Asia Pacific business landscape and opportunities

Asia Pacific Business

Australia is a large island continent that is located on the south-east of Asia. Covering a total area of 7,617,930 km2 (Australia G., 2012) with a population of 22,876,023 individuals as per the 2012 estimate (Australia), it happens to be very large country with a relatively small population. Australia is one of the most urbanized countries in the world. Since vast tracts of the country are not only uninhabited but also uninhabitable, there is a lack of a domestic market. Hence, there is a need for Australian businesses to look for international markets in order to ensure their future prosperity.

Currently, Australia has the world's thirteenth largest economy and the fifth highest GDP per capita of $66,984 as of 2011 (Fund, 2012). The Australian Securities Exchange is now, the ninth largest stock exchange in the world (On the International Realignment of Exchanges and Related Trends in Self-Regulation, 2010). In 2011, it was the 13th largest national economy by nominal GDP of U.S.$1.6 trillion. (12ht) (Field listing - GDP (official exchange rate)).

Australia is self sufficient with rapidly developing agricultural and manufacturing industries. In recent years, Australia has increased its economic focus and has become one of the most dominant and advanced market economies in the world with increasing demands from its trading partners. Australia's main trade partners are Japan, Europe, China, Indonesia, Korea, USA and New Zealand (Compostion of Trade Australia 2008-09, November 2009). These are basically Australia's largest export markets. Australia makes export revenue of approximately $103 million per annum. Its major exports are agricultural produce, including wheat, meat, and wool. In addition to these, it also exports minerals such as gold, iron ore, alumina and fuels such as coal and natural gas. Australia also is the fourth largest exporter of wine, with a whopping $5.5 billion industry contributing to the country's GDP. Machinery and transport equipment are also essential exports that contribute to the country's economy.

Striving for this constant progression is backed by certain key business elements that are also an essential part of the Australian culture. Being a nation that is defined by multi-culturism and opportunities, there are underlying concepts to understanding the complexity of this nation's culture. One of the defining aspects of its culture is Egalitarianism. This means that it is a culture that avoids any sort of differentiation between individual. This concept pretty much infiltrates every aspect of the Australian lifestyle and has particular prominence in the business sphere. There is a preference towards parity, modesty, and respect for one another. Arrogance is not at all appreciated. This is why seldom one will find an Australian bragging about their academic qualifications or business success. It also has a major influence on the down-to-earth approach adopted by the Australians in business.

Another defining and highly valued aspect of the Australian culture is the directness and openness of communication. Being literal and to the point is a well-known trait of the individuals of this country. There is a general encouragement to voice out one's opinions even if they're perceived as controversial and confrontational. Those who do this are well-respected in their daily lives. In a business context, this simply means that a lively debate on various issues shall be encouraged by the Australian business counterparts and should well be expected.

Individualism is another highly valued and unique key aspect of the Australian culture. Cultural fusion along with such a diverse population that makes up this country, this is one of them. Interaction with other members of the society is essential. However, one should treat with caution when trying to develop relationships when dealing with their Australian counterparts in any business arrangement. Australians as a nation are very particular about the segregation of the public and private lives of each individual. This is an issue that is given extreme importance and one should keep it in considerations when attempting to develop any sort of personal relationships with the members of the Australian society.

These few cultural forces then affect the way business is done in and with Australia. There are a few traits that are appreciated by Australians in a business context. Punctuality is one of them. Generally lateness creates an impression of a non-serious attitude and unreliability. It might be perceived that one is careless in their business dealings. It is considered extremely rude to arrive late and without notice. It is often expected of foreigners, thus, to be on time. Tardiness to an event is almost a way to offend and upset an Australian. Another feature of the structural hierarchy in the Australian companies is the considerable amount of power and authority that has been entrusted into the hands of the lower level employees. The decisions are made are not only by the high level executives but also the low level staff have a say in it. This also explains a lot about the company structure followed in Australia, which is generally flat with little visible distinction between ranks and statuses.

