Business Trends Asia Blog

IRP Vietnam 2012

2011-11-24T05:22:00.000-08:00

IRP Vietnam 2012

Open publication - Free publishing - More 2012

Business Trends Asia & LexisNexis

2011-11-03T05:34:00.000-07:00

E-magazine Business Trends Asia and Reed Elsevier affiliate, LexisNexis, have outlined their 2012 strategy on worldwide re-use of Business Trends Asia content.

From left to right: Matthijs van den Broek, Editor-in-Chief, Business Trends Asia, Arthur Sedee, Publisher Relations Manager, LexisNexis and Arthur Westenend, Editor, Business Trends Asia

Too many foreign residents on Bali

2011-02-18T01:54:00.000-08:00

Beautiful places with friendly, hospitable people tend to initially welcome adventurous backpacking youngsters, followed by nature-loving older tourists. Too often, these paradise destinations are then being discovered by enormous numbers of other, less culture- and nature-loving, foreign tourists and residents.

This development took place on the Caribbean island of St. Maarten, where, intially, in the Seventies of last century, beauty-loving wealthy Americans and Europeans spent their relaxing holidays. In the following Eighties and Nineties, St. Maarten attracted a different kind of tourist. The one that was involved in dubious, sometimes plain criminal, activitities and a new breed of foreign residents on the island was born.

The Thai beach resort of Pattaya had to cope with a similar trend, whereby, since the Eighties, criminals from Europe flocked to the once pristine fishing town and never left.

Another example is the Indonesian island of Bali, which is under threat from increasing numbers of, sometimes dubious, foreign residents. Whereas in the Seventies and Eighties, a small number of thrill-seeking surfers and peace-loving older couples took up residency on the island, the island is now being flooded by tens of thousands of "other" foreign residents.

Currently, an estimated 60,000 bule (Westerners) are living on Bali with a KITAS (temporary residency permit). This number does not include Japanese, Korean and other Asians. And this number does also not include Westerners who fly in and out of the island to Singapore or the Australian city of Darwin, on a business visa, which may even double that number !

Unfortunately, Bali seems to increasingly attract "people who have not succeeded in their business elsewhere, are drifters or surfers (who believe they should stay and open a business)", explains a long-time resident. "Most of the bule live on a bare minimum and plenty of them turn into crooks", he continues. According to Bali police, crimes committed by foreigners are up by 39% this year, ranging from ATM fraud to narcotics.

In 2008, in my report, titled Bali: Paradise Lost ?, I already raised the matter of over-crowding by foreign residents, which has an enormous impact on the island's resources, infrastructure and real estate sector. Subscribers to Business Trends Asia, can access this report on http://www.businesstrendsasia.com/newsletter.php?id=25&lang=en

This article appeared earlier on www.businesstrendsasia.com

We're all Chinese here

2010-11-24T06:13:00.000-08:00

When a member of one of Thailand's most prominent business families went on a diving trip to one of Malaysia's island paradises he found himself in the exclusive company of Malaysians as well as Singaporeans. Like himself all ethnic-Chinese.

During the drinks and dinner following the diving conversations centered around the topic of their positions in Southeast Asia. What surprised him was how strongly the Malays and Singaporeans stressed their Chinese ethnicity and how important it was for them to see themselves as part of the larger ethnic-Chinese community rather than as citizens of the country they lived in.

Coming from Thailand he had never really given his ethnicity much thought and saw himself as a citizen of Thailand rather than a Chinese living outside China. Later he stated to European friends how shocked he had actually been when learning from his diving buddies the disregard they felt for their fellow citizens in Malaysia or other ethnicities of the countries of Southeast Asia. There was a deep mistrust felt especially towards the ethnic Malays and Indonesians.

In Thailand, he said, the ethnic factor was considered a non-issue and was never discussed among friends most of whom would be ignorant about the ethnic background of the others and never give it a second thought.

His feelings reflect how ethnic Chinese and ethnic Thais have integrated better into one single society in which differences are not suspect and no-one should feel restricted or separate from main-stream society only because of ethnicity. This is also easier in Thailand as most ethnic Chinese and ethnic Thai share the same religion - Buddhism- and perform ancestor worship in one form or other. Also ethnic Thai have their roots in southern China and form part of the wider Tai ethnic community.

