Part A (China) By Qiao Ma, Portfolio Manager – Asian Equities Fund, Cooper Investors;
Part A (India) By Mary Manning, Portfolio Manager for the Ellerston Asia Growth Fund, Ellerston Asian Investments (ASX:EAI) and the Ellerston India Fund, Ellerston Capital; and
Part B (Australian company case studies) by Mukund Narayanamurti, Chief Executive Officer, Asialink Business
The previous section on ‘Does offshore expansion lead to superior returns?’ highlighted critical factors that must be considered when undertaking international expansion. There is clearly no single factor that drives superior returns from international expansion. Our extensive consultations have highlighted three major constraints currently impacting the internationalisation of Australian companies:
- The extensive use by senior leaders (boards and C-suite executives) of outdated anecdotes and examples of failures in Asian markets;
- The extensive use of media reports to inform views on strategies adopted by Australian and non-Australian companies in Asian markets; and
- A lack of substantive understanding of how market entry strategies and organisational capabilities determine success in Asian markets. This section shares best practice business models for succeeding in Asian markets.
The section is structured in two parts.
Part A: This part includes an analysis of non-Australian companies that have succeeded in China and India. The purpose of this category of case studies is for Australian companies to learn from international best practice in entering these highly competitive markets and generate market share, profitability and returns. We have identified these two markets as focus markets for two main reasons:
- China is Australia’s largest trading partner and offers some of the most significant market opportunities for Australian value-added products and services. While there is public discussion in Australia on the need for trade and market diversification strategies, we believe that China will continue to be our largest trading partner for the foreseeable future. We also believe that there remain significant untapped opportunities for Australian companies with China’s consumer class. For instance, the growing importance of the China International Import Expo (CIIE) to governments and companies internationally is an example of the extraordinary competition in the Chinese market for a share-of-wallet of the Chinese consumer. Understanding the strategies adopted by the most successful consumer companies in China (both local and foreign) will be particularly helpful for Australian companies.
- India has been identified by both business and government as critical to firm-level growth strategies. The India Economic Strategy to 2035 (IES) recognises that no other market offers Australia as much opportunity. A significant focus of the IES is growing outbound investment from Australia into India, an area in which there is currently a gap in understanding in corporate Australia – that is, how to invest in India, where to invest, and business and operating models to execute outbound investments effectively. The analysis on India focuses on addressing this gap. We have included 14 case studies in this category of non-Australian companies that have succeeded in China and India.
Part B: This part includes an analysis of Australian companies across sectors that have successfully entered Asian markets. This includes:
- Case studies across technology, construction, property and infrastructure, healthcare, consumer staples, consumer discretionary, and financial services. These aim to give Australian companies a new reference point of best-in-class peers who have succeeded in Asian markets. We have included a combination of public companies and private companies. In respect of public companies, we have also included commentary on best practice in investor relations.
- A range of markets have been considered including China, Hong Kong, India, the Republic of Korea (South Korea), Singapore, Malaysia, Vietnam, Indonesia and Japan.
- All case studies were developed in collaboration with CEOs, CFOs or senior executives of the companies profiled.
We have included eight detailed case studies in this part.