Euroasia: Language, Culture and Travel

I came across a good story in the Summer issue of Bright, the NZTE magazine that goes out to people interested in international business.

Key stories in this issue include coping with the international credit crisis; insights on trading in the Middle East; tips on perfecting your sales pitch; the world’s growing bioeconomy; interviews with two members of NZTE’s China Advisory Board; carbon-labeling of exports; staying sharp in the adventure tourism market.

I want to highlight some salient points from the  interviews with the 2 members of NZTE’s China Advisory Board, who have in-depth China market knowledge and have lived and worked in China for a long period.

If you have some time, do read the article. The 2 guys interviewed are:

David Mahon, Chair of NZTE’s China Advisory Board.

• Worked in Beijing for 25 years, heading a private  equity firm Mahon ChinaInvestment Management Limited.
• He says change in China has been so great though that he says it’s largely his last two years’ of experience that are relevant to clients.

Andrew Browne, partner in a corporate communications advisory company, Beijing Brunswick Consultancy Ltd.

• Advises clients on business development acquisition and listing strategies.
• Previously worked for Reuters for 20 years and in 2007 won a Pulitzer Prize.
• Grew up in Hong Kong.

Some quotes from Mahon:

• “If you’re looking around the world and trying to see sources of global growth, China is one of the bright spots”
• “Brand New Zealand is strong but we lack unity. There are all these meat producers and wine producers selling fragments. We need to approach in a unified way – then Brand New Zealand can be protected.”
• “Language is important”. “I learned five words a day – no one can afford not to learn five words a day.”
• “Too often you see companies with a product in China and it doesn’t do well. China demands products unique to China. For example, media is very culturally sensitive.”

Quotes from Browne:

• “What is it that China needs? They need brand, technology, marketing and sales channels. You’ll see a very serious shopping expedition going out in search of all those things.”
• “It’s a truism that China is a complicated country”
• “We each have a vision which is only a tiny slice of the whole. For all New Zealand companies, it’s critical that they meet as many people as they can and get as broad a view as possible. The secret of doing well is asking the right questions.
• The economy has been far too focused on exports and heavy industry. The low-end sweat-shops
  along the coast have resulted in excessive use of raw material and energy. In that sense, the old
  model has run its course and was looking unsustainable before the credit crisis hit.
• “Would you advise a top Chinese company manager coming down to New Zealand to learn a little English? The notion you can send a senior manager to China without language is ridiculous. China is changing so quickly. Language gives you a feeling of engagement and
  learning about the market.”
• “If you’re an architect, there is nowhere in the world doing building like China,”
• “Take parks. China needs parks; in the West, all the parks are there. Companies in the West that have long become dormant have sprung back into life in China. China is not something
  to fear at all. China is creating vast opportunities across the manufacturing and service sectors.
• “If you’re a banker, China is your big opportunity. I’ve watched the private equity funds
  of the world trooping through the lobby of CICC China Investment Corporation with their hats off.”

Also want to highlight an opportunity for Kiwi businesspeople to connect with Chinese investors and businesspeople at an upcoming event on 30 March 2009 – known as the International Sustainable Cities Forum. A delegation of high-level business and government leaders will be in New Zealand for 4 days to explore partnership opportunities.

It’s the perfect opportunity for those wanting to do business with the Chinese to attend.

When I started working as a graduate in 1999, the unemployment rate was 7.5%. The unemployment rate now is about 4.2%. It just seems to me like everyone is so much more despondent this time around.  Is this because we’ve had so many years of low unemployment and economic growth that we’ve forgotten what a recession looks like? OK so the New Zealand Institute is projecting a rise in unemployment to 11%.  At this rate, it seems it will be a self-fulfilling prophecy.

Everyone knows we’re going through a serious recession, but hey, we can’t change that. All we can do is to choose our response. The last thing that we should do is to keep complaining about how bad the recession is to our colleagues, customers and suppliers.  That’s not the best way to build confidence.

So, will the Job Summit on Friday make a difference? I don’t know. Ultimately, it’s up to individuals to make a difference. People with the right attitude committed to delivering superior value.

Times are tough. People are worried that they might lose their jobs as the unemployment rate starts creeping up. Job summit or no job summit. As always, during difficult times, the ones worst hit are the ones who are lacking in qualifications and experience.

