Asia: More than the Sum of its Chinese Parts

There is more to Asia than China - To succeed in the Asian Century it will be important to look beyond the Forbidden City.

Too often in Australia we think and talk of Asia as being China. Government strategies, political rhetoric, journalistic commentaries, and in many cases business strategies look to China as the be all of Asia. This is a simplistic and dangerous view to hold. China undoubtedly is a thriving and impressive market with somewhere around 1.3 billion people, including over 250 million in the middle class. It is the world’s largest country by population and will soon overtake the US as the world’s largest economy. China is a vast country stretching from the pacific coast in the East to Central Asia in the West, Russia and Mongolia to the North and India and the Himalayas to the South. Mega cities are abundant seeking to buy and sell all the worlds fare, while the resource potential is emerging anew with exploration and exploitation of rare earth minerals, and shale oil and gas reserves. China is clearly a behemoth, and it is important for any business and sovereign western government to plot a clear strategy for engagement with China. Asia however is more than just the sum of its Chinese parts.

Unfortunately I hear and see too often “Asia” being used as a proxy descriptor for “China”, which it clearly is not. We must remember that Asia is a vast continent which includes South Asia: Pakistan, India, Bangladesh (1 . 5 billion), Central Asia: Uzbekistan, Kazakhstan, Tajikistan, Kirgizstan, Iran etc (500million), and South East Asia: Indonesia, Vietnam, Thailand, Malaysia etc (600million). The rest of Asia dwarfs the population and labour resource potential of China. Asia makes up around half the world’s population. It is important to place this scale of opportunity into perspective.  The trade opportunities in these other Asian markets are equally impressive. Central Asia and Indonesian have abundant oil and gas resources, while in many countries there are rare earth minerals amongst other mineral resources readily sought on global exchanges. Indonesian for example is now the world’s largest exporter of Coal.

We should remember also that in addition to China, India and Indonesia make up three of the four most populous countries in the world…..and two of these markets are democracies ( India 1 billion, and Indonesia 250 million). The population size of other countries in Asia provides a renewed opportunity for manufacturing in the region from a non-Chinese market. The labour supply in Asian Countries such as Indonesia and India provide an opportunity for international manufacturers to tap into location benefits that can arise from proximity to sales markets and global supply chains.  The market opportunities in Asia are indeed more than just China and many successful companies are developing strategies to tap into these emerging market opportunities. So when you next hear a politician, businessman, journalist or man on the street talk of Asia….ask them which part? If businesses are to truly succeed in the Asian century they will need to actively build a strategy that goes beyond solely a China Strategy, as Asia is a big place, and increasingly likely to be the economic super region of the future.

f you would like to meet with me to discuss how I can help you and your organisation achieve success in the broader Asian markets, or you would like to discuss new opportunities emerging in the near future, please send me an email (nathan@asiaaustralis.com). Alternatively check-out my LinkedIn Profile and the website of my company AsiaAustralis.

Buying Magic Carpets in Uzbekistan

The Ark, The Mudbricked Fortress at Bukhara

The traditional caravan trading routes through central asia, linking China to Europe and the Middle East, are as exotic as they come, and the Uzbekistani city of Bukhara is first amoungst them when it comes to exotic mudbricked cities, bazaars, mosques and medrasses. In these cities and towns that have been trading with merchants and travellers for millenia, what better way to emmerse yourself in the cultural particulars of the region than to experience the art of buying a traditional handwoven carpet! But in buying a carpet there are many things to consider, such as a strategy that you will need to put in place…..

First of all you need to wander through the bazaars with total indifference to any of the shops, and or their wares. Soon enough a wiley shop keeper will have found out who you are, and will call, unseen from inside his shop “we have very special prices for Australians today”. Then a porty fellow will emerge from his door with an inviting smile stretching from ear to ear saying “please come inside for a quick look”. Having been suitably impressed with the shop keepers opening gambit, one should follow inside and sit on a couch/seat to await a quick showing of carpets until tastes are determined. Now it is important to point out that Uzbekistan is rather undeveloped and unsophisticated when it comes to carpet shops, rarely will you find a large plush showroom, and if you do find a large showroom it undoubtably will be lit by candlelight, making it feel like you are in a cave. So you must be preapred for small display rooms, but this increases the intimacy of the experience.

