Project Management Team for the Asian Market – Term Paper Example
Project Management Team for the Asian Market Asia-Pacific private equity-backed Mergers & Acquisitions (M&A) in the first half of climbed to $18.1 billion, a 79% increase from last year. China and India are leading the market with combined deals of $7 billion for almost 40% of the total transactions in Asia Pacific (Aldred, 2011). Add to this 63% of investment managers in U.S. expressed confidence on Asia. U.S. got only 14% of the vote and Europe got 11% (Lien, 2011).
Even during the economic crisis that shook North America and Europe, Asia remained steady and it is showing every sign of moving higher. ADB (2010) reported that KKR and Co LP, for example, completed Vietnam’s largest ever private equity investment in April when it bought 10 percent of Masan Consumer Corp for $159 million. There is also Carlyle’s persistence to get 25 percent stake in Indonesian consumer firm GarudaFood for about $200 million (Nguyen 2011).
Investing in Asia now will funnel some of the money floating in Asia to be funnelled to MFS. That’s trillions of dollars waiting to be tapped and MFS can get a portion of it.
The middle class in Asia is growing. Asia reached an estimated $4.3 trillion in annual expenditures in 2008—nearly a third of private consumption in the Organisation for Economic Co-operation and Development (OECD) countries. If they continue to grow at this rate, they will reach $32 trillion by 2030, almost half the whole world’s consumption (ADB, 2010). That is the $32 trillion we are looking at.
The aging population of Asia is fuelling investment growth (JICA, 2007). China continues to open, India continues conquer technology, and all other economies are learning from the two. The interest is also further feeding itself which equals to the growing investment.
There are also the changes in financial, international relations, economic regulations and new market structures are being put in place around the region to stimulate the investment market. Their pension structure is coming closer to the North American market (KPMG, 2008).
The market is, of course, facing challenges but setting up a separate project management office to concentrate on Asia Pacific region would knock down the hurdles.
Individual and medium sized company investors in Asia generally lack the understanding of the different investment products especially the younger markets like China (KPMG, 2008). They still have to differentiate between long-term and short-term fund investment. Many fund management and life insurance companies attested to Asian investors’ short time horizon and the obsession to a hands-on approach to their investment as oppose to trusting institutional investors.
Diversity of Culture, Policies and Languages
An estimated 2,200 languages are spoken in Asia. That alone presents major concerns on investing companies that wish to operate on a regional level. Then there is the difference in policies. There are differences in the procedure of cross border distribution, local market entry requirement, and long- and short- term pay-outs.
Distribution Network Limitation
The regions can’t be more varied in terms technology infiltration and technology education. In some countries, access to automated investment transaction and other technological progress is limited to urban areas while other countries have a better distribution of progress.
China’s major cities, for example, are highly advanced in education, technology, and investment maturity but rural areas are still living in the pre-Deng Xiaoping leadership. That gap is a big burden to investor companies.
Setting up a separate Project Management division can easily address each problem and benefit from it. Getting local managers that are already educated in the country will can address the lack of investment education and each possible person who gets educated is a hot lead. Local managers will also avoid having to deal with the diversity. Local managers will deal with local clients. MFS can also widen the market with access to investments.
As the market grows and money is waiting to be used on proper investment, investor companies around the world are slowly going there. Yes, they are cautious but they are moving and progressing. They are adjusting their regulations, rules and policies to accommodate the Asian market even if it means cutting their usual revenue in the interest of matching investor preference.
The largest global firms that are well established in Europe and North America are adjusting to the Asian market in exchange of getting more funds. What they lost in percentage, they regain in volume.
Bain Capital, for example, is working at getting $2 billion from Asia even when it meant cutting their usual two percent management fee to one percent if Bain takes 30 percent of the profit or two percent if Bain gets 20 percent of the profit.
MFS needs to get there now and operating a central office that treats this diverse market with a blanket principle will push us behind. We need a separate program management division to study Asia and strategize for a stronger presence.
(2007) Aging Population in Asia: Experience of Japan, Thailand and China. Retrieved from. http://www.jica.go.jp/english/publications/reports/study/topical/aging/pdf/aging_01.pdf
(2008) Statement of the Investment Management in Asia Pacific. Retrieved from http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Documents/inv_mgt_aspac_O_0804.pdf
(2010) Key Indicators for Asia and the Pacific 2010. Retrieved from http://www.adb.org/Documents/Books/Key_Indicators/2010/pdf/Special-Chapter-03.pdf
Aldred, Stephen (24 June 2011) Frontier Asia markets luring buyout firms. Retrieved from http://www.bestgrowthstock.com/stock-market-news/2011/06/24/frontier-asia-markets-luring-buyout-firms/
Lien, Sarah (May 2011) Asian Investment Manager’s Outlook. Retrieved from http://www.institutionalinvestorchina.com/arfy/uploads/soft/110519/1_0931467121.pdf
Aldred, Stephen (24 June 2011). Frontier Asia markets luring buyout firms. Retrieved from 26 August 2011. http://in.finance.yahoo.com/news/Frontier-Asia-markets-luring-reuters-230003485.html
Nguyen, Lannah (12 June 2011). Carlyle May Buy Stake in Indonesia’s GarudaFood, Reuters Says . Retrieved from http://www.bloomberg.com/news/2011-06-12/carlyle-may-buy-stake-in-indonesia-s-garudafood-reuters-says.html