It’s time to upskill. It seems university enrolments are up around the country, according to various local news articles.  Recent graduates who can’t find work are going back to university. But so are many students looking at gaining more qualifications in order to keep pace with developments.

During such perilous times, it’s important to understand what skills are in demand and how to stand out from the crowd. In New Zealand, where almost all native English speakers can only speak one language, knowing some basic foreign language can indeed be an advantage. Most of all you demonstrate to prospective employers that you have the ability to persevere with something as well as the ability to work across cultures. As New Zealand becomes more and more multicultural, the ability to communicate across cultures will be as essential as knowing how to use a computer.

New Zealand is an exporting nation. We would be poorer than Samoa or Tonga if we didn’t trade with our friends, and foreign tourists stop arriving. There are in fact more Chinese and Spanish speakers than there are English speakers.  Naturally, these are key languages to learn if one wants to learn how to communicate with our future customers.

But learning any language is useful. New Zealanders have traditionally learnt French, German and Japanese at school. Knowing any one of these languages would be useful. I have written at length about why one should learn each one of these languages, so feel free to check out my blog entries on why learn language

There are some sectors calling out for a reduction in the number of immigrants to New Zealand as the economy slows down and jobs become more scarce. This will intensify in coming months as the unemployment rate creeps up. Unions and out-of-work locals will no doubt pressure government to tighten immigration policy. We may see an increase in protectionist measures; more funding for Buy New Zealand made and government bailouts of uncompetitive firms.

In my view, this would be the worst possible response to an already dire situation.

I came across an interesting article in the New York Times by the author of “The World is Flat”, Thomas Friedman a few days ago. He says

If there is one thing we know for absolute certain, it’s this: Protectionism did not cause the Great Depression, but it sure helped to make it “Great.” From 1929 to 1934, world trade plunged by more than 60 percent — and we were all worse off.

Immigrants to New Zealand work the hardest, get paid the least and put their hard-earned money to good use: investing in local businesses and saving for their children’s education. Immigrants are less likely to splurge on non-value-adding plasma TVs and imported Italian designer furniture.

Immigrants, by their very nature, tend to be ambitious and enterprising. Why else would they travel thousands of kilometres to a distant land, far away from their families, to start over?

More than half of Silicon Valley start-ups were founded by immigrants over the last decade. These immigrant-founded tech companies employed 450,000 workers and had sales of $52 billion in 2005, according to research by Vivek Wadhwa,  in an essay published this week on BusinessWeek.com.

The fear that many ordinary Kiwis have is that immigrants will steal their jobs because they are willing to work for next to nothing. Even if this was true (which it is not), so what? We all need to wake up to the new reality. We cannot afford to rest on our laurels and become increasingly less competitive on a global scale. We need smart, resourceful, connected and hard working immigrants in New Zealand. Current immigration policy does not give much scope for low-quality immigrants to enter New Zealand in any case.

The other myth is that immigrants make no economic contribution to New Zealand. Recent studies show the net impact for having an immigrant here is $3.29 billion, or $3547 per capita, while the net per capita contribution of a New Zealand-born is just $915. Immigrants are 4 times more valuable than locals.

Immigrants are willing to work harder and not mind getting paid less. Is that such a bad thing? Are we crying exploitation because we are genuinely concerned for the welfare of immigrants or simply because we don’t want anyone to rock the cushy boat?

Smart, ambitious and hardworking immigrants are good for this country. Having more such immigrants in New Zealand would increase not just the number but quality of jobs, resulting in a more prosperous nation in more ways than one.

Spanish classes are very popular amongst Kiwis. Many choose to kick off the year with some Spanish lessons, in preparation for an upcoming trip to South America or Spain. Some choose to learn Spanish because of business reasons. At Euroasia, we are often asked why Spanish lessons are so popular. Here are some reasons.

• Spanish is unquestionably one of the world’s most important languages, spoken not only in Spain but also in most of the Americas, from California to Cape Horn!

• The Spanish-speaking countries are exciting places: the cities offer a round-the-clock buzz, while the great outdoors has huge potential for adventurous outdoor activities.

• Within the Spanish-speaking world, there is an enormous range of exciting places to visit: in Mexico and Central America, the cities of the Maya and the Aztecs, and resorts such as Acapulco and Cancún; in South America, the cities of the Aztecs (including Machu Picchu), the colourful Andean cultures of Peru and Bolivia, the strikingly varied landscapes of Chile and Argentina, and the cosmopolitan excitement of Buenos Aires.  Although some English is spoken, getting around is much easier with a little Spanish.

