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A Warning For Contract Managers and Law Departments

October 12, 2010

Companies in Asia traditionally have not had contract management functions. Indeed, in many cases there was not even a law department. The same applied to certain areas of Finance, such as Treasury. Now, lacking the constraints of reorganizing, some of these companies are adopting technologies that enable them to leapfrog their Western competitors.  

Despite the fact that contract management and legal have no estabished history in most parts of Asia, the situation is changing fast as encounters with Western customers and suppliers show the benefits to be gained from contracting and commercial competence. The fact that there is no entrneched organization to overcome means that Asian companies can adopt ‘best practice’ without a need for painful reengineering of existing processes. An article in GT News descibes a similar pattern being followed in the area of Treasury and highlights its implications for Western companies and their employees.

“The growth of Asia as a financial power, driven by China’s extraordinary economic engine, has been on the mind of western corporates and banks alike for a number of years now, in terms of both the challenges and opportunities it produces. One thing is for sure, there is a vibrant and fiercely competitive corporate culture rapidly emerging in the region.

One example of how this competition is manifesting itself is in technology ‘leapfrogging’ – enabling treasury departments in Asia to gain an edge over their western counterparts. Leapfrogging refers to the fact that, by and large, corporates in Asia are unencumbered by legacy systems within their treasury and can implement a brand new cutting-edge system from scratch – ‘leaping’ them to the front of the efficiency line ahead of western corporates, who can take years removing legacy systems, preventing them accessing the best technology available. This can inevitably lead to a lack of competitiveness compared with their Asian peers. Faced with this situation, it could be easier for western treasurers to look east for their next career opportunity.”

Job hunters aside, this warning should act as a wake-up call to all those who have either resisted the inroads of new process and technology, or have failed to push through on rapid implementation. At IACCM, we know there is a similar trend beginning in Legal and Contract Management functions because these companies are talking with us about best practice – and more importantly, are then hastening to implement it.

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