Over the past 18 months or so, the media coverage spawned from political and business circles has focused firmly on the enormous potential many Australian businesses face in Asia, in the wake of the newly formed free trade agreements with China, Japan and South Korea. This has been accompanied by a great deal of rhetoric too, about the fact that this will mean less reliance on the Australian resource sector, a necessity if we are to create a more diversified, and more stable economic future.

But in amongst all if this, a recent study by the Diversity Council of Australia has highlighted the very sobering truth: Despite new agreements that make it easier than ever before, Australian businesses – by and large – are not ready to do business with Asia.

What does this mean?

Key findings from the survey conclude:

• There is a strong business case for fostering Asian capability (A-Cap)*. Asia represents more than 60% of our total export market. More than half of the world’s population lives in Asia and its consumer demand is currently worth US$ 10 trillion annually.
• One-third of Australian workers have low A-Cap. While one in ten have excellent Asia capability, one third have none or very little. Close to two-thirds of workers have no or ‘very little’ working knowledge of how to effectively manage in Asian business contexts.
• Fluency in Asian languages is low. Only 5.1% of workers are fluent in one or more Asian languages, that is, they can comfortably discuss and write about highly complex issues with colleagues/clients in an Asian language.
• Having business interests in Asia doesn’t guarantee A-Cap. Workers in organisations with Asian business interests are about 50% less likely to less likely to have excellent Asia capability when compared with workers in an organisation with an Asian head office.
• There is too much talk and not enough action. On the whole, the sentiment from an employee perspective is that while organisations value A-Cap, they are not necessarily fully utilising this capability.

The simple fact is that many Australian businesses doing business in Asia for the first time will be given limited opportunities to get it right. Conducting business in Asia is not the same as doing business in Europe or America or the UK. Asians are hard working, complex and fastidious. Perhaps more critically, the business and social culture of Asia is fraught with behaviours and customs and beliefs that are steeped in tradition. Australians need to learn, understand and accept these customs and practices before long-term successful relationships can begin to be formed.

What’s more, these cultural nuances are different across Japan, China and South Korea. To believe one is identical to the other is akin to believing that Australians and New Zealanders are the same. This is just not true. There are many similarities, but there are also big differences. Australian businesses wanting to forge business relationships with Asia need to be acutely aware of the cultural diversity of our neighbours and need to develop intercultural competence.

The solution

Australian organisations can improve their Asia capability in the short-term by focusing on recruiting the A-Cap talent they need in areas that might be lacking. Cultural Chameleon can also help. If your business needs to develop cross-cultural competence, talk to us.

* Asia capability’ (A-Cap) is defined as individuals’ ability to interact effectively in Asian countries and cultures, and with people from Asian cultural backgrounds, to achieve work goals.