Malays and Indonesians are ethnic Malay and predominantly Muslim, a religion strongly opposed to "idol worshipping". This makes for more prominent differences than between Chinese and Thai. Another element causing tension is the fact that Islam forbids money lending against interest. And even though this is changing and many Islamic financial products have been introduced, traditionally the money lending business was in the hands of the ethnic Chinese who therefore controlled the purse strings of the ethnic and Muslim Malays and Indonesians, same as the Jews handled the money lending business in medieval Europe when the Roman Catholic Church forbade Christians to engage in such activities.

This created resentment among the ethnic Malays and Indonesians towards their ethnic Chinese co-citizens who in turn felt threatened and insecure in their adopted home countries leading to suspisions towards the ethnic majorities. This traditional divide is still felt today.

The Singaporeans in the diving party saw their country mostly as a small island of economic success based on their hard work (which was attributed to their Chinese ethnicity) surrounded by hostile (ethnic Malay, Muslim) predators who would take away their hard earned wealth by force if they could and who should therefore be kept at bay and in a subservient position as much as possible.

Although the Thai diver saw no reason whatsoever to emphasize his Chinese ethnicity and no tension exists between ethnic Thais and ethnic Chinese, reality is that also in Thailand all commercial activities, from the country's large international conglomerates to the humble one-man convenience store, garage or market stall, are dominated by ethnic Chinese with ethnic Thais making up any work force they may have. The ethnic Thais just feel not threatened by the economic control their ethnic Chinese fellow citizens have over the country and see no reason to change this, neither by force nor peacefully.

This article appeared earlier on www.businesstrendsasia.com

Indonesian support for sharia law declines

2010-08-24T05:36:00.000-07:00

by Debnath Guharoy

The army is in the barracks. The press is free. The constitution is alive. But from the way many elected leaders continue to behave, voters may well think politicians were put in office by divine intervention. The mayor of Bekasi, eager to follow in the footsteps of Tangerang, has now declared that he would too like to introduce sharia law. If the mayors believe they are acting in the name of people who put them in power and enforcing the will of the electorate, then they are both wrong. If both mayors believe they are actong in the name of the voting public, enacting into law what they believe has a groundswell of popular support, they would do well to look at the facts.

In the last 12 months alone, there has been a palpable hardening in the attitude of Indonesians against sharia law. From April 2009 to March 2010, the number of people who said “Islamic sharia law should be introduced in my area” declined from 43% to 36% of the population. That’s one in three people, not what an elected mayor could call a majority. Expressions of support for sharia law have even less support. A year ago, 38% of the population believed “thieves should have their hands cut off”. By March 2010, that number has slipped to 32%. “Those committing adultery should be whipped to death in public” also lost steam with an almost identical decline during the same period.

Communications and Information Minister, Titaful Sembiring, would do well to take note, not just members of religious political parties, such as the Prosperous Justice Party (PKS), of which he is a former leader. Always a delicate subject, sharia law is increasingly being rejected, not embraced, by growing numbers of Muslims around the country. In this world’s Muslim majority nation, steadily growing numbers of moderate Muslims are looking at tomorrow’s Indonesia differently. The purists and the fundamentalists form a shrinking minority.

In the minority, the fanatical politicians are those elected leaders who provide protection to lawless groups like the Islam Defenders Front (FPI), imposing their will on a peaceful, moderate majority eager to see a modern Indonesia blossom.

Focusing on the runaway mayors of Tangerang and Bekasi, the picture is similar. They would like to impose a monority will on the majority. However, only 38% of Muslims in Tangerang think “Islamic sharia law should be implemented in my area”. In Bekasi, only 42% of the population and 42% of the Muslims agree.

Will the President of this Republic please take not ? And let the people know which side he is on ?

About the author: Debnath Guharoy is Regional Director Asia for Roy Morgan Research

Not in my Backyard - Zomereditie - Toerisme

2010-07-27T03:30:00.000-07:00

Toeristische oorden maken zich op voor de komst van miljoenen recreërende Nederlanders. Wat betekent onze komst voor de ontvangende gebieden en hun bevolking? Wordt Afrika er rijker van? Redden toeristen berggorilla’s in Oeganda? Hoe verandert toerisme steden zoals Barcelona? En blijft trekpleister Thailand het ‘land van de glimlach’? Plus: verzamel do’s & don’ts voor je eigen reis.