Australians take their business dealings very informally. In trying to bond and show respect and equality amongst business partners, Australians have the tendency to initiate a first name basis fairly early on in the business relationship. Making connections and sound relationships in this nation is everything. Its of utmost importance that business partners have personal relationships established with their Australian counterparts. Established representatives of the counterparts must be taken into confidence for future help and support. Business dealings are conducted otherwise in pretty much the same manner from there as in any other part of the world. For example, when meeting for the first time in a business context, it is considered polite and customary to shake hands for a brief period before and after the meeting has been conducted. During the meeting, negotiations shall proceed rapidly as Australians have the tendency to be direct and open about what they require of out of and business deal and put it up on the table for debate.

However, all the company policy and procedures shall be followed. There will be no decision taken because of a gut feeling. The entire established rules and regulations shall be kept in mind while coming up with a common ground for a business deal. Since Australians like to involve all levels of staff into the decision making process as they believe in a collaborative effort. From the high level executives to the low level employees and take everyone's input into consideration before coming up with a decision, the negotiations process can be lengthy and slow. Although, it is often stressed that it should not be rushed. Australians take a very result-oriented approach to conducting business.

There are a few business etiquettes that are a norm in the Australian culture that should be followed in order to achieve good results of the endeavor. These include participating in "small talk" before the meeting just to show general interest, respect and establishing a good rapport with the colleagues. However, it is advised an amount of distance should be maintained with Australian colleagues as personal space is a touchy topic. On the other hand, making eye contact throughout the meeting and conversation is also of importance as it helps to build trust. Nor should one drag their personal lives in the midst such dealing as respecting an individual's privacy is of grave importance in the Australian culture. Also, one shouldn't brag about their business abilities or exaggerate facts for Australians do not value self-importance and dislike arrogance. Australians tend make judgments on your business competence based on actions as opposed to words. Being unassuming and modest is the key. Too much of an aggressive technique also puts off Australians as they feel they're being pressured into making a decision which is not really their style.

After considering how the Australians like to conduct business and what their norms are, a spotlight can be thrown on their trading partners. Australia's top ten two-way trading partners in an ascending order are: China, Japan, United States, Republic of Korea, United Kingdom, India, Singapore, New Zealand, Thailand and Malaysia. Australia is a member of the APEC, G20, OECD and WTO organizations. The Australian Government also pursues six high quality FTAs (Free Trade Agreements) with key trading partners where they offer net benefits to Australia and are supportive of global trade liberalization. The FTAs of which Australia is a part of include, ASEAN-Australia-New Zealand (AANZFTA) 2010,Australia-Chile Free Trade Agreement (ACFTA) 2009,Australia-United States Free Trade Agreement (AUSFTA) 2005, Thailand-Australia Free Trade Agreement (TAFTA) 2005, Singapore-Australia Free Trade Agreement (SAFTA) 2003 and Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) 1983 (Australia's Trade Agreements, 2011).

Although Australia trades with a number of countries on the Asian Bloc, its biggest trade partner since 2007 is China with exports and imports reaching a combined total of $57.2 billion (Uren, 2007). It forms 22% of the total export market for Australia and 15.3% of the total import market. China is closely followed by Japan which comprises of 16% of the total export market. The substantial export to China is of iron ore, wool, and other raw materials and over 120,000 Chinese students study in Australian schools and universities. So, not only material but also Australian services are imported by China. It is in the process of undertaking further FTAs with China, The Gulf Cooperation Council (Saudi Arabia, Qatar, Bahrain, Oman, Kuwait, United Arab Emirates), India, Indonesia, Japan, Republic of Korea, Malaysia, Pacific Agreement on Closer Economic Relations -- PACER Plus, and Trans-Pacific Partnership Agreement. However, this shift to trade with the Asian Bloc of is quite recent. Prior to that, Australia had restricted trade with European Nations and Britain who purchased majority of the farm products and provided supplies of consumer goods to Australia. It was in the mid-1980's when this shift happened.

