10 key things an international executive needs to know about the Asia Pacific region

1. There’s No Such Place as Asia Pacific 10 key insights about the region for the global business executive

2. What in the world is Asia Pacific? While technically the Middle East forms part of Asia, most organizations attach that area to Europe for pragmatic reasons Commonplace definitions see Asia = Pakistan to Japan to Indonesia Asia Pacific includes Australia, New Zealand and Pacific Islands Half the world’s surface area Half the world’s population The world’s two most populous countries (China and India) The country with world’s largest Islamic population (Indonesia) Four known nuclear powers (China, Russia, India, Pakistan) Democracies through to communist states to military dictatorships

3. What’s the issue? The region is so diverse, complex and with such little in common, it simply doesn’t exist in a meaningful sense And yet global organizations must find a way of managing this, and so they often will express Asia or Asia Pacific as a consolidated region from a financial reporting and management perspective It’s easy for people who don’t know the region well to then start to think of it as a region that has some consistency or homogeneity This misconception can impede an organization from fully capturing the opportunities in the Asia Pacific region, or making mistakes that cost time and/or money This misconception is not limited to executives from outside the region – especially North America and Europe – but often exists among senior management within the region, who may still perceive things through the lens of their own culture or personal experience While no-one can become an overnight expert – and few would claim deep knowledge of every facet of the region, there are 10 key insights an executive needs in order to have some framework of understanding Asia Pacific Understand these 10 key points; be aware of them as you go about your business; reflect on them as you seek to understand why certain things occur; and avoid the obvious pitfalls they warn against. It won’t guarantee success, but it will make it more likely!

4. 1. Distances and travelling times Up to 8 hours time difference between Karachi and Wellington Distances and travel times often not well understood outside the region East coast Australia from/to China, Japan, SE Asia 7-10 hours flying time, Japan/China to India similar, India to Australia 15-20 hours Even from central location such as Hong Kong or Bangkok, flight times can be 3-6 hours intra-region Local travel to/from airports is challenging in many locations The most financially significant markets for most companies lie on the rim of the region making it more difficult to avoid travel The typical executive covering this region will spend considerably more time travelling than his/her counterparts in other parts of the world

5. 2. No common culture There is no such thing as an “Asian” culture – there are a multitude and often have very little in common Some things that appear to be in common should not lead to the assumption that everything is similar What has been learned and is appropriate or may work in one market may be inappropriate elsewhere Cultures, and an individual’s identification with their cultural heritage, can be very specific and failing to recognize this is likely to be detrimental to a relationship This is also reflected in the business cultures which can vary significantly across the region, determining what is acceptable or expected behaviour and what is not

6. 3. No common language While Mandarin is the official language of China and spoken extensively, it is not commonly used for business outside the Chinese ethnic community There are many Chinese dialects, although the written language is common. However it is character based and computer software needs double-byte character capacity unlike the Roman alphabet There are multiple major languages and alphabets across the region that have come from very different roots, having little if nothing in common Entire language structures vary including tonal/non tonal pronunciation and character/letter construction English is the one unifying language and prevalent in business use. While its use and adoption is growing quickly, language complexity is a major impediment to undertaking business across the region

7. 4. Long heritage and proud recent histories Many parts of the region have a cultural heritage that stretches back centuries and even millennia There is often great pride and strong affinity to the cultural heritage and history, more so than many western countries, especially those in the “New World” Historical facts, legends and myths have as much depth across Asia than say European history; people are often bemused why so much importance is placed on the history of Europe and so little is understood of their history The region has re-written the history books during the 20th Century and an understanding of the region requires some basic knowledge of such milestone events as the independence processes in India, Indo China and Indonesia; the partitioning of India; Japanese expansion during the 1930’s and the Second World War in Asia; Chinese nationhood, the Communist revolution, the Cultural Revolution and the “Great Leap Forward” to the modern era; and key conflicts and their aftermath since WWII including Korea, Vietnam, Malayan insurgency, India/Pakistani border disputes and the killing fields of Cambodia It is important to acknowledge and respect the sense of history and pride that is typical across the region

8. 5. Religious diversity Religious diversity underpins much of the region’s complexity Islam is dominant in Pakistan, Bangladesh, Indonesia and Malaysia and widely practised in India Buddhism is predominant in much of South East Asia and parts of China and Japan Confucianism and Taoism are predominant in China Shinto is predominant in Japan Christianity predominates in the Philippines and South Korea and is a widespread minority religion elsewhere There is a religious base to many areas of past and potential trouble, e.g. India/Pakistan, Christian/Muslim in parts of Indonesia, south Philippines insurgency, internal dissent in China in Tibet and the far west

