A ground-breaking study by IML, Asialink and PwC reveals alarmingly low level of Asia capability on Australian boards and senior leadership teams
IML has partnered with AsiaLink and PwC to produce ground-breaking research on the capabilities of Australian leaders to understand and do business in the Asian marketplace. The results provide a sobering look at the shortfalls of our leaders, and the report offers solutions to the current lack of sophisticated knowledge of Asian business and culture.
Match Fit: Shaping Asia capable leaders reveals an alarmingly low level of Asia capability on Australian boards and senior leadership teams, with 90% of ASX 200 companies and 82% of the top 30 private companies not adequately equipped to do business in Asia.
Match Fit assesses Australian leadership on six key ‘Asia capabilities’, critical skills in business management in Asia, including:
- Sophisticated knowledge of Asian markets
- Extensive experience operating in Asia
- Long-term trusted relationships in the region
- Ability to adapt behaviour to Asian cultural contexts
- Capacity to deal with government
- Useful level of language proficiency
Key Findings from the research
The ground-breaking research reveals that:
- 90% of ASX 200 companies are not adequately equipped to do business in Asia
- Only 19% of ASX 200 boards are Asia capable
- Only 14% of ASX 200 senior executive teams are Asia capable
- 82% of BRW top 30 private companies are not Asia capable
- Senior executives from private companies had a significantly higher level of Asia capability than their ASX 200 counterparts
- Non-listed board directors showed a lower level of Asia capability than their listed company counterparts
- Top Asia capable industries include energy and resources, and financial services
- Of the top 30 most Asia capable companies on the ASX 200, 20% were in energy, resources and mining and 20% were in financial services.
- Least Asia capable ASX 200 companies belonged to healthcare and pharmaceuticals, and manufacturing industries
- Senior executive females are more Asia capable than males, while the reverse is true for boards
- Large cap companies’ directors are 2-3 times more Asia capable than their smaller cap counterparts across all of the capabilities.
The Case for change – Why Asia capabilities are central to business success
There is no question that if our businesses want to evolve, grow and innovate they need to look to Asia.
With 12.2% of Australians declaring Asian ancestral background in the 2016 Census, access to Asian markets is critical to Australia’s economic future – for many companies, success will depend on their ability to harness the opportunities presented by Asia’s rising middle classes (which will represent 66% of the global middle class by 2030)
Research reveals a strong link between business performance and the proportion of senior business leaders with sophisticated knowledge of Asian markets, understanding of cultural nuances and extensive experience in Asia. 80% of ASX 200 companies with board members and senior executive that have a high level of Asia capability derive more than 40% of their total revenue from Asia.
Fostering Asia capabilities
Our Match Fit report calls for urgent action by business leaders to invest in fostering Asia capabilities, especially at the leadership level, as a matter of top priority. Strengthening Asia capability involves a dedicated commitment to cultivating these skills at the leadership level. The report also calls for:
- Shifting mindsets: acknowledge the importance of Asia to securing Australian economic growth and prosperity and shift industry mindset towards pursuing long-term growth rather than short-term returns.
- Myth-busting risk in Asia: understand the risks of a market in the context of their own business, through market research, scoping opportunities and due diligence.
- Recruiting Asia capable talent: including, but is not limited to, expatriates returning from Asia. Consider engaging an Asia capable advisory board to support their strategic positioning in the region.
- Reporting market specific results: identify market-specific results for financial reports to avoid a situation where positive growth in one market is overshadowed by lower or negative growth in another market.
- Raising awareness and removing bias: erase bias against foreign income in Australia, and raise awareness on how vital our trade and investment relationship with Asia is to securing jobs and growth in Australia.