturing and healthcare and pharmaceuticals were the least match-fit for Asia.
Andrew Parker, PwC Asia Practice Leader said: "While there are some pockets of strength, the overall lack of Asia readiness revealed by this study is troubling although perhaps not unsurprising given the relatively limited investment of Australia’s largest businesses in Asia.
"If the last 25 years have been about shipping our commodities to Asia, the coming decades will be a story of services and consumption fuelled by a rapidly expanding Asian middle-class. If we aspire to be more than casual observers, Australian businesses will need to be where the consumers are - and that is increasingly in Asia.
"From the boardroom to the shop floor, our business leaders urgently need to invest in developing the capabilities and the talent that are essential for success in the region. Future generations will not mark us kindly if we do not get this right.”
While there is still significant room for improvement, non-listed companies proved more agile in Asia, often outperforming their ASX colleagues, especially at the senior executive level.