A view over Port Moresby’s Waigani district. Credit: BAI
At the end of 2019, Austrade commissioned Tebbutt Research to learn from Australian companies who work with the Pacific how to minimise risk.
The research provided some excellent findings on how to address risk through strong networks and embracing diversity. Here are their insights.
Networks and knowledge
A network of contacts in-country was viewed as fundamental to develop a successful presence. Those organisations with partners or working as a sub-contractor had significant advantages over businesses establishing a market presence for the first time.
Organisations with in-country alliances valued the support of established networks on the ground, which provided the knowledge of local regulations, labour laws, payment systems and assistance in setting up bank accounts.
‘A major mistake by foreign companies is the failure to listen to the needs of the Pacific customer and wanting to push their solution.’
Organisations working in Fiji for the first time spoke about the need to quickly build in-country relationships using ‘old school’ methods such as using telephone directories and cold calling in store.
In Papua New Guinea, it was evident the pathway was much more difficult. The main approach was to rely on formal networks such as business councils, the Australian High Commission, Austrade and industry conferences to establish relationships and build local knowledge.
Cultural diversity
Senior Trade Commissioner Papua New Guinea and the Solomon Islands, Andrew Weeks.
The Pacific is a region comprising a diverse range of countries, with different business cultures, beliefs and faiths.
The Pacific experts suggested that new entrants to the region shouldn’t underestimate the cultural diversity of the countries. It is imperative that you ‘do your research’ and be well informed before pursing business opportunities in the region.
Businesses and key informants indicated that, when operating in the Pacific, you have to approach the market with an open mind. Respondents spoke about the need to treat individuals with respect.
A major mistake by foreign companies is the failure to listen to the needs of the Pacific customer and wanting to push their solution. It is important to partner with organisations to understand local needs. Take the feedback from your customers and look to co-design a solution that works locally.
‘The Pacific works on the philosophy of “relationship first and business second”‘
Adapt your solution to the local supply chains, the customer and, more importantly, the local culture. Be patient.
Relationship first
The Pacific works on the philosophy of ‘relationship first and business second’. It is important to spend time forming relationships and respecting local traditions.
This takes time, which is something that Western business cultures, such the Australian, are unfamiliar with.
As Australians, we have a strong cultural desire to be transactional, get the job done and move to the next project.
Taking time to appreciate the diversity of the Pacific workforce, their knowledge and family situation is a skill to be mastered.
It was strongly suggested that the Pacific is all about friendships. In addition networking, knowing the right people, trying to understand your customers requirements and delivering products customised to their needs.
Understanding risk
Understanding the risk profile of customers and opportunities, whether in government or private sector, was viewed as a fundamental aspect of operating in the Pacific region.
This factor was heightened for those businesses operating in PNG. Payment risk was viewed as a significant risk factor when offering credit terms. Payments are slow, with businesses expected to offer standard credit terms of 60 days or more.
‘To operate successfully in the Pacific region, it is critical to gain a level of acceptance from local communities and government authorities. This is not negotiable.’
