Asia has a lot of business potential for multinationals. And the culture in the region is starting to change for the better, says Ed Peters
Multinationals seeking to take a dive into Asian waters need to look before they leap, although most of the major multinationals are in the region already - in one form or another. The most popular country in the region appears to be China. Indeed, China's admission to the World Trade Organisation is provoking a stampede of smaller and medium-sized companies (from suppliers and contractors to the law firms and multinationals). US real estate companies are also suddenly waking up to the potential Asia has to offer.
Those multinationals wanting to enter into this region for the first time should be aware that they will encounter many HR challenges. The region is a crossroads of cultures; its many different countries are at vastly different levels of development; and financial upheavals may well be on the horizon.
On top of this, local politics can add spice to an already precarious situation. For example, at one stage the Indonesian government was considering legislation which decreed that no corporation could employ more than three foreigners. The scheme was little more than a pre-election vote catcher, but it did cause various multinationals - who would have been unable to continue operations without their full complement of expatriate executives - more than a little heartache.
This example serves to illustrate one of the major problems multinationals can expect to encounter: the pool of labour - apart from the inexpensive manual kind - is limited. While Asians place a high value on education, local resources are often insufficient, whether because of poor funding or inadequate teaching methods. Foreign study is highly prized, but those lucky and clever enough to attend school overseas very often stay put once they have graduated, or come home to start their own businesses. Multinationals are thus often faced with the choice of a painstaking local headhunt and possibly having to train up new recruits into the bargain, or bringing in staff from abroad, with all the extra expense that entails.
John Ambler of the New York-based Social Science Research Council has made an extensive study of the problem of Asian educational practices. "Asia is n