Research on Australia’s competitiveness by the University of Hong Kong’s Professor Michael Enright has shown that Australia overestimates its economic integration with Asia and needs a wake-up call.
Enright, formerly of Harvard University, is one of the world’s leading figures in competitiveness research, having directed major reviews of competitiveness in 20 economies on five continents.
For his new report, commissioned by CPA Australia, more than 6000 business decision-makers in Australia and overseas were surveyed. This contrasts with the 68 responses that largely shaped Australia’s ranking in the 2012 World Economic Forum’s Global Competitiveness Report.
Australian respondents to the Enright study typically placed a relatively low level of importance on access to, and knowledge of, Asian markets and bilingual staff, while non-Australians generally rated Australia as disengaged from the region.
“If people in Asia are not seeing Australian businesses actively engaged in their region, they’re not purchasing Australian goods or services,” says CPA Australia CEO Alex Malley.
“Nor are they seeing Australian investment or seeing us bothering to learn Asian languages. There is a strong risk that without a change in mindset from Australian business, Australia will be a peripheral player in the Asian Century.”
Although the onus is on Australian businesses to look beyond the domestic market, Malley says that as a longer-term strategy government should aim to improve Asian engagement with the Australian workforce. The footprint of bodies such as Austrade in Asia could also be broadened.
“A high domestic focus is high-risk,” Malley warns. “Businesses should always have a broader view and they need to look not just to Asia, but beyond. Still, all the statistics point to the fact that the economic centre of the world is shifting to Asia. We are in that region and we have strengths in areas such as services. We can leverage off those strengths and benefit from the Asian boom. Asia is a logical first step and once businesses get used to exporting there, they can look at other markets such as Brazil.”
The survey found that Australia enjoys a strong competitive advantage in its relative freedom from corruption and stringent corporate governance system.
“Non-Australian respondents rate Australia’s governments, regulatory framework and transparency very highly and see it as one of our key advantages,” Malley says. “But it’s something governments and business never really focus on when they try to promote Australia. Instead, they focus on quality of life and features like that, which actually rank quite poorly as reasons to come to Australia and do business.”
According to Malley, an important finding to emerge from the Enright report is that Australia is taking for granted that it will benefit from the Asian Century.
“Most people in Asia don’t see us as part of Asia, business is not engaged in the region and yet we talk about benefiting from the Asian Century,” he says.
“Geographic distance may not be a handicap, but our cultural distance is,” Malley continues. “There is a strong risk that without a change in mindset from Australian businesses, Australia will be a peripheral player in the Asian Century.
“Businesses are domestically focused and at the same time complaining about the domestic economic situation. They need to broaden their horizons and make Asia a key part of their future.
“Respondents in general were positive about Australia, but it’s not grounds for complacency. The scale and scope of this survey – as well as the depth of its examination of industry – means it is not just about how Australia performs, but how important the various features are. Australia might not perform well in nuclear science, but is that important? No. In terms of making policy decisions, you need to look at both performance and importance.”
To read Australia's Competitiveness Survey - Preliminary Findings, click here.