When east meets west

Blurred photo of China streetThe Asian Century is upon us – so how can Australia capitalise on its burgeoning relationship with the region?

Australia has always felt a greater affinity with ‘the west’, but as we enter the Asian Century our integration into the region is set to accelerate, bringing challenges and opportunities in equal measure. But if Australia is to fully capitalise, it must do much more to embrace Asian culture and commerce than simply provide vast amounts of commodities for the region’s rapidly urbanising nations.

From education to investment, immigration to cultural integration, experts say Australian policies and attitudes need to be overhauled to facilitate Asia’s ascendance.

“We seem to be embracing the Asian revolution a little reluctantly,” says Brian Haratsis, Managing Director of MacroPlan Australia, the demographic economists. “We still make it difficult for some Asian companies to invest in Australia and immigration is still too low, from Asia and elsewhere. The US and the UK are the biggest foreign investors into Australia despite the enormous assets on our doorstep in Asia – and China in particular.”

A complex imbalance

In 2011, merchandise exports from Australia to Asia (China, Hong Kong Special Administrative Region, India, Korea, Japan, Taiwan) accounted for 76.2 per cent of Australia’s total. Yet in 2010, the latest year for which data is available, these countries were only responsible for 21 per cent of total foreign investment flowing into Australia, highlighting the extent of this ‘one-way’ relationship. If Japan is removed from the calculation, the share drops to just 6.3 per cent.

While some put this down to anti-Chinese xenophobia, Timothy Devinney, Professor of Strategy at UTS , says the investment imbalance is much more to do with legal complexities.

“Japanese companies can invest more heavily in partnerships and joint projects for the same reason that the Americans, French, British and Germans can – that there are more options to take legal action if something goes wrong.

“If a Japanese company does a deal with an Australian firm and then runs back to Japan, the Australian firm could sue that company in Japan. But with China the legal options are more restricted. Many would say you’d be mad to sign a contract with a Chinese company with a Chinese base. The legalities need clarifying before that situation can improve.”

That said, a sluggishness to embrace Asia is not just evident in business, but also in our grassroots education. Almost unbelievably, French is still the most commonly taught language in Australian schools and our linguistic skills rank as the lowest in the Organisation for Economic Co-operation and Development (OECD). Asian languages are barely getting a look in.

Lost in translation

“Not only are we monolingual, we are virtually Asian illiterate,” says Dr Bronwen Dalton, Senior Lecturer in Management at the UTS Business School and board member of the Australia Korea Foundation Department of Foreign Affairs.

A 2010 report on the current status of Chinese, Japanese, Indonesian and Korean languages in Australian schools shows the scale of the task. Only 18 per cent of Australian school students currently study an Asian language, decreasing to fewer than six per cent by Year 12 level.

A scant 300 students who do not have a Chinese background are currently studying Chinese at Year 12 level.

The government is trying to tackle the problem with the National Asian Languages and Studies in Schools Programme, started in 2008, which is encouraging more students to take up an Asian language. However, while it is desirable for more Australians to embrace the language and culture of our neighbours, Devinney says the most effective way to build bridges is to harness the skills of our existing Asian residents and those of future generations.

“History has shown that the more integrated you are in terms of other groups in your society the easier it is to engage in trade,” he says. “So the more Chinese Australians we have here, the easier it will be to conduct trade with China, because it is these people, with a direct link to their ancestral homes, who are usually best placed to conduct the transactions.

“It doesn’t matter if we don’t have enough Anglo-Saxon Asian-language speakers, as long as we have enough Asian-background Australians who can manage these business and investment opportunities in years to come.”

Challenges and opportunities ahead

A more integrated Chinese/Australian working community might also help diffuse fears about expanding into China generated by issues such as the internet and social media censorship.

Facebook is blocked. Twitter is blocked. YouTube is blocked. These issues are off-putting for businesses wary of breaking laws in this infamously grey area, especially given the role of social media in marketing. But having employees who can relate more closely to the culture could help overcome these hurdles by better understanding what will be culturally and legally acceptable.

As for how Australia copes on a domestic level, there are plenty of challenges ahead, especially in hard-hit areas such as manufacturing. This part of the Australian economy employed 25 per cent of the population 50 years ago. Today it is only 8.5 per cent.

But Shane Oliver, Chief Economist at AMP Capital, says it’s a problem that many Asian economies have already successfully negotiated, and we can learn
from what they have done. “Hong Kong and Singapore used to provide the world with all its cheap manufactured goods but now they are made in China and Malaysia.

Those economies have successfully adapted to change by focusing on finance [and] commerce – they adapted their economies accordingly, lowering tax rates to attract businesses to locate there, among other things.

“Likewise, Australia needs to focus on niche areas where we can add real value, our design know-how and our services sector, which relies far more on our
intellectual capital and experience. We can’t compete on price alone so we have to work smarter.”

Story by Nick Gardner