Not in my Backyard(voorheen Mind the Gap) is de maandelijkse internationale actualiteitenrubriek van De Balie. Deze maand de zomereditie over toerisme en de gevolgen ervan.

Te gast zijn René van der Duim (hoogleraar duurzaam toerisme, Wageningen Universiteit), John Hummel (Toerismeadviseur Azië, SNV), Matthijs van den Broek (Further East Consult) en Greg Richards (hoogleraar vrijetijdsstudies, Universiteit van Tilburg). En ook Lars van Troost (Amnesty International), onafhankelijk onderzoeker Djörn Eversteijn, satire van Peter Pannekoek (Comedytrain) en onze huisband Jomato Foe. Het programma staat onder leiding van Isolde Hallensleben

Asia's role in the post-crisis environment

2010-07-23T00:53:00.000-07:00

SPEECH BY DR TONY TAN KENG YAM, DEPUTY CHAIRMAN AND EXECUTIVE DIRECTOR, GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION AT THE SWISS RE FORUM SINGAPORE AT 10.30 AM ON 23RD JULY 2010

Asia’s Role In The Post-Crisis Environment

1. I would first like to thank the organisers for inviting me to speak at this year’s Swiss Re Forum.

2. The topic of my speech is ―Asia’s role in the Post-Crisis Environment‖. I will first take stock of how the Great Financial Crisis of 2008/09 is likely to change the global economic, political, and investment environment. I will then focus on the challenges and opportunities these changes pose for Asia.

The Global Outlook

3. First, let me share a few thoughts on the global economic outlook.

4. The global economy has clearly rebounded from the Great Crisis of 2008/9. After hitting a trough in the first half of 2009, the global economy has seen consistent growth. Massive policy support provided by governments and central banks is working. Global growth could hit 4% in 2010, up from a contraction of close to 2% last year.

5. Growth, however, will be uneven with the strongest performance coming from the emerging market economies, especially Asia. Asia has benefited from the pick-up in global trade and manufacturing; additionally, strong balance sheet fundamentals remain supportive of domestic demand. Growth in Asia ex-Japan could reach 8% this year, with China and India among the larger countries leading at 8-10%.

6. The US and Europe should continue to grow over this year notwithstanding higher downside risks. In the US, growth is likely to moderate in the second half of 2010 to a 2-3% pace. Although prospects for the US economy have improved, it does not look like the US will enjoy the growth spurt that typically follows a deep contraction. Growth in Europe should be weaker at around 1%, reflecting turmoil in the periphery states and more rapid fiscal consolidation.

7. The current global recovery is likely to continue into 2011, albeit at a more moderate pace. The strong rebound in global industrial production is peaking while monetary and fiscal policies, particularly in the larger emerging economies, are being normalised.

8. However, downside risks to the global economy have increased. I highlight three risks:
i) the turmoil in Europe;
ii) continued deleveraging in the US; and
iii) protectionist pressures in many countries.
The economic recovery, while real, is fragile and there is a risk that negative shocks could push the global economy towards a recession sooner than expected.

A Riskier Post-Crisis Environment

9. The post-crisis global economic and financial environment will be affected by three major trends.

10. First, it will take a long time for the developed world to fully heal from this crisis. The current recovery in the developed economies could continue, at least in the very short-term, but even the most optimistic economist expects the bounce to be much weaker than what has occurred in the past.

11. The second major trend in the post-crisis environment is the increasing importance of the emerging economies, anchored by Brazil, Russia, India, and China or the BRICs. For the first time in economic history, the long-term fiscal debt trends in much of the emerging world are better than those in much of the developed world.

12. The shift in economic power to the emerging world will likely increase geopolitical risks. For one, the emerging economies, especially the BRICs will become key global powers and increasingly demand more say on world affairs. Conflicts could also arise over access to natural resources.

