Companies lack Asia facts

Business Asia, August 2, 1999 by Cameron Cooper

Time to enter market now, experts claim

A lack of true knowledge about regional markets remains a stumbling block for Australian companies hoping to enter a rejuvenated Asia.

So says Peter Church, managing director of the ASEAN Focus Group and author of "Added Value", a new book profiling leading South East Asian business people.

"Even within our established companies in Australia there's a very risk-averse profile," he said. "I believe a lot of that comes from the boards of our major corporations which do not have represented on them significant Asia expertise."

Church claims too many CEOs listen to the negative media reports on Asia and think: "No way."

He said Australian companies must get a foothold in Asia now or risk missing out on the benefits of the region's apparent turnaround. As Asia's middle class recovers, he suggests they will want the same goods and services that Westerners take for granted.

"I'm looking at it through the eyes of an Asian (business person) because what they do is trawl around the West looking for ideas that we've had and they take them back to their own countries. Why can't we do the same?" Church asks.

Is Asia's recovery real? Well, if you believe the economists: yes.

South Korea leads the way, with its growth rate for this year forecast at 7.5 per cent. Elsewhere, Japanese consumption seems to be on the rise, reforms are biting in Thailand, and strongholds such as Singapore and Taiwan retain their competitiveness. Even Indonesia offers some hope: economic growth of 4 per cent has been forecast in 2000.

Salomon Smith Barney economist Alex Erskine offers a word of caution, however, in suggesting that Asia's revival is not an inflationary recovery: "So when Asia gets back on its feet it will be incredibly competitive. Therefore, Australia will have to be on its guard."

Richard Martin, the director of International Market Assessment and The Economist Intelligence Unit (EIU) in Sydney, believes world-wide scepticism still prevails about Asia, a factor he says favours Australian companies.

"Asia is not hot, it's not sexy (any more), therefore there'll be less of a crowd in Asia," he said.

Church takes heart from upbeat economic reports but restates that time is running out on two fronts for Australian investors: advantages with the Australian dollar are waning as Asian exchange rates improve, and Asian companies now embracing Western investment may soon go cold as regional economies improve.

"The people who should be looking at Asia should have been looking at Asia six years ago, two years ago and now," Church said.

"There could be another downturn and we have to be mindful of that, but if you're interested in foreign direct investment, then you can't wait too much longer."