Different cultural attitudes to navigating the recession
It's a privelege to have my friend Mitchell Pham, Director of Augen Software Group, to be our guest blogger today. We share very similar views on how we should approach the current recession; and we're both perennial optimists. Mitchell has just come back to NZ after having spent a month in Asia. Mitchell's views on how Vietnamese entrepreneurs (and by extension many Asians) approach the recession vis-a-vis New Zealand entrepreneurs should be required reading for New Zealand managers.
The common view of the cause for the global financial crisis has been largely held to be the over-exposure of the credit systems, with too much credit being handed-out too easily even where the risks of failure of repayment have been very high.
Governments around the world have been putting in place mechanisms to bail/underwrite the credit systems under their influence, so by and large, the ‘crisis’ seems to have been ‘managed’. However, the worry at the moment is that banks are still reluctant to lend as they have swung the other way and become ‘too risk-averse’ through the crisis. Without credit, it is difficult for businesses to develop/grow, which makes it difficult for economies to claw their ways out of the down-turn or recession that they are in. That seems to be the macro picture that we have been seeing.
At ground level where we connect with other businesses from large to small, we certainly see the effects of the crisis every day; from down-turn in demand for goods and services to cash flow crises from delayed payments, companies laying off staff, businesses scrambling, or restructuring, or diverting, or even dissolving. You name it, we have seen it in the market place. The crisis has certainly created a multitude of challenges for businesses to wrestle with. So, the economic down-turn has been noticed and even expected by many to last for the next 12-18 months, wherever we have been. However, in our own experience, what has been remarkable to observe is the difference in the way many Asian businesses seem to see and deal with the down-turn in contrast to that of many of their Western counterparts.
In Vietnam and other South-East Asian countries that we have been to, for example, most of the entrepreneurs we know have already gotten over the fact that there is an economic down-turn and that it will be around for another 12-18 months. They have already updated their busines
s plans to reflect that, and is now more preoccupied with what they can do to exploit the situation, while it is ‘here for a limited time only’. Oddly (and pleasantly) enough, the mood is still positive as businesses aggressively seek out temporary but strategic opportunities to further themselves, even divesting and/or spreading into new areas of activities. Many South East Asian entrepreneurs seem to be in the ‘opportunity’ mind-space no matter what situation the economy throws at them. It is very encouraging to see and
be surrounded by when we are there.
In contrast, few New Zealand entrepreneurs seem to be in the same mind-space right now. Despite the very real effects being felt, many of the businesses that we are surrounded by still seem to be either in denial (that the down-turn is really here and that it will be around for another 12-18 months) or in depression – still going through the emotional processes, with some businesses taking the ‘waiting to see what happens next’ approach to dealing with the situation. They are yet to go through the complete updating of their business plans, and are still a fair mental-distance away from the aggressive and intense focus on looking for temporary opportunities to exploit the down-turn while it is ‘here for a limited time only’.
The new New Zealand Prime Minister, John Key, is the first to have come from the private business sector. He has a lot of support from businesses, and the rest of the country also seems to have a lot of confidence in him. He has committed to refocusing government resources to push for growth towards 3%-4% for the New Zealand economy to recover from the down-turn and begin to go places again. As a modest group of companies, we are looking forward to taking part in that push and hopefully seeing the outcome in due course.
Another important effect of the economic down-turn, that we see as positive, is that businesses have been forced to streamline/optimise or evolve for the better.
Even the Augen Software Group has now become ‘leaner and meaner’ than we have been for many years.
We had a good run of growth and success in recent years and became complacent in a number of areas, and so now is a good time to ‘spring clean’ and ‘shape up’ for going forward.
As a New Zealand enterprise, we are very multi-cultural, with more than 15 different nationalities in our Auckland head office alone.
Our board of directors is also very diverse, and is made up of 40% Asian origin, 20% Kiwi origin, 20% European origin and 20% US origin.
So it has been an interesting range of cultures and perspectives in the mix as we take on the current challenges and set direction for the future.