9. 6. Never assume anything In almost every area imaginable, things can work in different and unexpected ways across the region, and many times from market to market within the region (and in some places like China from Province to Province) Expectations people have of what is appropriate when interacting with businesses, government, customers or colleagues may be very different from what you might expect Each country has its own set of regulations and these are typically not harmonized Views of what is right and wrong, or what constitutes an agreement, or how binding a legal contract is, or any number of issues may not be what is expected, and these different perspectives may result in fundamental misunderstandings One of the most common traps for executives new to the region is to make a decision on a particular issue, assuming that the factors that this issue depends upon as well as the effect the decision will have are predictable. So often these assumptions turn out to be false because local regulations, common practice, cultural issues, etc, can create a very different outcome to that anticipated. Always consider the dependencies and results of a key decision to ensure your assumptions hold true Transparency can be a challenging issue across much of the region. Levels of disclosure, transparency, formal documentation and adherence to rigid audit and compliance regimes vary, and it is wise to learn that accepting information at face vale may not always be the best approach

10. 7. Key population trends Overall, birth rates are declining and life expectancy is increasing but this trend is at different stages across the region These demographic trends have significant economic impact and are a key to understanding the future of the region Japan’s population is reaching the “tipping point” where more people will retire from the workforce than join, contributing to Japan’s economic pressures China and South Korea see the same thing occurring within the next two decades Elsewhere in the region, the population is youthful with many markets in South and South East Asia consisting of 50%+ under the age of 25, and the impact of an ageing population is likely to be felt 3-4 decades from now The unexplained trend towards more male births plus ongoing rural/urban migration are also likely to continue to impact the region

11. 8. Rising consumerism, dynamism and early adoption of technology Across the region, newly acquired spending power and the appetite for consumer goods are driving consumer spending at an astonishing rate More new cars were sold in China in 2009 than in the US for the first time; there are extensive waiting lists for India’s inexpensive “Nano” Consumers are early adopters and voracious consumers of new technology. More than 50% of the world’s new smartphones are expected to be sold in China in 2011 Youth-oriented culture, fashion, dynamism, brand consciousness and the prevalence of luxury brands are all a part of this phenomenon

12. 9. Internal dissent Asia is not one big, happy, extended family Political tensions remain high in places like India/Pakistan and the Korean Peninsula Internal dissent makes itself known in China from time to time Political instability or uncertainty and the threat of violence exists in areas such as Burma, the south of the Philippines, the south of Thailand, Nepal and the China/Taiwan debate is not over The appropriate sharing of economic prosperity creates tension; recently this erupted in Bangkok and it is only a decade ago violence was directed against the ethnic Chinese community in Indonesia Rivalry and jealousies between provinces or countries and individuals across the region may not be outwardly evident but exist to the same extent as any other part of the world

13. 10. Australasia’s identity crisis Whether Australia and New Zealand should be considered part of the region or completely separate is a matter of debate Two decades or more ago, the answer would have likely been “no” However extensive Asian immigration and Asian investment in both countries, extensive Asian student populations and Asia’s hunger for the importation of natural resources from these countries has driven much closer bonds At the same time Australasia’s traditional historic relationships and trading partners in Europe and North America have waned to a degree This results in the “sometimes in, sometimes out” position and the often confused use of “Asia” and “Asia Pacific” not knowing is this does/should include Australia and New Zealand Multinational organizations typically take one of two views, unless A/NZ stands alone. Geographic proximity to the rest of Asia forces their inclusion into an Asia Pacific regional structure for some companies, while the other approach is to keep A/NZ grouped with “developed” markets like Europe and North America

14. About the author David Christensen resides in Melbourne, Australia and has an extensive career as a Management Consultant and Senior Executive within multinational corporations spanning the Asia Pacific region. Specializing in corporate strategy, capital raising and market entry projects, he has undertaken assignments that have included working in China, Hong Kong, Taiwan, Japan, South Korea, India, Singapore, Indonesia, Thailand, and the Russian Federation as well as Australasia. He was a Partner with Gravitas Partnership based in Hong Kong and his corporate experience has included regional senior executive roles within American Express, Mercer, and AXA Asia Pacific. His earlier career was in sales, marketing and advertising and he spent seven years in client management with Saatchi & Saatchi and DDB Advertising. He holds an Honours degree from the University of Otago, in New Zealand. He can be contacted by email at david.d.christensen@gmail.com