13. For investors, the rise of emerging markets will mean that a larger proportion of their investments will be in these markets. Far from being a risky and perhaps optional part of their portfolios, emerging markets will become a core and unavoidable asset class in global portfolios.

14. The third major trend in the post-crisis environment will be increased vulnerability to negative events and extreme reliance on government policies both for support and far reaching reforms over the next few years.

15. The current recovery is being sustained by unprecedented policy support. Changes in policies or mistakes will thus have a significant impact on the global economic and financial environment.

16. A key challenge for policymakers is to properly time the withdrawal of unprecedented monetary and fiscal policies. Policymakers risk derailing the recovery if withdrawal is too early or too sharp. However, policymakers run the risk of creating excessive inflation over the medium-term, if emergency-levels of policy stimulus are left unchanged for too long.

17. In some countries, policymakers have come under pressure to repair public finances which have deteriorated markedly because of the financial crisis. Over the past couple of months, we have seen the turmoil in European debt markets spread as markets question the fiscal sustainability of an increasing number of states within the European Monetary Union. The challenge for policymakers in many developed economies will be to convince markets that they have credible plans to ensure sustainable public finances over the medium to long-term, while minimizing the negative short-term impact on growth. This is particularly true for countries that already faced difficult medium to longer-term fiscal challenges before the crisis. While markets have focused on Greece, Portugal, Spain, Ireland and Italy, this risk remains high for the UK, US, and Japan.

18. In the emerging economies, policymakers will have to deal with rising inflation and possible asset price bubbles. In contrast to the developed countries, the strong recovery in emerging markets means that CPI inflation will be driven by narrowing then positive output gaps and rising commodity prices. Asset prices, particularly in Asian real estate, have been supported by extremely accommodative global financial conditions, credit policies, a positive structural story, and in some countries, strong capital inflows.

19. Finally, high unemployment and unhappiness over ―"bail-outs" could lead to populist policies, including excessive regulation and protectionism. There is, especially in the developed world, a feeling that the financial sector has ―rigged‖ the system so that it cannot lose—it is simply too big to fail. While there is little doubt that some rebalancing towards better regulation, restructuring and supervision is needed, there is a risk in this environment that such reforms are excessive and ends up stifling innovation and growth. Protectionism also remains a risk despite the recovery, given high unemployment and what seems to be, for the first time in many years, increasing tensions between American and European businesses and the Chinese policy environment.

Implications for Asia: Post-Crisis Opportunities

20. Asia has benefited tremendously from post-WWII globalisation and liberalisation trends. Strong growth in the developed world, trade liberalisation, and a broadly stable geopolitical environment has enabled Asia’s export-oriented development strategy to work. This has underpinned Asia’s rapid economic growth and convergence to the developed world.

21. The post-crisis environment I have just described challenges these basic trends which, till now, have been taken almost for granted. Going forward, growth in the developed world will be modest at best. High unemployment increases the risk of protectionism and a reversal of globalisation. Shifting economic power could lead to conflicts among nations. Asia will increasingly face labour, natural resource, and commodity constraints to its high growth strategy.

22. Can Asia and the West adapt to these challenges? While we should not underestimate the difficulty of the challenges and there will certainly be setbacks from time to time, I believe that the answer broadly is yes as it is in the interest of Asia and the West to work together for mutual benefit.

Opportunities in Economic Rebalancing

23. In the next stage of Asia’s economic development, Asia’s economic growth model is likely to change from depending largely on exports to a more balanced model in which private domestic demand is also a key source of growth. In some countries, especially the larger economies of the BRICs, an expanded middle class will consume more goods and services, such as TVs, computers, and tourism. In many countries, extensive infrastructure investment will help meet the demands of massive urbanisation.

24. Asian countries and sub-regions like ASEAN are continuing to build strong WTO consistent and inclusive regional trading and financial relationships and free trade areas. This will insulate them from economic shocks, further raise domestic living standards and contribute to balanced global growth.

25. Asia’s economic rebalancing will, over time, result in significantly stronger currencies. As productivity in Asia rises relative to that in the developed countries, real wages will also rise. Asia’s better growth prospects will also attract capital inflows. Both factors should, over time, lead to an appreciation of Asian countries’ exchange rates. This reflects the region’s strength and will be a spur to further productivity improvements as well as provide a boost to Asian consumers.

