EDITOR’S COMMENT
Welcome to AFG Venture Dispatches, your insight into current issues and items of interest for Emerging, Technology and Growth Companies across Australia and Asia. This Edition reflects the shifting accent of Australia’s global trading relationships. Traditional ties are being augmented with new opportunities that exist with nearby growing economies. Articles, comments or letters are most welcome and can be sent to editor@afgventuregroup.com.
The next edition will be in June 2010 and will focus on Education, IT and Digital Media.
Contributions welcome.
Investing and Trading Globally – this month’s theme
“It is hardly possible to overrate the value, for the improvement of human beings, of things which bring them into contact with persons dissimilar to themselves and with modes of thought and action unlike those with which they are familiar… It is indispensable to be perpetually comparing [one's] own notions and customs with the experience and example of persons in different circumstances… There is no nation which does not need to borrow from others.”
John Stuart Mill (1806 – 1873)
Global trading and foreign investment are important to Australia’s development. In Australia’s formative years its natural resources and colonial relationship synchronised well with the industrially developing United Kingdom. Subsequent trading relationships were forged regionally particularly with manufacturing based economies that took advantage of our wealth in materials. Today Australia is moving beyond trading in just ‘rocks and crops’ to exporting services and intellectual property.
Australia is geographically well positioned to partner, trade and engage in the southeast Asian region. Most countries in Asia are increasing their own domestic consumption as well as exports of finished goods. The strength of the region has required a shift in the focus of Australia, who it trades with and how it carries out its business.
Successful trade and engagement requires adaptation to different markets and their needs. Cultures differ. Tastes, behaviors, values and beliefs are not shared or uniform. Broader outlooks and greater intelligence is required to manage across physical and cultural borders. Opportunities exist to re-imagine and re-engineer products, technologies, services and ways of doing, to fit the requirements of these new, larger and diverse markets.
Governments are playing their part to encourage greater cooperation between Asian nations through Free Trade Agreement’s (FTA’s) that aim to remove existing duties and trade barriers. They also foster greater engagement through trade missions and soft diplomacy via the arts and sport.
This edition looks at some of the issues of engagement. The future is now more closely tied to that of our close neighbours, with their expanding economies, increasing infrastructure and willingness to trade, engage and partner.
– Slavoj Zizeck (1949 – ).
Cultural Essentials for Success in Asia – Margaret Byrne, Principal Consultant, UGM Consulting
With many positive economic, strategic and geographical reasons, Margaret Bynes believes the conversation has moved from “Will we engage with Asia” to “How can we engage”. Some Australian companies have already ventured and things have gone wrong.
It seems cultural awareness is insufficient. Cultural intelligence is required, becoming more competent and adaptable in another culture, to achieve practical results. For Australian’s, it is seductive to think the use of English in business communication, will make developing a workable relationship with another country, easy. But language isn’t culture free.
Margaret presents what to be mindful of when communicating across cultures. Culture is the expression of the world-view of people, their behaviours, beliefs and values. Skills our outlined that will assist in promoting collaboration, clarity and mutual understanding in what can seem a puzzling and complex environment.
Danny Burrows sets out why exporters should closely examine Australia’s Free Trade Agreements (FTA’s) as there is value to be found within the reduction or elimination of customs duties. The focus is on trade and products but FTA’s also deals with services, foreign investment and a range of other issues that will greatly enhance sales in partner nations.
The onus is on exporters to provide significant direct savings to their customers and yet it only requires compliance to some simple procedures. Companies need to move beyond considering customs as a compliance and risk management issue. It is an opportunity to reduce costs for your importer customers, who can then purchase more, thereby increasing your revenue. Danny presents a table that demonstrates the impact and two simple steps to extract the value from FTA’s.
FTA’s are complex and lengthy legal documents, technical and rich in jargon. This presents a challenge to time poor export and supply managers. Extracting value requires expertise but once mastered it will provide lasting benefit to your business. The investment in understanding these agreements will be well worth it.
Tim Harcourt reviews Australia’s economic development and how Australia’s ongoing prosperity is shifting to associations and relationships with ASEAN nations and what is known as Chindia – China and India.
Being small in population terms and with low rates of savings, Australia has always been reliant on foreign investment. Initially Britain, then Germany, the U.S and Japan have funded infrastructure development and export industries.
With the expansion of India, China and ASEAN country economies, Australia is no longer suffering the ‘Tyranny of Distance’. We can now talk of the ‘Power of Proximity’ as our ties with Asia move beyond just ‘rocks and crops’ to include investment, services and intellectual property. Our future will be linked to ‘loving our neighbours’.
Asia Skills in the Asia Century – Jenny McGregor, Chief Executive Officer, Asialink
Jenny McGregor draws on the recently released, PWC Melbourne Institute Asialink Index, to demonstrate the dramatic increase in Australia’s global trade and investment ties with Asian countries.
The data shows a huge and consistent increase in trade with China since 1990, and another striking increase with India since 2002. In terms of overall trade, however, the 10 countries of the Association of Southeast Asian nations (ASEAN), as a grouping, is Australia’s largest trading partner.
These new markets require Australia’s workforce to make adjustments in habits of mind and skills to take advantage of many more opportunities. In support of this Asialink’s education arm, the Asia Education Foundation has unveiled a new initiative: “The Asia Literacy Ambassadors – Partnering Businesses & Schools Project.” Skilled professionals share their own stories and experiences to help stimulate and increase student demand for Asia knowledge and expertise.
