As the world tilts East, an HSBC report reveals new opportunities for European businesses and warns companies are at risk by not engaging with the new world economic order.
“Unless European business confronts the implications of the rebalancing of economic power and the growth of Asia, business opportunities will be lost and business threats will increase,” according to a report published by HSBC Commercial Banking which investigates the challenges and opportunities of the rise of Asia for European businesses. ‘Looking East: The changing face of world business’ identifies the most influential current and future trends in ‘the East’ and interprets these to define practical implications and opportunities for companies domiciled in Europe.
It highlights that ‘thinking businesses’ need not only to factor Asia into their strategic thinking, but also actively address how they can capitalise on its diverse consumer base, skilled workforce and advances in research and development (R&D), while mitigating the risks posed by the macroeconomic climate.
The report recommends that successful European businesses of the future will:
- Maximise human capital – looking beyond domestic borders to capitalise on Asia’s investment in up-skilling as it moves away from its image as a source of low cost labour.
- Create an ‘innovation supply chain’ – turning the traditional model of Western innovation and Eastern delivery on its head to take advantage of Asia’s increasing share of R&D spend.
- Invest in consumer insight – to tap into the opportunities afforded by unprecedented growth of a diverse and fast changing Eastern consumer market.
- Employ a global mindset – dedicating time to understanding how Asia has redrawn the world business map, overturning preconceptions about the East and fostering a culture that accommodates different business models and ‘rule books’.
- Mitigate risk effectively – by accurately researching, understanding and weighing up risks versus the significant rewards of engaging with the East.
- Rethink consumption and distribution – acknowledging individual business’ role in tackling global sustainability issues, particularly the East’s energy consumption, and considering new models of manufacturing and export as a result.
- Create an advisory-led business – acknowledging the role of external experts to provide local market insight into doing business globally.
Alan Keir, HSBC Group general manager, global co-head of commercial banking, said: “We are no longer looking at when West meets East, but at how the East will redefine the West and the way we do business. It’s crucial that European businesses are not only appreciative of this fundamental and fast-paced change, but that they are able to respond swiftly and effectively. Our competitiveness as a region is at risk if we don’t address practically and proactively at an individual business level how to capitalise on it. It is the thinking business which acts now.”
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