Increasingly Sophisticated Financial Systems

26. In the area of finance, Asia's increasing economic wealth and consumer sophistication will demand a wider variety of more sophisticated financial markets, products, and institutions. Financial systems in a number of Asian countries are still dominated by banks, with relatively undeveloped foreign exchange, bond, and equity markets. Retirement savings and fund management are nascent. Banks are likely to continue to be the core of many systems, but other markets and institutions will develop.

27. This crisis gives financial institutions and markets in Asia tremendous opportunities to grow and develop. The globalised Western banking system, hampered by capital constraints and re-regulation, will likely not be able to intermediate the massive capital demand needed to finance Asian growth. This leaves the playing field unusually open for Asian financial institutions and markets, particularly for several years.

28. Fortunately, given the experience of the 1997 Asian Crisis, Asian financial institutions generally came into this crisis much healthier than their global counterparts. Capital, liquidity, and non-performing assets were at healthy levels while exposures to toxic assets were limited. Asian household, business and government sectors are also relatively un-leveraged. In order to take advantage of this opportunity, however, Asian banks and capital markets will need to quickly step into the breach.

Sharing Global Responsibilities

29. The shift in economic power from the developed world to the emerging world could, however, raise geopolitical risks. However, I do not see Asia aggressively challenging the global order, which has benefitted Asian countries for decades. Asian countries, including China, generally share the view that a multilateral, rules-based international order is critical to their long-term growth and development. Asia’s rise therefore is not inevitably a zero-sum geopolitical game where the US and Europe must decline as Asian countries grow.

30. Asia will of course assert its views on global political and economic governance but will do so as a stakeholder wanting to strengthen international institutions and cooperation. For instance, Asia’s voice in global affairs will rise in tandem with its economic power. The governance and functioning of the international order – the G20, World Bank, IMF, WTO, and the UN – will also be reformed to take into account Asia’s rise. But this is a rebalancing to take into account the growing importance of the emerging world and not a supplanting of the older order.

31. Asia continues to believe in the benefits of open economies and globalisation.
The region also benefits from regional integration, whether through ASEAN, ASEAN+3, or Asia-Pacific Economic Cooperation (APEC). For many in Asia, the Great Crisis of 2008/9 has reinforced the benefits of regional cooperation to promote trade, investment, markets, and provide avenues for conflict resolution.

32. Given the shift in economic power, Asia and the developed world will need strong and wise political leadership to preserve the global trading and financial system. This global order has, by and large, brought significant benefits to citizens of both the developed and emerging economies. I am confident that Asian countries will do their part to maintain an international order conducive to expanding world trade and enhancing global prosperity.

Environmental Challenges

33. Finally, as Asia develops, Asia will learn to better manage its environmental footprint, more so given its rapid development and high population density.

34. Challenges include land contamination, water scarcity, water and air pollution, destruction of bio-diversity, and climate change. This situation is not sustainable. A richer and more sophisticated citizenry will also demand policies which are environmentally friendlier.

35. I believe Asia will innovate to deal with these constraints. Government policies will seek to address these challenges, while increased R&D will drive technological advances. China, for instance, is becoming a major force in research and development of technologies that address environmental constraints such as renewable energy. One reason why I am optimistic is Singapore’s own experience in water scarcity. As an island nation, we have limited water catchment areas and rivers. But intelligent planning and taking advantage of technological improvements have enabled Singapore to move to self-sufficiency in water.

Conclusion

36. To sum up, Asia is recovering well from the Great Financial Crisis of 2008/9. The crisis seems likely to accelerate the shift in economic power from the developed to the emerging world.
37. Asia is at the cusp of the next stage in its development. There will likely be bumps along the way, perhaps a few crises, but if we learn the right lessons from history, especially those of the recent Great Crisis, Asia will innovate and adapt. There are difficult challenges but I am optimistic that we can overcome them.
______________________________________________________________

China's sensors reign in "vulgar" reality TV show

2010-07-22T00:24:00.000-07:00

by Rebecca Chow

When viewers tuned into China’s most popular dating show this spring, they saw beautiful women, brutal rejections and plenty of money worshiping, as when a female contestant was asked by a possible date whether she would like to go for a bicycle ride.

