Australian Firm Casts Eye On Asia for Bigger Profits

INSIDE some unremarkable industrial buildings about 50 miles outside Sydney, executives of a small company are engaged in the kind of action that Australia's leaders hope will guarantee their country's economic future.

Memtec Limited, a maker of high-tech water filtration and purification devices, has been expanding into Asia. John Crapper, an executive, explains: "We were driven into that area because Australia was very small and very slow to respond."

This is music to the ears of many Australian economists and politicians. They say their nation can no longer depend so much on its natural resources to ensure prosperity. It must integrate its economy more closely with Asia's robust markets.

Since colonization by British expatriates in the late 18th century, Australia has traditionally traded what its residents could mine, raise, or shear - such as coal, gold, wool, beef, and iron ore. These goods are still the country's leading exports. Now Australia's government is increasingly trying to get businesses to invest in Asia and to find Asian markets for high-tech goods that generate good profits.

That is where companies like Memtec come in. Founded in 1984, its main business is making filtration equipment that forces water into tiny nylon tubes, leaving impurities outside, where they are removed in a flushing process. The company immediately began exploring markets and acquiring related companies in the United States and Europe.

More recently, Memtec moved into Asia. It created a Japanese subsidiary and is active in China, Indonesia, Malaysia, South Korea, Taiwan, and Thailand. The move has paid off.

Company sales in the Pacific region in the last five years grew 87 percent, compared with 32 percent in Europe and 66 percent in the Americas. Annual 1994 sales were $115 million.

"We've got proximity" to Asia, says Mr. Crapper, "and that basically gives us a comparative advantage compared to the US."

Memtec is, though, an exception among Australian businesses. Most companies here still look to Europe or the US first when they think about expanding abroad. As of mid-1993, for example, Australian companies had invested $57 billion (Australian; US$42.8 billion) in the 18 economies of the Asia-Pacific Economic Cooperation forum, which groups countries on both sides of the world's largest ocean. But two-thirds of that money was spent in the US and New Zealand.

Helen Hughes, a former World Bank economist and professor at the University of Melbourne, notes that the market share of Australian goods in many Asian countries has actually dropped over the past decade or so, amid the rapid rise of intra-Asian trade.

Despite a growing consensus in favor of the government's Asia-oriented export and investment push, Professor Hughes maintains the country should concentrate on fixing its economic problems, such as a high balance of payments deficit and 10 to 11 percent unemployment. "We aren't competitive" in Asian markets, she says. "We just don't export enough."

ROBERT NATIONS, an Australian architect who has lived and worked in Southeast Asia for 15 years, watches the arrival of Australians with a wry smile. "Too many people think they have a lot to bring to Asia because politicians have told them so," he said recently in Bangkok. "I just don't think there's enough sensitivity to what's at stake."

"You can't be successful in Asia if you're a carpetbagger," he explains. "You have to be ready to stick it out for a long time."

Mr. Nations is nearing completion of a design for one of the world's largest private real estate developments, a $15 billion to $20 billion city now being built just outside the Thai capital. Nations says the project requires an understanding of the way Thais live, and that takes years of experience.