A Medrassa and the Kalon Tower, Bukhara

It is important at this point, before the carpets are all laid out, for the prospective buyer to announce that he has already bought many rugs from India, and turkey, and that you don’t actually need a carpet…as you’ve already got one! None the less you should be aware of the appropriate dimensions for the carpet that you are definetly not going to buy… This ensures you see the ones you want not some mishapen pieces that are of no interest. Choose the colour that will suit your room and then ask questions of the seller such as “is this sheep or camel wool??” and, “How many knots per square inch are in this carpet?” The more knots the easier the carpet is to bend and subsequently more supple your carpet will be. It also determines quality and as a consequence price. Then you must turn a corner of the carpet to determine the suppleness of the carpet, you may wish to ask for a magnifying glass to see the knots if one is not offered. It is also pertinent to enquire after the knotting method: one knot, one and a half or double knot. One should also walk upon the carpet to determine how nice it feels. This all adds to your credibility as a carpet buyer.

Once a carpet has been chosen, it is recommended that you reconfirm that you definetly don’t need another carpet at the moment. The shopkeeper may then offer to show you his house, and a few more carpets that are similar. One will then get in a car with the shopkeeper to see his house, his carpets, and his carpet making rig. You should ask about the family heritage of the carpet maker if it is a family business. The shopkeeper will tell you his father and grandfather were both carpet makers aswell, and that they are Uzbek/Afghani in heritage (Bukhara is only 250km from Afghanistan).

You should then reconfirm that the carpet in the shop was still your favourite, and that you will need another look. Upon return to the carpet shop you should ask if they can freight the carpet to Australia, should you decide to purchase, of course….even though you are not actually in the market for a carpet just now. “DHL, fedex or Uzbek mail??” will be asked, at which point you can find the price to Australia……after the carpet has been weighed. I would suggest that you ask now for a carpet price, even though you are not going to buy one just now…..you know as a matter of curiosity, given your experience in the carpet industry around the world. One can now suggest that you will go and may come back later after lunch. After you have perused other carpet shops in town and determined market value of carpets, you can return to the original shop for the price negotiation. Remember to factor in freight and taxes for a total cost. Then set your target price but be flexible, however have walkaway point. It is also important to remember that the people are generally poor, and any money you give will be put back into the local community.

It is now that the negotiation begins. The carpet in question will be rolled out once more. It is worthwhile at this point to search out flaws or errors in the carpet. Point these out. Then ask how you will be able to pay for this carpet, and in what currency. Remember that there is an official US dollar exchange and an unofficial rate that is much better. Don’t get caught out. The difference in price is 25%. Once this has been determined, then you should ask for the total price including freight to be negotiated. This will lead to a flurry of phone calls with the DHL agent to cut the external fat out of the price. Once this has been completed, one must announce that “it is still quite expensive” and that you “couldn’t possibly afford to buy the carpet at this price”. You will be told that this is the final price. At this point I would recommend you point out that Australia’s dollar is effectively worthless against the US dollar since the GFC. One should then offer a low price as an alternative. After some umming and arring a slightly cheaper price will be offered. The prospective buyer should then say their thankyous for the seller’s time and get up and leave…… At which point you will be stopped, and a cheaper price reached.

The Kalon Mosque and Tower, Bukhara

Once everything is satisfactory, you can make payment, and take photos of the carpet, this is to ensure that when your carpet arrives by post it is that one you actually bought. Then you will leave with the carpet seller to the Uzbekistan ministry of arts, culture and sport building, and be admitted by armed military guards. Try not to get too flustered by this show of military power…..The buyer will be ushered into a large room with a big desk for the appropriate minister to sit, and a smaller table in front for the buyer to sit. Behind desk are suitable Uzbek military propoganda posters and happy photos of the relavent dictator in both civilian and military attire. In the room will also be various other men, all suitably fitted out in Mafioso looking suits and black leather jackets. You will then be required to produce your passport, visas and residency status, and then be asked to sign at least 6 different forms………….in cyrilic.

Voilà!!! You now own a red camel wool carpet that hopefully will arrive home soon. Great fun buying carpets in Uzbekistan!!