Our SMEs can drive the Asian century

If Canberra is to get serious about entrepreneurship in Asia, it needs to embrace paths small businesses are already forging – and welcome investment flowing the other way.

Strip out all the platitudes, and the government's white paper Australia in the Asian Century could have been a document half the size.

Then strip out everything that patronises a business community that has been engaging with Asia for decades, and it could have been issued as a long-ish media release.

But there it is, in all its waffly majesty – something to reference for decades to come, but perhaps never again wade through.

Perhaps the government should have just republished Ross Garnaut's 1989 report, Australia and the Northeast Asian Ascendancy, to give it the attention it should have had two decades ago – that report was overtaken by the brutal suppression of Chinese protesters in Beijing's Tiananmen Square that year and the meltdown on the Tokyo Stock Exchange.

Still, if we are to have the debate again, and if it really does reinvigorate the learning of Asian languages and promote better cultural understanding, the white paper won't be a complete waste of time.

One of the dangers in this massive document is that too much of it heavily implies a 'top-down' mentality to deepening trade and business relationships with Asia, when in fact much of action in past decades has been 'bottom-up'.

Yesterday afternoon I chewed the issue over with Peter Strong, executive director of the Council of Small Business of Australia, who thumped the table a few times to drive home his main point: "Small business people are already there!"

Strong has more experience than most in working with small businesses in Asia, having previous worked setting up a small business incubator in Tianjin, just outside Beijing – a joint venture between Ausaid, the World Bank and the Chinese government.

Having run similar projects in Turkey and Central Asia, Strong argues that entrepreneurs are essentially the same all over the world – whether it's a poor developing nation or an affluent one such as Australia, he reckons "about 10 per cent" of citizens want to own their own businesses.

And having worked on several government-funded projects – including managing mass redundancies for Central Asian governments as inefficient Soviet era corporations were wound down, to make room for lean, mean private sector businesses – Strong says entrepreneurs share one peculiar characteristic: "They don't listen to you much. They're too busy thinking of ways to grow their business and make money."

That's what Australian SMEs have been doing in Asian markets for a very long time. All government has to do is help remove the impediments to doing business, and provide a skilled citizenry to take up the opportunities.

The government's objectives in the white paper are all laudable, particularly the decision to make four Asian languages – Hindi, Indonesian, Japanese and Mandarin – available throughout the school system.

That's a very expensive task, and it's laughable to suggest it will be covered by the Gonski money – which is actually needed just to stop an ongoing slide in literacy and numeracy skills. Moreover, the government has made this concerted push before – 20 years ago – but the rapid uptake of Asian languages just as rapidly declined. The study of Indonesian has declined by around 40 per cent in universities in the past few years.

However, 20 years is a long time in Asian business. This time it looks crucial that such language and cultural education is revived and maintained, whether by Labor or a future Coalition government.

At the risk of sounding platitudinous, it will help Australian entrepreneurs to build the interpersonal relationships with like-minded entrepreneurs to our north.

The white paper includes some big-business case studies, such as the tie-up between Indian car maker Mahindra with a Gippsland-based engineering firm, and Linfox's two decades of logistics expansion through a dozen of our near neighbours.

However, for Strong, it's important to keep an eye on the little people – men and women who often combine a week on a Thai beach, say, with another week handing out business cards, spotting opportunities, and tapping their calculators to see how they can create something out of the merest wisp of an idea – the fundamental drive of every entrepreneur.

The white paper does mention SMEs a number of times, again in fairly vague, waffly ways (so please bear with them):

"There will be opportunities for Australia’s small and medium-sized enterprises through greater international engagement. The government’s main focus will be assisting these enterprises, which often find it more difficult to identify market opportunities and regulatory requirements, to gain access to trade finance and to establish contacts in target markets. Addressing the impediments these companies face in conducting business in Asia will be important for Australia to capture the benefits of the Asian century.

"... Enterprise Connect supports Australian small and medium-sized enterprises to develop the skills, capabilities and knowledge needed to make the most of opportunities at home and abroad. Its business advisers work directly with companies. This support was extended recently to the tourism industry.

"... Other measures to support small and medium-sized enterprises will continue to operate. These include the Small Business Support Line, the Small Business Advisory Services program, the Buy Australian at Home and Abroad initiative, Commercialisation Australia grants, and research and development tax incentives."

What the report spends far less time explaining is that if we're to shake off colonial attitudes of yesteryear, we should expect to see just as many entrepreneurs flowing the other way – the white paper talks about smoothing the way for skilled migration and making temporary visas easier to obtain. But if Strong's "10 per cent" rule holds true, we need to embrace the idea that a large proportion of future SME opportunities on Australia soil will be seized by Chinese, Korean or Indonesian entrepreneurs.

It's a bold vision – a real two-way flow of people and capital, that is as much about starting up small businesses in each other's countries as doing deals at the big end of town.

The BHPs, Rios, ANZs and so on have made great strides in winning business at the top levels. Australian entrepreneurs, armed with better language and cultural skills, will now have to learn faster than ever before how to pinch Asia's bottom.

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