SOURCE: The Boston Consulting Group

The Boston Consulting Group

September 18, 2015 23:01 ET

Companies Thrive Despite Emerging Asia's Structural Barriers by Proactively Shaping the Business Ecosystem

New BCG Report Finds Entrepreneurial Companies That Move First and Act to Improve Local Talent Pools, Infrastructure, and Regulatory Environments Are Seizing Asia's Greatest Growth Opportunities

SINGAPORE--(Marketwired - Sep 18, 2015) - Despite the economic slowdown in many emerging markets in Asia, the region offers some of the world's greatest growth opportunities. While most companies are stymied by the region's talent gaps, inadequate infrastructure, and uncertain regulatory environments, a handful of highly entrepreneurial companies are finding innovative ways to overcome these obstacles -- and as a result are building formidable competitive advantages. These are among the findings of a new report released today by The Boston Consulting Group (BCG) at the Singapore Summit.

The report, entitled Overcoming Asia's Obstacles to Growth: How Leading Companies Are Reshaping Their Environment, analyzes how certain companies are winning the battle for growth in China, India, and six Southeast Asian economies. The research found that these leading companies share what the authors call a "first-mover mind-set." Such a mind-set has three main characteristics: An entrepreneurial culture, a long-term view that enables companies to invest in areas beyond the normal scopes of their businesses, and a willingness to create local partnerships. This mind-set allows companies to invest in and shape their environment, setting them apart from competitors. 

"The most entrepreneurial companies in Asia don't simply wait for the region's bottlenecks to be resolved or for local conditions to be able to accommodate their business models," said Vincent Chin, a BCG senior partner who heads the firm's Southeast Asian operations and is a coauthor of the report. "They find creative ways to overcome the barriers and proactively help shape the environments around them."

The five companies studied -- S.F. Express of China; Astra International of Indonesia; AirAsia of Malaysia; Wipro of India; and Unilever, a London-based multinational corporation -- have all exhibited the first-mover mind-set in tackling one or more of emerging Asia's key barriers to growth. "If the local pool of talent is too thin, these organizations tend to develop their own," explained Christoph Nettesheim, a senior partner and a coauthor of the report. "If regulators are slow to understand why an innovative activity is good for their economies, these companies work relentlessly to educate them."

The following are some of the innovative strategies that these companies have adopted to overcome structural challenges:

  • Poor infrastructure in China's rugged interior hasn't stopped S.F. Express from being able to deliver urgent parcels to small businesses in 31 provinces within two days. S.F. Express controls its own fleet of cargo planes and a national network of 12,000 service centers.
  • Remote villages -- many lacking paved roads, electricity, and landline phones -- account for 15 percent of Unilever's $5 billion in annual sales in India. To serve this market effectively, the company maintains an up-to-date digital profile of millions of small mom-and-pop retailers and has helped more than 60,000 village women set up their own micro-enterprises to distribute Unilever products.
  • Astra International manages to hire 3,000 university graduates each year in Indonesia despite the country's acute skills shortage. To win Indonesia's talent war, Astra has partnered with high schools, polytechnic institutes, and universities; it has also established a comprehensive program to identify, recruit, and nurture top job candidates at every skill level across the country.

According to the report, companies hoping to seize a lasting competitive advantage and to become leaders in Asia's immense, swiftly evolving growth markets must take a proactive approach to shaping their environments by building an entrepreneurial company culture that encourages employees at all levels to seek to improve the business. They must also have a long-term vision that allows them to invest in talent, infrastructure, and efforts to shape regulation. This approach requires a spirit of partnership. Successful companies must, for example, work with schools to bolster the education system and develop the talent pool they need, as well as be open to joint ventures -- even if that means sometimes accepting minority ownership.

The risks of adopting a wait-and-see attitude toward emerging Asia and counting on governments to clear away structural constraints are immense. "Companies that retain a narrow vision of their operations in emerging Asia risk being frozen out of the world's greatest growth markets," warns Ranu Dayal, a BCG senior partner and a coauthor of the report. "They will cede the richest opportunities to first movers."

About The Boston Consulting Group
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