“I’d rather sit and cry in the back of a BMW,” she said.

Or when another woman, asked for a handshake, responded: “Only my boyfriend gets to hold my hand. Everyone else, 200,000 renminbi per shake,” or about $29,475.

Such witticisms made “If You Are the One,” produced by Jiangsu TV, the most watched reality television program in the country. Then the censors started watching.

Late last May, central government propaganda officials issued a directive calling the shows “vulgar” and faulting them for promoting materialism, openly discussing sexual matters and “making up false stories, thus hurting the credibility of the media.”

So the dating show, and others like it, got a makeover. Gone are fast cars, luxury apartments and boasts of flush bank accounts. Now the contestants entice each other with tales of civic service and promises of good relations with future mothers-in-law. One show now uses a professor from the local Communist Party school as a judge.

China’s television programmers are not far behind their Western counterparts in tapping demand for salacious entertainment. But that tends to conflict, sooner or later, with official notions of propriety and taste in China, which are a lot further behind.

“Traditionally for the government, there are several functions of the television industry,” said Ouyang Hongsheng, a media professor at Sichuan University. “Entertainment is last.”

Although all television stations are still state-owned, stations owned by provincial governments now compete with one another for ratings, national cable distribution and advertising revenue. The profits from these stations go back to local agencies, so provincial-level officials often think more about padding their budgets than enforcing decorum in the public media.

Still, central government propaganda officials reserve the right to intervene. And the minders in Beijing have no financial stake in the shows.

Since its debut in January, “If You Are the One” has been at the center of the storm. Each episode is like a game, as 24 women are presented with a parade of eligible bachelors. The men are subjected to abrasive questioning and ego-deflating sound effects of rejection. The entire process, 30 minutes in taping, is edited down to about 10 minutes on screen. The result is what might happen if the “The Bachelor” and “The Gong Show” produced an offspring with attention-deficit disorder.

Before the changes, the courtship tended to focus on financial matters, and the decisions were swift and ruthless. Personal introduction videos were stamped with “owns car, house” (or the unfortunate opposite) on the bottom half of the screen.

During one precensorship episode, a woman said to a potential 33-year-old suitor, “You say you’re good at what you do, but then how can you still just be a salesman?”

Another contestant, the 20-year-old son of a wealthy businessman, showed off his multicolored sports cars and bank statements that indicated a balance of six million renminbi (about US$884,000).

Ma Nuo, 22, the woman who professed to prefer crying in a BMW over riding a bike, denied in an interview that she thought too much about money. She said the producers played up her comment for publicity. “I only wanted to reject him, but in a creative way,” she said.

Men began sending Ms. Nuo marriage proposals attached with pictures of themselves in BMWs. She did not write back to them. She chose a photographer as her date on the show.

Viewers flocked to the program for its off-screen scandals as well as for the on-screen romance. Producers were accused of making up life stories and using actresses as contestants. After every offensive comment or awkward moment, video clips quickly appeared on Web sites.

As the ratings of the show climbed, its critics became louder and more numerous, calling it a frightening window into the degradation of social values.

Censors may have seen an opportunity to present themselves as do-gooders, reining in a form of entertainment many thought had gone too far, said Chris Berry, professor of film and television at Goldsmiths, University of London.

By June, a triumvirate of news organizations run by the Communist Party, the Xinhua news agency, People’s Daily and China Central Television all ran reports extremely critical of the show’s attempt to win ratings at the expense of quality. The State Administration of Radio, Film and Television stepped in.

“In this situation, if we don’t correct it, it will have a negative influence on all of society,” Zhu Hong, a spokesman for the state body, told CCTV. “Lots of people on the Web have said, ‘You can’t not control this!’ ”

The shows are now forbidden to “hype up marginal issues, show the ugly side of things, or overly depressing, dark or decadent topics,” according to the directive. Instead, the shows have to “maintain core Socialist values.”

Some dating shows, like Zhejiang TV’s “Run Toward Love,” were canceled. All have toned down references to material wealth and sex.

