Taking advantage of the new Asian economic zone



By Martin Conboy


new asian economic zoneFormer Australian Treasury Secretary Ken Henry has cautioned Australian businesses that the resources boom fuelled by Asian demand has transformed the structure of the Australian economy so deeply that the lack of competitiveness suffered by foreign exchange and trade-exposed industries (Retail, Tourism, Education and Manufacturing) is largely irreversible.


Dr Henry, who is also heading up the government’s Asian Century white paper taskforce, recently told a Melbourne business conference that the mining boom had resulted in a surge of investment 62 per cent higher compared with the sector’s 20-year average rate of growth.

Not only was the investment boom skewed to the mining and resources sector it is also starved other sectors of capital to improve their businesses. Moreover the investment bulge lead to higher labour and material costs and an appreciably stronger Australian dollar. In 2000 one Australian dollar brought US$ 0.55 and twelve years later it is buying US$1.05. Today it is hovering around US$0.93. Henry said that trade-exposed businesses would need to achieve an unrealistic fifty per cent increase in productivity to make up for the lower price to sell their products.

Additionally a new wave of robots, far more adept than those now commonly used by carmakers and other heavy manufacturers, are replacing workers around the world in manufacturing and distribution. The new Australian government has seen off the car industry and is flatly refusing to underpin any industry sector that cannot stand on its own feet.

We only need to look at what’s happening in the automation of call centre and customer service environment as smart phone apps and self-serve web sites erode the need for human agents. Moreover the arrival of Recruitment Process Automation is sending shivers down the spine of the recruitment industry.

Experts say even though jobs will be lost, more efficient manufacturing and service sectors will create skilled jobs in designing, operating, servicing and consulting to third party organisations.

Dr. Henry went on to say that Australia was “kidding ourselves” if productivity measures, often mooted by business and government leaders, would help “obviate the need for structural adjustments in the economy”, he said.

“There’s simply no feasible increase in productivity growth that would reverse all or even a significant proportion of international competitiveness that’s presently being experienced by Australia’s trade-exposed non-resource industries,” He said.

Furthermore the simple fact of the matter is that global labour markets have restructured and highly skilled and less expensive Asian knowledge workers can and will do the work required of them. Gone are the days when Asia was a place where low value business processes were sent as a labour arbitrage play.

“If we want to benefit from the Asian Century, we can’t think of us standing apart from Asia selling product into it,” he said. “Rather Australia will be most successful if we achieve deep, seamless integration [with Asia].”

“We’re living through an extraordinary period of economic change, the like of which will never appear again in our lifetimes … and perhaps won’t come to Australia again for several generations,” he said.

“And that’s why it’s important to think deeply about these issues and to engage widely in the Australian community to ensure the opportunity is not squandered.”

If necessity is the mother of invention, then we had better really start to look hard at what is happening to the north of Australia.

Dr. Henry said the structural changes in the economy meant jobs are being lost in traditional trade-exposed industries like manufacturing, but stressed many are also being created elsewhere. A report commissioned by the International Federation of Robotics found that robotics manufacturers worldwide in engineering and assembly jobs already employ 150,000 people.

“You never hear anyone say that on an average business day in Australia something like 5000 to 6000 people walk into a new job – that’s each day,” Dr Henry said.

The opportunities that will be presented by the new Asian Economic zone can only be imagined. However there will be demand for western expertise as new business are being set up to cater for increased demand driven by the rise of the Asian middle class. Customer service expertise in particular will be keenly sought after.

Nearly every day I hear about opportunities in the areas of live web chat support, Social Media Monitoring, email response and as I say a few years ago the new rock stars will be the people who can make sense of Big Data.

Australian BPO service providers not being interested or do not have the wherewithal to provide such services. Its not as if we did not know that Social Media and online marketing are going to be growth markets for BPO providers, I just wonder if anybody is listening.

Follow Martin Conboy on Twitter

August 12, 2014

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