When I first arrived in Asia in the 2000s, the continent was on the rise and yet back in Europe and the US, Asia was a rather peripheral topic. In many ways it still is, or at best the conversation is limited to China. That’s a mistake. One only needs to look at the successful strategies on display in many Asian countries to contain Covid-19 and manage the economic fallout. They are founded in a tremendous confidence in a unique, homegrown approach that has been gaining strength for many years. What we’re witnessing is just a foreshadowing of the leadership role Asian societies, governments and businesses are poised to take in this century.
What does this mean for doing business with Asia and in Asia?
To understand that, it helps to understand the 20th century, which, in many ways, was the Western century. In 2016 77% of all international students at US universities were from Asia. In 2007 44% of highly skilled Chinese professionals preferred working for a western multinational to working for a local Chinese company. English is a prevalent business language in many countries. These are all indicators of intense adaptation.
And it means that the Asia that Western businesses dealt with was in many ways adapted to them.
This momentum is now moving in the other direction. Parag Khanna, author of ‘The Future is Asian’, puts it like this: as Asia is globalizing, Asia is also Asianizing. How does this manifest itself?
Asia’s ability to innovate is growing by the day. In some sectors like e-mobility, Chinese companies are getting ready to compete at a global level. Countries like Vietnam are taking a sandbox approach when it comes to new technologies, providing the framework for companies to innovate fast with regulation shaped as the market develops and consolidates.
Local champions beat multinationals, combining rapid innovation with a deep understanding of market trends. After pioneers like Samsung, Alibaba, Huawei there is already a new generation of smart, fast-growing companies on the rise. Many of them are turning into regional and global players, like Indonesia’s Go-JEK, Vietnam’s FPT, China’s Byton.
In line with this development, there’s a renewed interest from top local talent to work for local companies. A survey from 2017 shows that a third of executives in Chinese companies moved from MNCs during the previous five years – and only 10% moved the other way. This talent pull will increase as Asian companies go global and send their nationals abroad.
Politics and political speech are increasingly focused on the national and the regional, from Indonesia to Malaysia, from China to the Philippines. Existing regional alliances like ASEAN are strengthened and new regional initiatives are formed – like RCEP, a free trade agreement being negotiated among 15 countries in Asia-Pacific.
These changes to the environment multinational businesses operate in, directly impact the most important stakeholder relationships that determine business success. And they raise a number of questions:
- How can businesses better understand and successfully engage with Asian markets?
- How can they thrive in a changing global competitive landscape?
- What do products and services need to look like to wow local consumers with local experiences, in line with local values?
- How do employers add value to a fast moving talent pool and provide both short-term gains as well as long-term career opportunities to compete with a myriad of other opportunities, including entrepreneurship?
Solving these is key for businesses to thrive in this new world.
But if mindsets of leaders and teams are stuck in the Western century, they will fail.
The critical success factor will be a change of mindset that leaves the Western century behind and focuses on the intense adaptation and collaboration required when operating in Asia.
Six ways to better equip your business for the changes the Asian Century brings:
1. Local trumps localized. Respect and harness the power of local insight, understanding and action to arrive at powerful local solutions. Empower local teams to make new connections and enable innovation to come from any part of the world, taking advantage of different perspectives to strengthen your proposition to customers, consumers, partners and talent.
2. Find your place in the ecosystem. To succeed, go beyond the customer. The eco-system has a tremendous role to play in the success and failure of a foreign business in an Asian market. Ignore it or deprioritize it at your own peril, and you may end up like the many companies that have exited markets they weren’t able to truly connect to.
3. Take a value-based approach. The days where investment, job creation and high-quality products was all that was expected from MNCs are behind us. To be relevant, build talent programs according to what matters to local talent. Connect with consumers based on their values. Talk to partners and governments about contributing to societal goals. Understand the national narrative and weave your proposition into it. The return will be loyalty, purchase, and license to operate.
4. Partnership at eye-level. Global teams win when they collaborate at eye level, taking local mindsets, cultural context and perspectives into account. This takes empathy and an ability to respect each other’s experience. The same goes for interactions with external stakeholders.
5. Diversity is now business-critical. Only truly global teams bring the best of all worlds into the room to find the right solutions. Break the hierarchy that runs from headquarter market to local market, move key positions to Asia and promote talent from local markets in Asia to leadership positions.
6. Lead with a global mindset. Leaders that can change perspective and see the world through the eyes of people with radically different backgrounds will be the glue to achieving both local impact and global consistency to enable their businesses to thrive in this new environment.
 Source: Forbes Magazine (https://www.forbes.com/sites/anismuslimin/2017/11/30/why-asian-countries-are-investing-so-heavily-in-the-english-language/#27c312665e85)
 Source: Harvard Business Review (https://hbr.org/2011/03/the-battle-for-chinas-talent)
 Source: Fast Company (https://www.fastcompany.com/90301632/the-definitive-guide-to-asias-global-influence-in-the-21st-century)
 Source: Nikkei Asian Review (https://asia.nikkei.com/Opinion/Multinationals-risk-defeat-in-China-talent-war2)
Cover image by Duy Nguyen https://unsplash.com/@duykhuongxyz