It's all happening in Asia

This article was originally published on February 2, 2017 and written by Rodney J. Johnson.

1. Asia is no longer the future of your business. It is the here and now. 
2. Asia is already the center of the business world, now rules are solidifying, markets are maturing, and investors are committing.
3. Asia is more important to global companies than ever before. That creates both opportunities and risks.

Things are changing rapidly in Asia today.

Market rules are maturing, investment is flowing, global companies are committing to an Asian future. Asia is a diverse and complicated place, however. The region defies a single definition or stereotype. Different regions of Asia differ by culture, ideology, economic and legal systems, and historical rivals. All of these differences mean Asia cannot be treated monolithically.  Effective risk management in Asia means the different countries require a custom approach and local knowledge of each place. 

Northeast Asia
For many in the West, Northeast Asia is what comes to mind when they think of Asia.  Northeast Asia includes China, Japan, Korea (North and South), Taiwan, and Mongolia. Culturally, Northeast Asia has always been under China's influence, with China and Japan being the two dominant historical competitors in the region. Today, Northeast Asia is largely in the US sphere of influence. Japan and Korea are close allies of the US, and are culturally closer to America than they are to anyone else.

It is not an exaggeration to say that Northeast Asia is the engine of global economic growth today. Over the last 30 years, China's rise has powered the economic growth of the region and played a large role in forming the economic structure of the world we live in today. 

Southeast Asia
Southeast Asia is perhaps the most culturally and economically diverse region of Asia.

Rodney J. Johnson
President, Erudite Risk
Founder Resilience Cloud

Rodney J. Johnson is currently President of Erudite Risk, Co-Founder of the KBLA, and Founder of Resilience Cloud. He has spent most of his work life in Asia. Working in both the IT and the risk management sectors, he has been based in Korea and Singapore, while running companies with direct operations in Korea, China, Singapore, and India. He is the former country manager of a Korean subsidiary of a Silicon Valley operating systems start-up acquired by Samsung SDS, Korea’s largest systems integration company. Following that acquisition, he served as the chief operating officer of the new Samsung SDS–affiliated company that resulted from the acquisition.

Rodney J. Johnson is also a former technology analyst, reporting on Asian technology issues, and served as an intelligence analyst in the US Army. Over the last 13 years, he has led or been involved with more than 2000 risk management and security-related cases for multinational companies in Asia, as well as directly consulted for more than 30 of the Fortune 100. He has a BA in economics and mathematics and an MBA from the University of New Mexico’s Anderson School of Management.What customer industries is your company strongest in?

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Being mostly in the tropics, SE Asia is rich in natural resources. Mining, oil, and other natural resources extraction plays a dominant role in the economies of SE Asia. The region includes the Philippines, Indonesia, Malaysia, Singapore, Vietnam, and Singapore among other countries. It's location and broad geographic scope, combined with the existence of untapped natural resources, suggest SE Asia will be the epicenter for future geo-political and military conflict. 

The economies of SE Asia are largely dominated by the Chinese diaspora, with an enormous economic and ideological range between the poorest countries and rich countries like Singapore. SE Asia is still culturally more influenced by Great Britain than by the USA. 

South Asia
South Asia's time may finally be upon us. Dominated by India, the region promises to be the new growth opportunity of the 21st century. South Asia also includes Pakistan, Bangladesh, Sri Lanka, Nepal, and Afghanistan, among others.

A long time colony of Great Britain, India has been non-aligned since independence, but is now courted by the West as a counter-balance to China's growing power. India's huge middle class, vibrant democracy, and relatively untapped potential make it a key country of interest for many companies hoping to succeed in Asia. India's time is now. 



Three Important Trends in Asian Risk

1. Asia is more important to global organizations than ever before, so they are putting more money into the region.
Since Asia is now a more important part of the global portfolio, companies are directly entering Asian markets and bringing along compliance and control structures from home. That means that rather than outsourcing services, companies are more likely to directly hire regional personnel. Having more at stake means caring more about control over assets and operations than before. One problem with the direct hire strategy is when the organization hires one individual, or a small team, and expects that person or team to oversee and manage the whole region's compliance and risk requirements. The load is just too large and the region is just too diverse to be able to rely solely on internal resources; unless those resources are vast and spreadout across the region. 

2. Now that the region has become very important to their businesses, and they have invested a lot, companies are investing more energy to learn about it.
Learning about the different markets allows organizations to understand the different risks faced in each market, as all markets present unique challenges. The understanding that one-size-doesn't-fit-all when it comes to operations, governance, and compliance is a key step to building effective structures and making better risk management decisions. Understanding that experience in one country in Asia may not translate to other markets is a huge step as well. 

3.  Due to the intersection of influences in the region, the “trusted advisor” role is more important than ever and, unfortunately, less valued.  
Now that new local hires are often replacing long-term advisory relationships, there is huge potential for problems as opinions grow less diverse, misunderstandings about local hires roles arise, and attempts to stretch personnel across the region are made. Direct regional hires are best utilized as internal advocates for very localized risk management programs and policies, while coordinating support from those with deep local knowledge in each market the organization operates in.  They should not be used to replace support from long-term, trusted advisors, but aid in translating the dictates of the markets into the internal language of the organization. 

How companies choose to enter and operate in Asia will ultimately determine their success. Among all of the variables and different ways organizations can choose to enter markets, the one thing that is non-negotiable is commitment. Companies must commit to each market they enter with as much force as possible. The dictates of competition and the will to meet them are both very important, but building in the ability to avoid, mitigate, and recover from risk events of all types must also be high on the list. 

Erudite Risk

Erudite Risk offers risk management and security-related professional services for multinational companies operating in the Asia-Pacific region. With operations in India, Korea, and Singapore, Erudite Risk is ready to help you meet the challenges of Asia, the most dynamic and challenging business environment in the world.

Rodney J. Johnson is President of Erudite Risk. He has lived in Asia for most of his adult life, but still longs for good Mexican food.