‘Unless European business confronts the implications of the rebalancing of economic power and the growth of Asia, business opportunities will be lost and business threats will increase’, according to a report published on 30 June by HSBC Commercial Banking which investigates the challenges and opportunities of the rise of Asia for European businesses. ‘Looking East: The changing face of world business’ is the first report which identifies the most influential current and future trends in ‘the East’ and interprets these to define practical implications and opportunities for companies domiciled in Europe.
It highlights that ‘thinking businesses’ need not only to factor Asia into their strategic thinking, but also actively address how they can capitalise on its diverse consumer base, skilled workforce and advances in research and development (R&D), while mitigating the risks posed by the macro-economic climate.
The report recommends that successful European businesses of the future will:
o Maximise human capital – looking beyond domestic borders to capitalise on Asia’s investment in up-skilling as it moves away from its image as a source of low cost labour
o Create an ‘innovation supply chain’ – turning the traditional model of Western innovation and Eastern delivery on its head to take advantage of Asia’s increasing share of R&D spend
o Invest in consumer insight – to tap into the opportunities afforded by unprecedented growth of a diverse and fast changing Eastern consumer market
o Employ a global mindset – dedicating time to understanding how Asia has redrawn the world business map, overturning preconceptions about the East and fostering a culture which accommodates different business models and ‘rule books’
o Mitigate risk effectively – by accurately researching, understanding and weighing up risks versus the significant rewards of engaging with the East
o Rethink consumption and distribution – acknowledging individual business’ role in tackling global sustainability issues, particularly the East’s energy consumption, and considering new models of manufacturing and export as a result
o Create an advisory-led business – acknowledging the role of external experts to provide local market insight into doing business globally.
According to Alan Keir, HSBC Group General Manager, Global Co-head Commercial Banking: ‘We are no longer looking at when West meets East, but at how the East will redefine the West and the way we do business. It’s crucial that European businesses are not only appreciative of this fundamental and fast-paced change, but that they are able to respond swiftly and effectively. Our competitiveness as a region is at risk if we don’t address practically and proactively at an individual business level how to capitalise on it. It is the thinking business which acts now.’
The report also maps likely trends that may emerge as a result of the adoption of a more ‘Eastern centric’ mindset amongst European businesses. Joe Ballantyne, The Futures Company, comments: ‘The story of globalisation and the integration of the world economy isn’t turning out the way many people expected. In future, successful businesses will need to understand how the dynamics of cultural change play out across different markets, how the geopolitical landscape is changing and even how different models of capitalism are evolving in different parts of the world. Innovation will need to become more global in focus, new strategies for marketing products and services across different markets will need to be adopted, and greater investment in renewable technologies will be necessary as the world’s conventional energy supplies are stretched.’
Alan Keir concludes: ‘In my experience, the ‘East’ begins closer to here than Asia and I’m excited to be working with companies in the emerging Eastern European states – many of which are already capitalising on the Asian opportunity. We have, and will continue to help businesses with the financial tools to take advantage of the opportunities in Asia through our unrivalled on-the-ground presence, knowledge and local expertise.’