“If You Are the One” added a new co-panelist: a psychology professor from the School of the Jiangsu Provincial Communist Party Committee.

During an episode broadcast June 27, Huang Han, the mild-mannered psychologist, sat on stage and nervously adjusted her headset microphone.

“Oh you know, I’m so old, you’re a young girl in my eyes,” she said to a female contestant who worried about being older than her date. “These days, everyone works for a few years before they start looking for a duixiang, right?” she responded, using an outdated term for significant other.

In the same episode, Gao Fang, 23, enthused about his volunteer work during the Olympics, which led Yang Yi, 24, to fight back tears as she talked about taking care of disabled orphans.

Ratings have slumped since the changes, according to a spokeswoman for the show who declined to be identified. She attributed the drop to competition with the World Cup, even though the show did not compete directly with live soccer broadcasts.

And then there are the fan reactions. “Volunteering? How fake is that?” said Du Shibin, 48. “Who doesn’t ask about houses and cars these days when looking for someone to marry?”

About the author: Rebecca Chow is Managing-Director of Shanghai-based TransChina Services (http://transchinaservices.weebly.com/ )

Malaysian Indians cause further shift in power

2010-07-16T02:48:00.000-07:00

Malaysia's population 25.7 miliion consists for 50.4% of Malays, 23.6% of ethnic Chinese, 11% of indigeneous people and 7.1% of ethnic Indians. This last group has always been relegated to the fringes of Malay society squeezed beteen the economically powerful Chinese and politically powerful Malays. A lack of confidence and cohesion among the ethnic Indian Malays did not contribute to any improvement of their position. A new found self-confidence among this group, however, is emerging and Malaysia's political landscape may change because of it.

The Malaysian Indians never suffered the fate of the Malaysian Chinese who, until as late as 1969, were still the victim of anti-Chinese pogroms by ethnic Malays. In 2008, a prominent UMNO party member labeled his Chinese compatriots as "mere squatters" in Malaysia and were not deserving of equal rights.

Due to their low position in Malaysian society, Malaysian Indians did not suffer from the jealousy the often richer ethnic Chinese evoked in the ethnic Malays. Their numbers were and are also much smaller than those of the ethnic Chinese.

But since the start of the 21st century and the unstoppable rise of India on the global stage, Malaysian Indians are feeling increasingly self-confident. The growing power of the ancestral homeland reflects also on of ethnic Indian origin who live outside India and are citizens of other countries. Ethnic Indians around the world feel emboldend by India's rising power and influence. In Malaysia this means that they increasingly refuse to accept their lower status in Malaysian society and are claiming their constitutional rights.

The Malaysian political establishment is also aware that treating their ethnic Indian population badly and withholding their rights will put strain on the relationship with India.

The rise of China strenghtened the position of the ethnic Chinese population in Southeast Asia. Where in the past politically instigated pogroms against the ethnic Chinese happened from time to time, now political leaders in all Southeast Asian countries will think twice before allowing something like this to happen again as it will certainly cause mainland China to react with sanctions and a withdrawal of much coveted Chinese investments.

Due to India's rise, ethnic Indians in Malaysia will have trump card of sorts in their sleeves. The Malaysian political establishment will need to adhere to their demands to an improvement of their situation in order not to upset India itself. This will mean a further erosion of the political power of ethnic Malays who only form a tiny majority in Malaysia. A combined movement of ethnic Chinese and ethnic Indians can force the ethnic Malay political powers to finally officially abandon their promotion of Ketuanan Melayu or Malay supremacy and accept that Malaysia is a multi racial society.

Such a change will not be a smooth one but how to organize and establish such a society could be learned from neighbour Singapore where the ethnic Chinese majority has gone to great lengths to ensure all religions and ethnicities equal rights and opportunities.

This article appeared earlier on www.businesstrendsasia.com

India's small towns drive consumption

2010-06-08T02:14:00.000-07:00

Ernst and Young (India) on 11 May released the report The New Market "Shehers": Tapping Potential Beyong the Metros, identifying the trends in consumption patterns and marketing spends in small town India. The report provides an insight on how non-metro urban markets are becoming more relevant in India's consumption story and how marketers are restructuring their budgets to take advantage of the new urban consumer.

