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Asian Companies Miss Their International Revenue and Profit Expectations Despite Strong Outbound Investment Growth, According to

  Asian Companies Miss Their International Revenue and Profit Expectations
  Despite Strong Outbound Investment Growth, According to Accenture

         Talent and cultural obstacles inhibit international success

Business Wire

SINGAPORE -- April 2, 2013

Less than a third of large Asian companies report meeting their revenue and
profit expectations for their international business in the past three years.
This contrasts with more than a doubling of annual outbound investment by the
region’s companies in the past decade, according to new research by Accenture
(NYSE: ACN). The research also revealed that understanding foreign consumers
and sourcing the right local talent were among the biggest barriers to success
overseas.

The research, published in a report, ‘Asian Paths to Global Growth’, included
a survey of 249 senior executives at Asian based companies with annual
revenues in excess of $250 million. Only 28 percent of surveyed companies say
revenues and profits from their international business were in line with
expectations in the last three years (ranging from 37 percent in China to 12
percent in Japan). This comes against $2.9 trillion of outbound investment in
the past decade by Asian companies^1, of which, according to Accenture, 63
percent was directed beyond the region in 2011.

The biggest barrier to successful international expansion is a lack of
understanding of overseas customers and markets, according to 61 percent of
respondents. A majority (53 percent) pointed to complex local procedures and
government regulations as a barrier. Thirty-five percent said their weak brand
or reputation in these target markets was their biggest obstacle.

Talent and cultural issues are the greatest internal barriers to successful
global expansion. Just over half (51 percent) of respondents said they cannot
attract or retain the right talent to expand outside the region. Cross
cultural barriers were identified by 46 percent and the inability to manage
foreign workforces by a further 37 percent.

“Asian companies are increasingly enthusiastic about overseas opportunities
but face stiffer competition and crowded markets,” said Paul Gosling, senior
managing director, Accenture Management Consulting, Asia Pacific. “Today,
Asian companies make up 35 percent of the world’s largest businesses, but only
one in ten of the world’s top brands. To close this gap and improve their
relevance they will need to compete on more than cost and invest more in
differentiation, understanding target customers and sophisticated talent
management.”

The report shows that, where a majority (54 percent) of respondents say low
cost operations are a driver of their global competitive advantage today, only
20 percent say this will be the case in three years. Forty-four percent of
respondents say that in three years, they intend to drive their competitive
advantage through their brand equity and 44 percent through the skills of
their workforce.

Despite the obstacles and mixed results to date, 90 percent of the companies
surveyed remain committed to continuing their international growth
initiatives.

For their ambitions to succeed, Accenture believes Asian companies must focus
on four key points:

1.Being clear about their purpose for expansion to prevent conflicting
    strategies; then ensuring resources and capabilities are aligned to those
    corporate objectives.
2.Differentiating offerings in overseas markets based on deep understanding
    of customers and localized marketing and product development activities.
    Both social media and data analysis tools play an important role for
    success.
3.Building efficient and flexible operations with a focus on scalability and
    the ability to react to dynamic and volatile environments.
4.Putting in place the talent, leadership and cultures for global growth,
    which may involve role rotations, offshore placements, cross-cultural
    training and enhanced internal communications.

“Today’s Asian companies have tremendous opportunities ahead of them and many
enjoy advantages such as strong positions in domestic markets and government
support,” said Mr. Gosling. “However, they are discovering that they can’t
simply repeat the strategies of the first wave of Asian globalizers. Instead,
they must forge new paths and move up the value chain. They need to ensure
their brands are strong in target markets, form an intimate understanding of
customers and create new operating and technology platforms.”

Learn more at www.accenture.com/growthjourneys

Notes to editors

The survey of 249 companies with annual revenues in excess of $250 million
covered ASEAN, mainland China, Hong Kong, Taiwan, India, Japan and South
Korea. Accenture commissioned the Economist Intelligence Unit to conduct the
survey. Accenture experts also completed in-depth interviews with 18
executives and compiled original analysis on investment flows using data from
Thomson Reuters and fDi Markets.

About Accenture

Accenture is a global management consulting, technology services and
outsourcing company with over 259,000 people serving clients in more than 120
countries. Combining unparalleled experience, comprehensive capabilities
across all industries and business functions, and extensive research on the
world’s most successful companies, Accenture collaborates with clients to help
them become high-performance businesses and governments.Through its Skills to
Succeed corporate citizenship focus, Accenture is committed to equipping
500,000 people around the world by 2015 with the skills to get a job or build
a business. The company generated net revenues of US$27.9billion for the
fiscal year ended Aug. 31, 2012.Its home page is www.accenture.com.

^1 Source: Thomson Reuters and fDi Markets, a service from The Financial Times
Limited 2013.

Contact:

Accenture
Chow Yi, +6564106701
yi.chow@accenture.com
 
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