Interview: Are US Companies Better at Operating in Asia Than Asian Ones?

Watch Telstra's Tom Homer explain "Why U.K. Companies Are Smashing the Asian Competition." (IBTimes UK/YouTube)

Telstra, an Australian telecommunications and media company, recently released a comprehensive report on why some corporations succeed in Asia and others fail. One of the findings is that American companies (followed by the U.K.) do best across multiple countries in Asia. The report, entitled "Connecting Countries," cites nine key factors which separate the corporate winners — the Asia Business Champions, as they call them — from those that are failing. Some of the findings will come as a surprise for senior executives who are trying to crack the code for the most effective ways to grow their businesses in Asia. We talked to Tom Homer, head of EMEA and the Americas for Telstra Global, to give us more insight.

Tom, a big surprise in the report is that soft skills — personality traits — are more important than prior experience and knowledge for successfully leading a company across Asia. Can you elaborate?

We asked senior leaders (C-level and other senior executives) to rate the importance of a set of key traits that might be required to manage across multiple countries in Asia. When you look at the responses given by leaders working in the most successful businesses in Asia compared with those working in other companies, two things stand out:

1. There are three key traits where leaders in the most successful companies diverge even further in their assessments than leaders in less successful companies: these are resilience, curiosity, and creativity. And we think these three traits are vital:

· You need to be tough enough to cope with what leading a business across Asia can throw at you;
· Curious enough to be constantly hungry to learn more — you’ll never be in a position to say you understand Asia or a country in Asia any more than you will be able to say that you understand America. But if you are willing to keep trying to learn more you’ll make better and better decisions;
· And creative enough to be willing to embrace new ways of thinking and of problem-solving and adapt them to your needs.

2. The leaders in the most successful businesses believe that all of these behaviors are more important than those who work for less successful companies. They know that managing across countries in Asia requires a cross-section of skills and pay more attention to these skills than leaders in less successful companies. Simply being aware that managing across Asia is different is central to solving the problem.

Western companies are more likely than Asian companies to have been successful meeting their financial and strategic objectives over the last three years in Asia. Why?

Telstra’s research shows that over the last three years, U.S.-headquartered companies that are operating in Asia have been more successful than Asian companies. In fact, 68 percent of U.S. companies successfully met their financial and strategic objectives in Asia over the last three years, compared with only 59 percent of Asian companies. We believe this may be explained by a key finding in our research, which shows that U.S. firms are more likely to think that it is extremely important to have regular visits and exchanges from senior leaders at a global level to regional offices and vice versa. We also uncovered that explaining the needs of global headquarters to local markets, as well as the needs of local markets to global headquarters, is vital to U.S. businesses operating throughout Asia, which could also be a factor in why some U.S. companies are outperforming their Asian peers.

Interestingly, in our in-depth interviews with executives, one of the seasoned Asian executives described her role as a metaphorical (and at times literal) “interpreter” with a responsibility to interpret the needs of the local office to headquarters, and vice versa. To do the job well you need to understand both contexts very well and you need to enjoy the trust of the people you report to in the central office. By encouraging interchange between offices and getting staff to commit to extended postings in central and regional network offices you build the personal ties and connections that mean you will already know and trust the person at the other end of the phone or the videoconference you are speaking to when decisions need to be made.

What does the report reveal about the most promising markets for expansion in Asia?

Over the last three years companies operating in the Philippines, India, and Indonesia are most likely to have been very successful meeting their strategic and financial objectives. Looking to the next three years, companies operating in China, Hong Kong, and Singapore are most bullish, predicting that they will far exceed their financial and strategic objectives.

Are there any common characteristics of an Asia Business Champion?

In our research, we define Asia Business Champions as firms that were both extremely successful in the past three years meeting their financial and strategic objectives in Asia and expect to exceed those objectives in the next three years. Only 5 percent of respondents qualify as an Asia Business Champion based on this definition.

In terms of common characteristics, Asia Business Champions are more likely to be companies with a global footprint than other companies in this study — 82 percent operate both in Asia and in countries outside of Asia, compared with 40 percent for other companies. Asia Business Champions are also more likely to be U.S. and U.K. multinationals — 32 percent of Asia Business Champions are U.S. firms compared with 14 percent of firms overall and 8 percent are U.K. firms compared with 3 percent overall. Although Asia Business Champions come from a broad cross-section of industry sectors, the two stand-out sectors are ICT (information and communications technologies) and financial services, both of which are overrepresented among Asia Business Champions as a whole.

The final way in which the profile of Asia Business Champions differs from other firms is in the number of workers they employ — Asia Business Champions are significantly more likely to employ more than 200 workers and less likely to employ fewer than 20.

Why did Telstra decide to commission this report?

Whether the region is their natural or adopted home, there is a growing talent pool deployed in Asia right now who are building Asia-capable companies and promoting better trade links throughout the world. It’s rare to hear from these executives as a collective — but as more multinational organizations look to expand into Asia their feedback is needed now, more than ever. Change isn’t always comfortable, but it’s coming.

Telstra Global commissioned "Connecting Countries" to understand what these pathfinders doing business in Asia think, what they’re seeing, and what they’ve learned along the way. We need to leverage their experience, and we are sharing the research to help other companies change the way they connect and collaborate, and enable them to adapt their strategies accordingly, rather than "follow suit" but expect different results.