Businesses around the world are recognising the growth potential of Asia. Incredibly diverse, it has wide cultural differences and varying levels of political maturity, governmental regulation and technological infrastructure. It is also subject to extremes of nature which can severely impact people and infrastructure. Jim Clarke, senior vice president of Telstra International Global Carrier Services, believes this diversity is central to the business opportunity, but creates a number of potential risks which must be addressed.
The extreme diversity of culture, affluence and levels of development across over 35 countries in Asia-Pacific brings a multitude of challenges that must be considered from the first stages of expansion planning in Asia.
The relative level of technological infrastructure available to businesses differs greatly; in particular:
- Network connectivity and built-in redundancy
- Availability and price of bandwidth
- Allocation and management of spectrum, real estate and electrical power
Understanding localised infrastructure issues can be both resource- and time-consuming, but knowledge of local market capabilities is crucial. Organisations that can adapt to varying regional conditions and are robust enough to manage international expansion will see the most return on investment.
Regulatory frameworks across Asia also vary widely. This not only impacts the process of entering a market, but also brings other considerations such as ensuring the protection of critical data. Unlike in Europe, standardisation of business and technology regulation will not be seen in Asia for the foreseeable future.
In regions where regulations are still being formed, ensuring data protection and security of intellectual property (IP) is another key concern. Many sales organisations therefore locate their customer databases in countries which they classify as ‘less risky’.
Many countries across Asia have mature and stable political environments, but in a number of countries the political situation is considerably more volatile than in the West. Furthermore, the region is more susceptible to extreme weather and natural events which can have a severe impact on business operations.
Due to the risks of rapid political change or natural disaster, companies must carefully consider how to manage their data and systems, especially in isolated locations. Without sufficient redundancy and back-up networks, the threat of business downtime will severely impact the potential success of the expansion.
Diversity across Asia is most apparent in the cultural differences. For all customer interaction, local culture must be the biggest consideration. It is crucial to understand how to build trusted relationships with suppliers and customers, and how to effectively negotiate prices.
While much international business is conducted in English, success often boils down to a deep understanding of local culture and language, yet regional offices must be consistent in their overall business approach and sales messages.
For businesses planning to expand into Asia, it’s imperative to use a trusted third party partner who has seen the region’s development, understands the regulatory environment and has the knowledge of the kinds of applications and services that local customers are demanding.