• Spain itself is one of the world’s most popular tourist destinations, famous not only for its Mediterranean beaches, but also for its stylish cities, its well-preserved small towns, and, in the south, its unique Moorish heritage.  Not to mention Ibiza, with the hottest nightclub scene in Europe, if not the world!

• The Spanish language has been the vehicle of great writers, from both Spain and Latin America.  Both areas have also been the home of world-renowned artists and, more recently, film-makers.

• New Zealand is increasingly looking to South America for trade links, especially Chile, the most prosperous of the South American states, and the one closest to New Zealand.  Spanish speakers will be in demand in the future (in fact right now we have Kiwi businesspeople doing business in South America learning Spanish at Euroasia).

• Young Kiwis can work in Argentina, Chile or Uruguay for one year under a working holiday scheme.  A knowledge of the Spanish language would obviously make a huge difference to anyone’s job prospects.

Find out more about Spanish lessons at Euroasia.  Or to enrol for a Spanish course, check out the Spanish timetable!

2-week intensive Spanish language courses start this week (20 January intake) and the once-a-week option kicks off early Feb. Enrol now.

Many of you would be spending the first few weeks of January thinking about your new year resolutions. According to the United States government website USA.gov, the most popular new year resolutions are:
* Lose Weight
* Managing Debt
* Save Money
* Get a Better Job
* Get Fit
* Eat Right
* Get a Better Education
* Drink Less Alcohol
* Quit Smoking Now
* Reduce Stress Overall
* Reduce Stress at Work
* Take a Trip
* Volunteer to Help Others

I can’t help but notice that “finding a husband/wife” is not on the list.

Another worthwhile resolution that should be on the list is “to learn a language”. In recessionary times, it’s even more important to keep improving and to consider learning a second language. Now is the time to be upskilling to future proof yourself. The ability to speak a second language puts your business or your job prospects one step ahead of the competition. You are also demonstrating to future employers that you have what it takes to stick to something. Employers realise that people who embark on language learning have some key characteristics that are highly valued in such times: commitment and dedication being some key ones.

The reasons people give for not learning a language include lack of time, the cost involved and the difficulty of the subject area. Part of what makes knowing a language a great skill to have is simply because it’s not that easy for someone to acquire fluency. If it was, it would quickly lose it’s value and won’t be treasured as much.

Let’s think about it this way. What if you manage to land a big business deal in Asia or Europe, or secure a great job, because you speak a second language? What if you get yourself out of a sticky situation in a foreign country because you speak the local language? What if you find the love of your life as a result of your language learning journey? I’ve certainly seen these things happen in my time at Euroasia.

I would suggest that a worthwhile New Year resolution in 2009 is to learn a second language.

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.

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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 business 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.

In 2007, China’s GDP was US $3.25 trillion. The Chinese economy is forecast to grow at 9.9% this year. The extra dollars generated by the economic growth alone is more than the entire annual GDP of Singapore and New Zealand… COMBINED!

“Not another China article” you may say, but this is such an important topic that I think it does no harm to remind ourselves of the many implications of China’s rise for New Zealand (and the rest of the world)

Perhaps part of the motivation behind not wanting to read more about China is our fear that the Chinese is about to take over the world. That we do not have to worry about, because they already have!

Since 2005, I have noticed that on average the size of China’s economy climbs up a rung every year. First, Italy was beaten when China became the world’s 6th largest economy, then it was France and UK that got dwarfed. This year, China’s economy is set to overtake that of Germany’s for the first time.

I believe ordinary New Zealanders will increasingly be impacted in at least one of the following ways:

1) Your suppliers will be Chinese

For many of you this is already the case. China is the cheapest, most efficient place in the world to make just about anything. When I take visitors to local souvenir shops, I generally find New Zealand souvenirs that are made in China outnumber those made in New Zealand 10 to 1. As factories making mass-produced goods in New Zealand become less competitive by the day, more businesses will start buying from China.

2) Your clients will be Chinese

As the Chinese acquire more wealth, they will start to demand the goods and services that we sell. The global food crisis could turn out to be a blessing in disguise. New Zealand can once again be proud to be dependent on agriculture. Our dairy products and quality foods will demand a premium in China. Our professionals will also be busy; helping build China’s physical and corporate infrastructure.