Historically, Australia's largest trade partners were Great Britain and other countries in Europe. This is simply due to Australia's colonization by the British in search of new markets and sources of raw material. This was a period when Australia was considered to have a relatively closed and protectionist economy. Australia's economy was primarily based upon agriculture until the end of World War II. Beginning with the wool industry, agriculture in Australia later expanded into wheat, beef, dairy, and irrigated crops. Economic diversification began at the end of the war with the growth of the manufacturing and service industries. The exploitation of minerals significantly accelerated economic growth. This pattern of development remained dependent upon foreign investment and capital and was highly vulnerable to fluctuations of commodity prices. The manufacturing sector has remained dependent upon foreign interests, and has suffered a slow decline since the1960s. It was in the 1955 that Australia first started exporting coal to Japan after which Japan become a regular destination for Australian exports of agricultural and mineral goods. However, in the 1950's and 1960's, those manufacturers that were nurtured by the government failed to increase productivity. As a result, foreign investment declined as the foreign investors were quick to notice that increases in productivity in overseas manufacturing was much higher than in Australia and there is no competitive advantage there anymore.

It was in 1967 that Britain started negotiation to enter the EEC, putting an end to the Australian advantage and of privileged access into the British trade world. In the 1980's, to counter this downturn of events, reforms were introduced by the eventual Australian Governments, the Australian economy started to turn their attention towards the Asia Pacific Region from the Western Markets. This was due to the economic liberalization reform introduced in the government led by Prime Minister Bob Hawke in 1983. Economic Liberalization is a term that refers to the government putting up fewer regulations and barriers when it comes to trade in exchange for a greater deal of participation from the nations (and foreign) private entities (Chaudhry).Regarding liberalization, Ex- British Prime Minister, Tony Blair, had said,: "Success will go to those companies and countries which are swift to adapt, slow to complain, open and willing to change. The task of modern governments is to ensure that our countries can rise to this challenge." (Blair, 2005).

Economic Liberalization also means to open up their economies to foreign investment. In Australia, it was the Labor Party governments that dismantled the trade walls and brought an end to the protectionism era. The statement given in this regard by the Labor Party in the ALP platform in 2000, " Labor is committed to ensuring that the benefits of global economic growth are shared-- Both within Australia and between countries. We support free trade as a means of generating growth necessary for enhancing the living standards of everyday Australians." (As approved by the 42nd National Conference, 2000). Thus, also in 1983, at the constant urging of Treasurer Paul Keating, the Australian Dollar was floated and a financial regulation took place. The liberalization had stepped up the productivity of the Australian economy by a huge amount and is also responsible for turning Australia into one of the advanced market economies in the world today (Hu & Khan).

After the advent of the economic liberalization policy, consistent behavioral and structural changes were noticed in the Australian economy's growth. These included a sharp increase in the trade intensity, with a 17% increase in the ratio of imports and exports to the GDP. Not only that but also there was growth in enterprise agreements with substantial beneficial variations in the terms of employment offered to the labor force from then on along with better working conditions and practices. There was a noticeable rise in the BERD innovation indicator in areas of production, distribution and marketing. There has been a decline of high cost manufacturing activities and the rise of ETMs (for example, while TCF production has fallen in real terms by about 40% since 1985, manufacturing production as a whole has risen by 40%). (Banks, 2003). This expansion of trade outside the country led to the investments from the Asian Bloc along with establishment of import and export relationships. The vast scale of trade with China has seen massive investments by Chinese companies in Australia. From 2007 to 2010, Chinese investment in Australia amounted to nearly U.S.$60 billion. Australia's mineral exports also grew by 55% to U.S.$139 billion in 2010 and are projected to reach U.S.$180 billion in 2011, thanks to China's strong economic performance. Chinese companies have also started to lease land from the Australian government to mine resources on their own. One can rightfully say that Australia's meteoric development was facilitated by China's perpetual demand for iron ore, coal and aluminum.

Integrating into the global scene has always been easy for Australia. It has always handled globalization with aplomb. Australia's strategic location has enabled the country to maintain amiable relationships with the Asia-Pacific region, an area of the world that commands a top priority in its foreign and trade policies. The island-continent has maintained good ties with its closest neighbors, which are Japan, Indonesia and China, and of course with the U.S. It has also established free trade deals with the Association of Southeast Asian Nations (ASEAN).