Asia’s Century: Where and How to Win in Asia – BCG, by:Larry Kamener, Ross Love, Jim Minifie & Tom von Oertzen

Asia’s century has arrived. Asia is the world’s largest and fastest-growing regional economy.

By 2030, its real GDP is expected to more than double to US$67 trillion, outstripping GDP projections for Europe and the Americas combined. Its growth stems from three phenomena. First, Asian economies have sustained high investment in infrastructure, housing, industry, and human capital. By 2030, real investment in Asia could rise to as much as US$22 trillion per year. Second, Asian economies are increasingly sophisticated and integrated across the region and the globe; intra-regional trade in Asia has tripled since 2000. Third, rising household incomes  are causing a surge in consumer demand for a broad range of products and services.  Indeed, real consumption may reach US$45 trillion per year by 2030. This enormous growth raises the question, how can companies outside the region capture the Asia opportunity?

In Australia, many companies in the resources sector are already benefiting from the boom fuelled by Asian demand. But given the scale of growth, it is clear that untapped opportunities exist in other sectors, too. To find out where, The Boston Consulting Group conducted in-depth interviews at 13 leading Australian companies that operate in Asia outside the resources sector. Our findings offer valuable insights for companies around the globe that have an eye on the Asia prize.

Asia: Local Differences, Regional Advantages: 

The companies we surveyed demonstrate that there is no pan-Asia approach to entry and growth. Cultures, economics, demographics, and business practices differ widely across the region. For example, Japan’s slow-growth, technology-driven economy contrasts sharply with Vietnam’s high-growth, low-labour-cost economy. Asian consumers are different not only from Australian consumers but also from their peers in neighbouring countries—and even in different provinces within the same country.

Nor is there an approach that all companies can take to capture the Asia opportunity. Each of the Australian companies we surveyed has developed its own strategy, making smart overtures into Asian markets in the last few decades and reaping the rewards. Each faced its own challenges, but some common themes emerged. (See the sidebar below.)

The Australian Success Story

To understand Australia’s success in Asia outside the resources sector, first look at the following three core Australian capabilities:

  • A sophisticated skills and services sector
  •  A geographic advantage in the region
  • The ability to add value to natural assets such as grain and wool

Then consider how those capabilities intersect with the underlying drivers of Asia’s economic transformation:

  • High levels of investment in Asia are creating opportunities for Australian companies to participate in infrastructure development, the financial sector, human-capital investment, and resource development.
  •  The increasing sophistication and integration of Asian economies are creating opportunities for Australian companies to provide professional and technology services to Asian customers and to deploy transport and logistics capabilities to facilitate the linking of Asian economies.
  •  Growing consumer demand in Asia is providing avenues for Australian manufacturers of health care and pharmaceutical products. In addition, some Australian companies are developing new businesses to attract Asian tourists and are servicing the Asian demand for quality food products.
  • These drivers of growth in Asia, together with Australia’s capabilities, translate into nine specific areas, where companies must focus their efforts in order to succeed in Asia.

For all these organizations, Asian businesses are central to overall success—and most are already valuable financial contributors. Without exception, the companies we surveyed believe that entering Asia has strengthened their position and made them more productive and resilient. They have built their Asia businesses through such efforts as developing their staff; building scale; investing in capacity, technology, and intellectual property; and diversifying their cost and revenue bases.

To unlock the secrets to their success, we asked each company about its customer value proposition, how it achieved growth, and the key to its operating model in Asia. From our discussions, we concluded that companies that have succeeded in Asia have tailored their business models to reflect the importance of customization, relationships, and adaptability.


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