With the spotlight heavily on Asia following the launch of the Australian Government’s “Australia in the Asian Century” whitepaper(opens in new tab), Australians are being encouraged to seize the opportunities of the Asian century, as the region transforms into the economic powerhouse of the world.
In recent years, Asia has become the key hub in the global supply chain as many multinational corporations move manufacturing(opens in new tab) operations to lower cost locations, such as China.
The manufacturing, distribution and logistics market is growing at a significant rate in the region as a result. Research firm Frost and Sullivan(opens in new tab) estimates that the transportation and logistics market in Asia Pacific will grow at a compound annual growth rate of over seven percent from 2011-2016, to reach over $4 trillion by 2016.
Expansion increasingly by necessity
Many Australian manufacturers, wholesalers and distributors have been expanding into Asia for years, driven by desire for growth and global success. This has enabled them to source the best materials for the best price from any global market, and to reach new markets, distributors and customers wherever they are.
For others, however, increasing global pressures are forcing them to expand beyond Australia’s borders not by choice, but for survival. This is largely driven by factors beyond their control, particularly the strong Australian dollar, Australia’s industrial relations and regulatory framework, higher direct costs, a relatively small domestic market, weak private sector spending, the impact of cheap imports and goods into Australia and fierce manufacturing competition, particularly from Asia.
Over the past two years, many high profile cases of iconic Australian brands, such as Bonds, King Gee, Hard Yakka, Mortein, Dettol and Streets, have offshored various manufacturing and distribution operations to Asia in order to survive. Despite being strong local brands with the latest state of the art manufacturing technology and efficient processes in place, these businesses have needed to embrace Asia to stay relative and competitive.
Significant job cuts show how increasingly vulnerable we are to international economic conditions. The manufacturing sector employed 16 percent of Australia's workforce 30 years ago; today it is half that, with 4,400 jobs lost in the past year alone.
Global expansion is never easy
While many foresee their business future in Asia, just as many hesitate on the doorstep of this economic powerhouse, wondering how to break into a diverse market where languages, currencies, regulations, and cultural morays are not only so different from Australia, but also significantly different within the region.
How do you best set up a functional business quickly and affordably in Asia with the lowest level of risk possible? What’s the easiest way to move a business or open a subsidiary there, while maintaining control from an Australian headquarters? How can you minimize the cost of IT systems choking growth plans, while still managing multi-currency, multi-language, multiple reporting requirements and financial consolidation of all subsidiaries?
These are complex business questions that require case-by-case market analysis. Regardless of the differences, the key is to not allow a great business decision to become derailed by a costly and time consuming IT decision.
Cloud speeds up new market entry
Cloud computing(opens in new tab) is playing a crucial role in helping Australian companies expand into Asia more easily and cost effectively, by giving them the agility and flexibility to set up new businesses operations. It provides the ability to operate in global markets in real-time and establish a core platform for manufacturing, distribution, customers and supply chain. In addition, the speed of implementing cloud solutions gives businesses rapid entry into foreign markets that legacy on-premise software would not offer.
Now you can establish a comprehensive core platform for business management, particularly for key back-office operations and financial business processes, without the huge costs and manpower required to install, operate and maintain hardware and software systems.
By understanding the benefits of cloud computing, your business stands to gain a real competitive advantage as Asia continues its economic transformation.
By Mark Troselj, managing director of Asia Pacific for NetSuite