Andrew Grant, Head of Greater China for McKinsey, has this to say in an interview published this month:

I am hard pressed to think of any New Zealand business that shouldn’t have China on the agenda – on their board agenda, on their management agenda, on their growth agenda.

3) Your neighbours will be Chinese

I believe New Zealand will see an influx of Chinese migrants in the next 5-10 years, much like how we saw an influx of Koreans and Hong Kongers in the mid-90s. As China becomes more developed, income levels will rise. But so will stress levels. Many Chinese professionals will be tempted by the clean air, laid back lifestyle and relative safety of New Zealand. Short of New Zealand imposing a quota on the number of Chinese migrants, I foresee Chinese migrants arriving in droves.  Many such migrants will be alumni of local universities and schools, having studied here during the language school boom years of early 2000s.  The presence of Chinese migrants here will attract more, and word of mouth will ensure a steep growth trajectory in migrant numbers; much like how it happened in the mid-90s with other Asian migrants.

As most Chinese migrants will prefer living in Auckland, Wellington or Christchurch, these cities will become far more cosmopolitan than they already are – sooner than you think.

4) Your colleagues will be Chinese

This is a direct result of (3). As New Zealanders become more used to having Chinese neighbours, we will also get more used to having Chinese colleagues. We’re standing at the cusp of change. Traditionally, businesses have been very hesitant to recruit Asian staff. As companies have literally run out of Kiwis to employ in the last few years, they have had to take on staff they wouldn’t normally employ. Much to the surprise of these “early adopters”, the Chinese staff have generated a return on investment beyond their expectations, thus clearing the way for them to employ more Asians.

5) Your boss will be Chinese!

OK, for my staff at Euroasia, this is already the case!

As the rest of the world begins to suffer from what looks like a prolonged recession and a severe credit crunch, the Chinese with their war chests will go out bargain hunting. Some businesses will inevitably end up in Chinese hands. Despite being communists, the Chinese are shrewd capitalists at heart. They are also exceptional operators, with over 5000 years of trading history behind them.  I have seen many New Zealanders greatly underestimate Chinese capabilities; based on limited encounters with Chinese students and recent graduates who speak broken English.

Make no mistake, these uncouth foreigners could one day be paying your wages.

How then do we prepare ourselves for the new reality?

1) Learn Chinese

I would say that wouldn’t I?

No Chinese person expects you to be fluent in Chinese. But the fact that you’ve made an effort goes a long way.  It also seems a little unfair that we expect other people to devote a lot of time, money and energy to learning English so that they can communicate with us if we’re not prepared to make any effort at all.

Additionally, when you travel in a country without a knowledge of the language, in some ways you only scratch the surface; only when you know the language do you realise how much you would otherwise be missing. This is more the case in China than almost anywhere else.

2) Understand Chinese culture

There’s no better way to understand the culture than to learn the language. They are so intimately intertwined that I doubt you can fully understand a culture if you can’t speak the language.

In addition to taking a basic Chinese language course, you can also book in for – or better still get your boss to pay for – some cross-cultural training.

There are also plenty of books on Chinese culture and doing business in China. Chinese people are not easily impressed by you saying that you’ve read the 20-page English translation of Sun Tzu’s Art of War. It’s a different story if you’ve read it in the original language.

3) Make some Chinese friends

This is easier said than done. But hey, it’s easier now than it was 10 years ago. We no longer have to go to China. China has come to us. You would be surprised how much you can learn from Chinese students if you pause and listen to what they have to say. This, of course, requires a lot of patience and cultural understanding.

Considering the fact that you could soon end up with a neighbour from Beijing, a colleague who packs chicken feet for lunch, clients who demand progress reports in Chinese, and a Mandarin-speaking boss, it could be well worth the effort.

4) Carpe Diem!

I close with a very apt quote from Andrew Grant’s interview quoted earlier (emphasis mine):

This period of unbelievable growth, we’re not going to get that again. This is not something that I think people have the option to wait around for. I don’t know how much the story is being told, but in China the FTA, not just in the substance of what is written there and all of the clauses, but what it has done in terms of the way China thinks about New Zealand, it really is a very special window of opportunity that every Chinese business is interested in engaging in with New Zealanders and New Zealand. I hope New Zealanders realise how precious that is and the imperative and urgency to really seize the moment.