Australian Property Companies Face Major Challenges in Asia

Wednesday, August 27th, 2014
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Australian companies across all sectors including property and construction face significant challenges when doing business in Asia, the interim chief executive officer of a major organisation dedicated to helping and equipping Australian workers and firms to succeed on the continent says.

Asialink Business interim CEO Bruce Bayley said challenges involved in doing business in Asia included understanding rules and regulations with regard to issues such as taxation, employment and corporate structures across different countries; obtaining sector specific information for individual countries (the construction sector in Malaysia, for example); and understanding local business cultures of countries in which they operate.

Stressing that there is not ‘one Asia’, and that laws and cultures vary across the continent, Bayley said many businesses struggle to understand local customs of the country they are dealing with.

In Indonesia, for example, he said the first meeting which takes place is usually more about establishing a relationship between parties, with serious business often being left until subsequent meetings.

Likewise, managing a virtual team in multi-cultural environments can be difficult, especially in cultures where subordinates find it difficult to question ideas of their superiors.

“Let’s say you set up a joint venture with an Indonesian concrete company and you are working with them from Melbourne,” Bayley said. “On the phone, you may receive very little feedback from your Indonesian partners about particular issues or ideas and they will rarely speak against an idea or a concept that their boss might suggest. ”

“They will rarely give an outright  ‘no’ to anything and silence may be incorrectly interpreted as support  for an idea, but the reality may be somewhat different. The reality is that culturally, it is extremely difficult for them to in any way disagree with you in that kind of forum.”

He noted that that way of doing business is difficult for many not accustomed to such a reality.

“When you are thinking about going into these markets, you really have to take the time to understand the culture so that you are aware of and able to deal these situations and be prepared for the fact that you might not get a straight answer or that it might take two or three meetings to get to the heart of issues that you want to discuss,” he said.

Bayley’s comments come as the Australian property and construction sector steps up efforts to capitalise on opportunities in Asia, where countries such as Indonesia, Vietnam and the Philippines are becoming increasingly attractive alongside China and India on a continent where one report published last year suggested 270 million new homes as well as new commercial premises and infrastructure would be needed by 2025.

The comments also follow the release earlier this month of Asialink Business’ Engaging Asia survey of more than 400 business leaders, in which participants identified gaps in available resources, including ‘starter packs’ with legal and cultural information on each country being difficult to come by, sector specific information for each country not being readily available and more training and advice about how to adapt to different business cultures being needed.

Asked what needed to be done about the gaps referred to in the survey, Bayley said much information exists but can be difficult to find and added that AsiaLink is trying to create online portals which collate individual country information in a single place.

He also said smaller companies should make greater use of resources such as Austrade, industry associations and chambers of commerce.

Finally, he said the importance of being prepared cannot be understated.

“I think the basic message is ‘do you research, learn as much as you can about the country you are contemplating doing business in, and go and access people who have done it before and learn as much as you can about what you are contemplating before you act, ” he said. “There is no substitute for having somebody on the ground, and doing your homework and finding the right people on the ground becomes critical.”

“In the property sector, that becomes even more critical because if you were talking about doing a property development in Indonesia, say, you would almost certainly have to have a local partner to work with you.

“Doing the research that helps you to go and find a suitable partner is crucial.”

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