Nigel Renton discusses some financial implications when considering expansion into new global markets: business borrowing and foreign exchange risk.
Growth often requires an increase in a business’s debt facilities. International trade also requires dealing with foreign currencies. Nigel demystifies the complicated language, outlines various financing facilities and charges. He presents a method to develop an effective foreign exchange policy to assist staff and leaders.
Karen Dado discusses the reality of many Australian start-ups who talk about securing large commercial returns from capturing just small shares of global markets. Often these companies are ill-equipped to build sales and positive cash-flows before their investment capital runs out.
Most collaborative networks and partnerships in the past have been centred on research and development rather than sales and marketing distribution. And the habit has been to work with the same partners. Instead, research indicates, it may be advisable to sample from a broad set of experiences with diverse partners, right across the value chain, as early as possible in the firm’s life cycle.
Karen presents alliance-partnering options to consider and a six-stage process to increase the chances of forming successful alliances. Often the way an alliance is structured is critical to its success. And working with an experienced trusted advisor that understands the sector may be the best way to optimise your energies and efforts.
Martin Paech and Lindley Edwards resume their conversation, this time focusing on culture and the need to develop cultural intelligence. There is a human tendency to believe our own culture, our ways of organising, are superior to others. This gets in the way of being able to work with wisdom and operate effectively on a global basis.
Martin shares an experience of cross-cultural dysfunction. Disheartened by having to deal with cultural perceptions/stereotypes, brought an insight into the importance of immersing oneself in the community we work amongst. Technology is now making it possible to experience and learn about cultural difference without travelling. Though they may be shallow connections they do allow us to slowly familiarise ourselves and become comfortable and therefore open, to other cultures.
Shared assumptions, values and beliefs enable a community to interact quickly. The downside is that we can be unaware of how they don’t translate across cultural boundaries. Lindley shares examples of how cultures ‘see’ and ‘think’ differently. Communicating is content within context: non-verbal cues, motives and cultural concepts. Languages describe feelings, emotion and ideas, specific to the landscape lived in. We also differ in how we move, our music, our stories and philosophical underpinnings.
Seven value dimensions are presented that are key identifiers of cultures and the conversation concludes with a poem from Hafiz.
“Language is the road map of culture. It tells you where its people come from and where they are going.” – Rita Mae Brown, Starting from Scratch, 1988
“If you reject the food, ignore the customs, fear the
religion and avoid the people, you might better stay at home.” –
James Michener
Special Notice
Trade and travel also expands world-views, through the sharing of insights and other, maybe better, ways of doing it. Reflecting Australia’s stronger and deeper ties with Asia is a book by Peter Church OAM, ‘Added Value – The Life Stories of Indian Business Leaders’ to be launched in India on April 13 by Dr. Shashi Tharoor, the Minister of State for External Affairs.
‘Added Value’ is a hardback of 304 pages published by Roli Books in India that shares invaluable advice and the remarkable and candid inside stories of thirty Indian business leaders. Through interviews, Peter Church details the paths they travelled, the obstacles overcome and the lessons learnt along the way.
It will be available for purchase for AUD30 (plus postage) via the AFG Venture Group website in mid May. If readers would be interested in purchasing the book and would like to be informed when it is available then they should send an email to daphne.lim@afgventuregroup.com.
‘Added Value’ features – Raghav Bahl – Network18, Rahul Bajaj – Bajaj Group, Kishore Biyani – Future Group, Subhash Chandra – Essel Group/Zee TV, Anand Deshpande – Persistent Systems, Ranji Dua – Dua Associates, Arun Firodia – Kinetic Group of Companies, R Gopinath – Air Deccan/Kingfisher, Y K Hamied – Cipla, Shahnaz Husain – Shahnaz Husain Group, B N Kalyani – Bharat Forge Limited, Habil Khorakiwala – Wockhardt, Uday Kotak – Kotak Mahindra, Harsh Mariwala – Marico Limited, Subash Menon – Subex, Narayana Murthy – Infosys, CP Krishnan Nair – The Leela Palaces/Resorts, Deepak Parekh – HDFC Bank, Deepak Puri – Moser Baer India Limited, A V S Raju – Nagarjuna Construction Company Ltd, C K Ranganathan – CavinKare, Arun Bharat Ram – SRF Limited, G M Rao – GMR Group, K Ravindranath – Global Hospitals, Anji Reddy – Dr Reddy’s Laboratories, G V K Reddy – GVK Group, Kiran Mazumdar Shaw – Biocon Ltd, Shashi Kiran Shetty – Allcargo Global Logistics Limited, Vijaypat Singhania – Raymond Limited, Monkombu Sambasivam Swaminathan – The MS Swaminathan Research Foundation
If you have any comments or would like to submit an article, please email the editor@afgventuregroup.com – your comments and feedback are always welcome. We seek articles for the next issue that will focus on ‘Education, IT and Digital Media’. The due date for contributions will be mid May 2010.
If you were forwarded this newsletter and would like to receive your own copy, wish to change your e-mail address or no longer wish to receive further copies of AFG Venture Dispatches, please contact editor@afgventuregroup.com.
A Final Word
“Just as trade typically makes countries richer in material terms, it tends to make them culturally richer as well.” – Tyler Cowen (1962 – )
Copyright 2010, AFG Venture Group. All rights reserved. All material contained in this newsletter is the Intellectual Property of AFG Venture Group and cannot be reproduced, copied, published, quoted or disseminated without the prior permission of AFG Venture Group.
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