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Diversity is key for business expansion in Asia
12 December 2011
View from the Top: Jim Clarke of Telstra. Asia’s diversity is central to the business opportunity, but the diversity creates a number of potential risks which must be addressed
With business opportunity often comes risk. This is especially true of Asia-Pacific. Across more than 35 countries, there is extreme diversity of culture, affluence and levels of development. Whether it is ensuring business continuity, being able to conduct business meetings with customers and suppliers to meet local cultural requirements, or ensuring a consistent business approach across regions with varying regulations and levels of technological infrastructure, there are a multitude of challenges that must be considered from the first stages of expansion planning in Asia.
The relative level of technological infrastructure that businesses can use also differs greatly. Some business centres, such as Hong Kong, Tokyo and Singapore enjoy high-speed network connectivity and built in redundancy. In other areas however, network connectivity is poor and the service from local providers is not sufficient for the requirements of multinational businesses.
The availability and price of bandwidth across some parts of Asia can be a significant challenge. For disaster recovery planning in particular, this can be a problem. The availability of affordable bandwidth is a prerequisite for the centralisation of back-up systems.
Furthermore, the allocation and management of spectrum, real estate and electrical power differs in each country, and implementing consistent IT services across the region requires a great degree of adaptability. This, compounded with the aforementioned climatic concerns, can lead to a heightened level of risk for Western businesses in terms of downtime.
For businesses expanding across various territories, understanding localised infrastructure issues can be both resource and time-consuming, but knowledge of local market capabilities is crucial. Organisations that can adapt to varying regional conditions and are robust enough to manage international expansion will see the most return on investment.
Regulatory considerations and data protection
Regulatory frameworks across Asia also vary widely. This not only impacts the process of entering a market, but also brings other considerations such as ensuring the protection of critical data. In Europe, business and technology regulation is becoming increasingly standardised, but this will not be seen in Asia for the foreseeable future.
Singapore and Hong Kong, for example, offer very open and transparent markets, whereas China and Vietnam are highly regulated. The more complex the regulatory frameworks, the more difficult it may be for businesses to create effective results.
In regions where regulations are still being formed, ensuring data protection and security of intellectual property is also a key concern. Although without doubt the IP risk in China is lessening, it should still be a key consideration. Many sales organisations keep their customer databases out of the countries which they classify as risky in this respect. Data growth and data security are key areas which must be considered when deploying IT infrastructure in Asia Pacific.
While many countries across Asia have mature and stable political environments, the area also includes a number of countries where the political situation is considerably more volatile than in the West. Furthermore, the region is more susceptible to extreme weather and natural events which can have a severe impact on business operations. The last decade has seen a number of floods and earthquakes which have had a significant impact on business infrastructure in the region.
The risks of rapid political change or natural disaster can bring an additional level of complexity to establishing successful business operations. Careful consideration must be placed in how companies manage their data and systems, especially in isolated locations.
Before expanding into a new location for example, the first thought must be how much resilience and how many backups can be in place should the worst happen. Without sufficient redundancy and back-up networks, business downtime will be a constant risk, severely impacting the potential success of the expansion. Local knowledge will be a vital function of successful business continuity planning.
The link between all of the challenges listed already has been diversity. This is most apparent however in tackling cultural differences across Asia. For customer interaction, from sales to support to billing, local culture must be the biggest consideration. It is crucial to understand how to build trusted relationships with suppliers and customers and how to effectively negotiate prices.
To an even more micro level, questions should be asked as to the extent marketing materials should be translated into the local language, how sales meetings should take place, and how many speakers of the local language should be on the payroll. It’s true that much international business is conducted in English, but success often boils down to a deep understanding of local culture – language is a key component of this.
In the midst of this diversity, the company must ensure that the regional offices are consistent in their overall business approach and sales messages. To ensure deep local penetration whilst making sure messages for client consumption are kept in sync is difficult, and requires streamlined communication channels between those offices.
The importance of trusted partners
With all this considered, the final challenge for companies expanding in Asia is how to implement this on the ground. The most effective means in many cases is working with trusted partners who have knowledge on the ground to help the implementation of the strategy. They have seen the region’s development, understand the regulatory environment and have the knowledge of the kinds of applications and services that local customers are demanding. GTB
Jim Clarke is senior vice president, global carrier services, Telstra International
Further reading from Global Telecoms Business:
Telstra obtains telecoms licence in India 02 Nov 2011
More places, more capability, more people 26 Sep 2011
New head of Telstra China 05 May 2011
Interview: David Thodey of Telstra 03 Mar 2011