IN THE last three years, Thai conglomerates have made significant acquisitions abroad, mostly in the Asia Pacific as well as in the US.
In 2014, Thai firms invested almost $4 billion (Bt140 billion) in other Asian countries, more than double the figure in previous years, according to a new study by leading global advisory, broking and solutions company Willis Towers Watson.
Today, Asia Pacific-headquartered companies account for 40 per cent of the firms in the Fortune Global 500, outnumbering those headquartered either in North America (30 per cent) or in Europe (28 per cent). This represents a significant growth from 10 years ago, when they comprised only 24 per cent of the ranking.
Willis Towers Watson’s 2016 Asian Trailblazers Study: Masters of Multitasking and Transformation found that Asian multinationals, to achieve success, have had to overcome substantial odds, including significant barriers to time, lack of experience, and managing highly divergent cultures.
“These multinationals have had amazing and sometimes unconventional growth stories,” said Scott Burnett, head of Asia at Willis Towers Watson. “They have not had the luxury of time nor been able to grow in an orderly and linear fashion like many of their global counterparts. We call them ‘Asian Trailblazers’ in recognition of their pioneering spirit. They’ve had to venture into the unknown, and have made up for lost time by being pragmatic and agile, prioritising, selectively outsourcing, and learning quickly on the job.”
“In Southeast Asia, Thailand’s MNCs tend to get insular, and find it more difficult to adapt to change and to think outside the box due to the national culture,” said Pichpajee Saichuae, managing director of Willis Towers Watson Thailand. “While Thai MNCs have successfully expanded their businesses abroad, there is plenty of room for improvement in terms of having a diverse leadership. On the other hand, their peers from the Philippines – a very culturally diverse country – hire the best talent from wherever it is available and focus more on qualifications than origin. And they reap the benefits of having a multilingual culture.”
In five Southeast Asian countries – Thailand, Malaysia, Philippines, Singapore and Vietnam – there are at least two very large and important MNCs that have embarked on a 360-degree transformation towards becoming global. Some of these MNCs’ CEOs have been vocal about the fact that to become truly global, they have to overcome part of the challenges posed by their cultural DNA.
Cultural distance for Southeast Asian MNCs involves more than English language barriers. The largest clash exists in terms of leadership and working style. Organisational culture in these multinationals is highly correlated with national culture and firms have realised that this is directly affecting their ability to succeed as global players.
Apart from the cultural issues, the research revealed that many Southeast Asian multinationals typically started as family-owned businesses, and are now dealing with second- and third-generation leaders that have different business training and ambitions from their predecessors.
The study found that one of the ways that Asian multinationals are handling this pace of change is by “leapfrogging” some of the basic changes undertaken by their more developed counterparts, and making radical moves early on.
For instance, in terms of shared service models for support functions, many fast-growing Asian Trailblazers are not setting up traditional bricks-and-mortar call centres, instead choosing to bypass this earlier stage of HR development and avoid obsolete systems, switching directly to mobile-technology-enabled ones.
Furthermore, many Asian Trailbla-zers have also skipped several traditional elements of certain HR roles and jumped directly to a more strategic role, such as using workforce analytics, focusing on employee engagement or developing holistic wellness programmes.
“Asian MNCs have been surprisingly successful in sustaining their growth despite having smaller HR teams with fewer resources, compared to their developed-market counterparts,” said Burnett. “In the West, most large corporations have departments with experts handling areas like rewards or talent management, compensation and benefits, and so on.”
“These Asian corporations usually have just one or two key people handling all HR-related issues. Since they are used to dealing with multiple issues simultaneously, these HR executives have the advantage of being flexible and highly-equipped to face unexpected challenges.”