Asian market risk for Australian businesses

Despite the obvious benefits to Australian businesses expanding into the Asian market, a new survey from PricewaterhouseCoopers (PwC) have said companies thinking of investment in this region should be careful.

The business consultation group earlier this month released its 'Transforming challenges into opportunities: Asia Corporate Treasury Survey 2014' report, which polled more than 100 industry executives from seven Asian countries.

The survey focused on four major areas of business including corporate treasury, liquidity management and treasury management.

Risk Assurance Leader at PwC Singapore Dominic Nixon said businesses in Asia face unique challenges and companies can soon encounter difficulties.

"Operating in Asia presents many issues that affect all global companies. There are also many challenges unique to Asia," he said.

"Unlike much of Europe or the US, Asia does not have a single currency; there is no single regulator; the banking landscape is very diverse; and there are many restrictions/ regulations governing the multiple emerging currencies."

Nearly a third (30 per cent) of respondents were found to operate in more than six nations. This was a problem because more than half had less than five employees in the group treasury.

With major growth in the area, a massive 54 per cent were not happy with their current recruitment software management. With a lack of specific financial skills, businesses were having to suffer with smaller teams.

Another surprising element to the survey was the executives attitude towards cash management. Less than a third could access their cash position in real time and 52 per cent "did not have confidence in their cash flow forecasting processes".

While business investment in the region is still recommended, individual firms should develop solid strategies and cash management plans to become competitive in the tough market, as Mr Nixon explains.

"The multitude of risks organisations face can be mitigated and managed by finance and corporate treasury functions."

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