Great Expectations in Asia Pacific

The Asia Pacific region, with a growing economy and burgeoning population, is seen as a tremendous opportunity both for multinationals and local companies looking to expand regionally and even globally. For both, success hinges on their ability to achieve high performance driven in large measure by excellence in the finance function.

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The economic order is changing as globalization enters a new and complex phase.

Accenture calls this new phase the rise of the multi-polar world, meaning that centers of economic power and activity are multiple and diverse. No one area has economic hegemony. In this new world, Asia Pacific is on the rise. Thanks to its growing economy (8 percent a year) it now accounts for a quarter of the world’s gross domestic product. And by 2020, it will be home to 700 million new consumers.

Opportunity abounds in this region—but its innate complexities of language, climate and culture make it one of the hardest places to succeed. To get a handle on this complexity, Accenture surveyed nearly 200 companies in the region, including multinationals already in the area, those planning to go there and Asia Pacific companies operating abroad or planning to do so.

Multinationals and native Asia Pacific companies were asked similar questions:

• What was the primary benefit sought from expansion?—For 67 percent of multinationals and nearly three-quarters of Asia Pacific companies, it was gaining access to customers.
  
  
• When asked which capabilities their finance function needed to be best positioned for overseas expansion, the most common answer was a standardized operating environment for both groups (29 percent and 26 percent).
  
  
• The survey asked respondents to indicate recent finance initiatives. Multinationals have recently developed a finance function strategy (69 percent), implemented standard enterprise performance management (66 percent) and standardized finance processes (66 percent). For Asia Pacific companies, the top three recent finance initiatives were implementing enterprise performance management (51 percent), implementing systems to deal with advanced tax and regulatory issues (46 percent) and standardizing finance processes across the enterprise (46 percent).

What emerges from the survey are some similarities and differences, but also some surprises.

• For multinational and Asia Pacific companies alike, the expansion is mostly motivated by the search for new customers.
  
  
• But what is second in importance for each group is even more telling. For the multinationals, Asia Pacific is a tempting site for new headquarters and a source of abundant, low-cost talent. For Asia Pacific companies expanding beyond national borders, customers are a top priority too. But global technology, innovation and know-how also beckon them beyond their borders.
  
  
• An overwhelming majority of companies, both multinational and Asia based, have found the customers they expected.
  
  
• When they have not received the benefits they expected from their expansion, both groups say the main reason is price undercutting by emerging market competitors.
  
  
• For companies operating in the Asia Pacific region, building and sustaining the required level of governance, control and compliance is a major challenge, as is the availability of skilled finance personnel. This is true for companies expanding across Asia Pacific or outside of Asia Pacific globally.

The key to success in the challenging, competitive Asia Pacific region is high performance—underpinned by excellence in the finance function.

Global multinationals operating in the Asia Pacific region will have to leverage their existing global finance strategies and capabilities—but tailor them to local conditions. Asia Pacific companies, on the other hand, will have to transform their finance functions (including processes, tools and organizational structures) to move toward a regional or even global model.

The key goal for both groups is to win more customers. To do this will require the business intelligence to identify not just how they are performing individually, but also which markets to aim for—and how competitors are faring.