Australian Business and Economic Engagement with Asia
Australian government policy-makers have long asserted that Asia is a source of economic opportunity for Australia, especially for Australian businesses seeking to internationalise their operations. 1 Neither growing geopolitical tensions between Australia and China in recent years nor the economic dislocation caused by the COVID-19 pandemic appear to have altered their thinking in this respect.
Despite this situation, however, few Australian businesses have so far established a significant presence in the region. In recent decades, Australian mining and agricultural companies have exported vast amounts of primary commodities to the region, including iron ore, coal, gold, petroleum, wheat, and beef, contributing to Australia’s wealth and prosperity. But Australian businesses have made little direct investment in the region, preferring instead to put their capital into countries such as the United States, the United Kingdom and New Zealand.
In a series of recent reports on Australia’s economic relationship with Asia, the business advisory firm PwC has observed that Australian businesses “are looking offshore for growth but are largely ignoring the world’s fastest growing region.” 2 Few are planning to expand into the region. 3
To address this issue, PwC, the Business Council of Australia (a leading business representative organisation), the Asia Society (a prominent think tank), and the University of Sydney’s Business School collaborated between 2019 and 2021 on a program of research and consultation aimed at examining “how Australian companies can increase their presence and position in Asia to ensure [Australia’s] continued prosperity and deliver progress for future generations.” 4
Their key findings were published in April 2021 in a report entitled A Second Chance: How Team Australia Can Succeed in Asia. Although not an official government report, A Second Chance was launched by Dan Tehan – Australia’s Minister for Trade, Tourism and Investment – indicating some degree of government support for the project.
Since the late 1980s, the Australian government has sought to promote Australian economic engagement with Asia and specifically Australian business investment in the region. It has done so by encouraging economic liberalisation and (less vigorously) greater “Asia literacy” – that is, a command of Asian cultures and languages – in Australia. 5 A Second Chance grafts onto this approach a concern with assisting Australian businesses in creating the networks, capabilities, and partnerships they need to compete effectively in the region. This concern reflects a view that economic liberalisation and greater Asia literacy cannot on their own ensure Australian business success in the region. Australian business also needs access, know-how, and leverage.
The new agenda outlined in A Second Chance has five main elements. The first, “Adopt a ‘Team Australia’ approach”, calls for greater collaboration between Australian business, government, and academia in the pursuit of greater economic engagement and business success in Asia. The second, “Playing to our strengths”, advises that Australian policy-makers and corporate executives need to know Australian business’ “capabilities and comparative advantages well and identify markets and sectors where [Australian business is] most likely to get ahead.” The third, “Learn to navigate a more complex China”, asserts that Australia needs to maintain the best possible economic relationship with China in the context of emerging tensions in the bilateral relationship due to geopolitical factors and fundamental differences over human rights and democracy. The fourth, “Reboot Asia literacy,” posits that Australia needs a deeper understanding of Asian cultures, politics, societies, and economies, not just in general but particularly in corporate boardrooms where Asian expertise and experience is limited. New appointments to corporate boards are thus needed. The final element, “Champion our rich Asia talent” calls on Australian business to harness the market knowledge, networks, and language skills of Asian Australian communities and the Australian diaspora to gain better access to lucrative Asian markets.
This agenda thus represents an attempt to grapple not just with the difficulties for Australian business created by Australia’s deteriorating relationship with China, but also with two other stark realities as well.
The first, which is acknowledged only implicitly in the report, is that Asian markets are in many cases characterised by government-business relations that are personalistic and political in nature and dominated by predatory and authoritarian elites. 6 These characteristics make it difficult for Australian businesses to compete given legal obligations to avoid bribery and corruption and the fact that many Australian businesses find it difficult to develop the local relationships crucial to success. In earlier reports, PwC has argued that many Australian businesses have little idea how to do business in the region. 7 The solution proposed in A Second Chance is to harness the networks and market knowledge of new corporate board members who have Asia expertise and experience as well as members of the Asian-Australian and Australian diaspora communities who are connected to the region through family, social, and business linkages.
The second reality is that foreign investors operating in Asia – particularly ones from other Asian countries – often work in close collaboration with, and have extensive support from, their home country governments. As A Second Chance points out, such a partnership-based approach “has served countries like Singapore and Japan well in securing major investment and other commercial opportunities in Asia.” 8 Operating without strong government support, Australian business has been at a competitive disadvantage. For Australian business to compete more effectively in Asia, A Second Chance contends, Australia needs to replicate this collaborative model.
The agenda outlined in A Second Chance is innovative in these important respects. This does not mean it will succeed, however. Its realisation depends on other key parties getting on board: the Australian government, corporate shareholders, academia, Asian-Australian communities, and the Australian diaspora. In launching A Second Chance, Minister Tehan said that he looks forward to working with PwC and its collaborators on implementing the report’s recommendations. 9 But it remains to be seen whether the Australian government and other parties will ultimately play their part. Even if they do, the resulting assemblage may be insufficient to make up for decades of conservatism, disinterest, and laziness within the Australian business community and to address the stark realities of Asian markets noted above. It may be that the Asian economic opportunity will, as PwC has put it, simply pass Australian business by. 10
Andrew Rosser is Professor of Southeast Asian Studies at the Asia Institute, The University of Melbourne. Email: andrew.rosser@unimelb.edu.au