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Accenture Outlook | The human touch behind Asia Inc.'s global push

Accenture Outlook | The human touch behind Asia Inc.'s global push

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Published by Accenture
A new generation of Asian companies is going global and actively managing talent, leadership, empowerment and communications to overcome obstacles and drive growth. These culturally savvy leaders are rendering stereotypes obsolete, setting the standard for other Asian globalizers and posing a new threat for established multinationals.
A new generation of Asian companies is going global and actively managing talent, leadership, empowerment and communications to overcome obstacles and drive growth. These culturally savvy leaders are rendering stereotypes obsolete, setting the standard for other Asian globalizers and posing a new threat for established multinationals.

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Published by: Accenture on Jul 22, 2013
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09/12/2013

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The journal of high-performance businessThis article originally appearedin the 2013, No. 2, issue of 
Asia
The human touch behindAsia Inc.’s global push
 By Arika M. Allen, Paul Gosling, Grant D. Powell and Claire Yang
A new generation o Asian companies is going global andactively managing talent, leadership, empowerment andcommunications to overcome obstacles and drive growth.These culturally savvy leaders are rendering stereotypesobsolete, setting the standard or other Asian globalizers andposing a new threat or established multinationals.
accenture.com/outlook
 
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Outlook 2013
Number 2
Meet today’s Asian multinational: Itstop leadership includes an American, aGerman and a South Arican. Businessis conducted in English. It is active in70 or so countries, where its ocesare run largely by non-home-country executives. The company is pushingaggressively into Russia and Brazil,and its goal is to increase sales romoverseas operations to more than65 percent o revenues.This particular multinational isTakeda Pharmaceutical Co., oneo Japan’s oldest and largest drugcompanies. It is also a orerunner o a new generation o Asian companiesthat are rapidly expanding outsidethe region.In 2008, Takeda purchased US-basedMillennium Pharmaceuticals or $8.8 billion, ollowed three yearslater by a $13.7 billion acquisition o Swiss giant Nycomed. More recently,Takeda built a new plant in Russia andacquired Multilab, a pharmaceuticalscompany in Brazil.But this is not about a buying spree. Accompanying Takeda’s expansionhas been a drive to hire non-Japanesesta and management with internationalexperience, and a decision to useEnglish across its global operations.The company’s leaders are changingthe organization’s culture with anemphasis on diversity and “borderless”teams. In the process, they are makingTakeda a leader among the many  Asian companies working to master the human actors in their push to goglobal—considerations that many o their predecessors ignored or did notully understand. An emphasis on the people side o theequation—also very much in evidenceat companies such as Samsung andTata Motors, among others—is seenas essential to the long-term globalsuccess o those organizations. It enablesthem to better compete or the talentthat can uel innovation, quality andhigh perormance—key elements o a dierentiated competitive thrustidentied in new research commissionedby Accenture and produced by theEconomist Intelligence Unit. By osteringdevolved leadership, these Asiancompanies can stay much closer andbe ar more responsive to, their over-seas markets.This trend also poses big questionsor Western multinationals. As their  Asian rivals ocus on the human sideo their internationalization eorts,they’ll become more attractive placesto work and may well lure top talentrom today’s leading global companies.So business leaders worldwide need toask themselves whether they are properly matching their Asian rivals’ eorts.
Up-and-comers
They also need to be alert to themomentum o the numerous Asiancompanies that are eager to learn romand emulate the Samsungs and Takedas,the up-and-comers that, beore long,could become orceul competitors or promising partners—or both.Japanese companies began their global march decades ago, and SouthKorean giants such as Hyundai andLG Electronics have ollowed. But inthe last decade, many more o Asia’scompanies are making their presenceelt worldwide. Companies such asChina Mobile Communications Corp.,Huawei Technologies Co., Kia MotorsCorp., State Bank o India and Wilmar International. have all joined theranks o the Fortune Global 500.The ast-paced and assertive overseasexpansion o these Asian globalizersis gaining attention—not only becauseo the scale o their investments butalso the rate at which those investmentsare rising. In 2011, Asian enterprisesinvested $383 billion outside their home markets—more than twice the$158 billion they invested a decade ago.More and more o those unds arebeing invested ar beyond the region.Ten years ago, Asian businesses made
 
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Outlook 2013
Number 2
nearly 60 percent o their investmentwithin Asia itsel. In 2011, that ratioreversed, with more than 60 percent o their capital earmarked or outside theregion. Japanese companies make upthe largest block o investors overall,though their rivals rom China are notar behind.
Cultural stumbles
However, there has been no automaticcorrelation between money invested andresults achieved. As Asian companiesexpand into new territory, they run upagainst very dierent behaviors andbelie systems. For every successuloverseas move by a Samsung, therehave been many, many retrenchmentsand losses by Asian companies as they have stumbled over local culturalnorms and language diculties whileclinging to rigid and oten hierarchicalpractices that worked well or themat home.Perhaps the most notorious example o cultural mismatch was the attemptby a Japanese company to teach someo the emale employees o a newly acquired US company how to servetea, wear their hair and choose their wardrobes. Although ewer Asiancompanies today are likely to makesuch a aux pas, their approachesare nonetheless oten out o sync withwhat works in the regions where they choose to invest.Their business leaders know it. Askedto assess their internal executionin light o their global plans, Asianexecutives as a whole say their greatestinternal challenges are dealing withcross-cultural issues, mastering thehuman aspects related to talent andhaving the right local leadership.Nearly hal coness that they strugglewith cross-cultural barriers, and morethan hal are hard-pressed to attractand retain talent in overseas markets,according to the Accenture/EIU study (see charts, pages 4 and 5).These deciencies are proving to haveconsequences or many companies.One sure indicator: Only about a thirdo companies rom China and Indiasay they have seen their revenue andprots rom international operationsdevelop in line with their expectations.The gure is even lower among Japanesecompanies, at just 12 percent. Another telltale sign: Many Asiancompanies have ound it tough tocreate internationally recognizedbrands. Although Asian corporationsnow comprise 35 percent o the world’sbiggest enterprises, they make up just1 in 10 o the most valuable brands,according to Interbrand’s 2012 list o the world’s 100 Best Global Brands—again o only three companies over thepreceding decade. With these markers to go by, is it any wonder that there is such keen interestin what the successul Asian globalizersare doing?For most would-be Asian globalizers,the biggest challenges lie ahead.They conront a ar more complexand volatile global landscape thandid the rst wave o Asian companiesthat built global businesses. They mustgo nose-to-nose with strong localcompanies and an increasing number o multinationals.
Foreign affairs
The game gets bigger and tougher every year. Between 1990 and 2010, thenumber o companies operating acrossborders almost tripled, rom 35,000 toalmost 104,000, with the proportion o those rom emerging markets soaringrom 12 percent to 30 percent.The prevalence o amily-ownedbusinesses and state-owned enterprisesin Asia also presents unique challenges.In companies where a amily stillholds a sig-nicant stake—hal o publicly listed companies across10 key markets in Asia—ownershipand management are oten tightly intertwined, which makes it harder 
(Continued on page 6)

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