The report highlights consumption patterns of consumers across Key Urban Towns (KUTs) and Rest of Urban India (ROUI).

For the report, India was divided into 4 geographical categories - the top-6 Metros (Mumbai, Delhi, Bangalore, Hyderabad, Chennai and Kolkata); the KUTs, which are 22 cities immediately following the metros in their market potential, e.g., Amritsar, Surat abd Ludhiana; cities in the ROUI and the KUTs, e.g., Kota, Jalandhar, Jabalpur and rural India.

Key findings:

- Retail presence in the KUTs and the ROUI through organized retail chains and malls has increased significantly. Over a 2 year period, the percentage growth in the number of malls in the KIT (55%) was more than twice that of the metros (24%).

- Consumers in the KUTs show an increasing preference for the premium products and services of established mass barnds. For instance, the sale of LCD TVs and wellness services is on the rise in the KUTs.

- Significant uptake in the leisure and lifestyle spends of consumers in the KUTS. Men are utilizing wellness services more than ever before, not just in the big metros, but also in tier II and III cities. Womens in small twons are more willing to pay large amounts for age correction, body sculpting and removing skin imperfections, etc..

- The share of KUTs and the ROUI in newpaper advertising (by volume of activity) in 2009 was higher that 50% across most categories. For categories such as cellular skinacare, orla hygiene, hair care and consumer durables, the advertising share is even higher at 75%.

- The KUTs and the ROUI comprise more than 50% of total below-the-line (BTL) activity in the country. BTL activity has grown significantly in non-metros (40% in 2009 vs. 15% during 2007), as compared to metros (60% in 2009 vs. 85% during 2007). 60% of BTL activity is concentrated in the ROUI and in rural India with sectors such as telecom, consumer durables and certain categories of FMCG products.

- Mobile advertising is also catching up more effectively in the KUTs and ROUI as opposed to person-to-person marketing with more than 500 million mobile users base in these regions.

The metros and the KUTs are driving growth in later-stage consumption (higher trandaction value products and discretionary goods), the ROUI are driving growth in early-stage consumption (necccesities and products with lower transaction value).

Marketers are taking cognizance of this new urban consumer and are aggressively targerying these KUTs and ROUIs, which has resulted in a ficus shits in media spends from the metros to the non-metros. This trend is likely to continue with the changing consumption pattern of consumers, fuelled by greater purchasing power.

This article appeared earlier on www.businesstrendsasia.com

Talent shortages in Asia-Pacific high

2010-05-21T01:08:00.000-07:00

Manpower Inc. on 20 May released the results of its fifth annual Talent Shortage Survey, revealing that talent is elusive - it's everywhere yet nowhere, as talent shortages persist in many countries and industry sectors. Thirty-one percent of employers worldwide report having difficulty filling key positions within their organization - a rise of one percentage point from 2009, amidst a perpetual global pool of available workers.

The top hardest to fill jobs are Skilled Trades, Sales Representatives, Technicians and Engineers according to the survey of more than 35,000 employers across 36 countries. These are the same top jobs that employers have reported struggling to fill for the past four years, demonstrating that there is an ongoing global mismatch in these key areas.

Globally, employers having the most difficulty finding the right people to fill jobs are those in Japan (76%), Brazil (64%), Argentina (53%), Singapore (53%), Poland (51%), Australia (45%), Hong Kong (44%), Mexico (43%), Peru (42%), Taiwan (41%), China (40%) and Panama (38%). Compared to 2009, employers are reporting that talent shortages are considerably less pervasive in Romania (down 26 percentage points), Taiwan (down 21 percentage points), and South Africa (down 19 percentage points).

Talent shortages in Asia Pacific are ten percent higher than the global average, with 41% of the region's employers indicating they are having difficulty filling positions due to the lack of suitable talent in their markets. This is a nine percentage point increase when compared to the 2009 survey.

Employers having the most difficulty finding the right talent to fill jobs are those in Japan (a huge 76%), Singapore, (53%), Australia (45%) and Hong Kong (44%). The talent shortage appears to be least problematic in India (16%).

There remains a clear talent shortage of skilled sales representatives in Asia Pacific, as this job remains the most difficult to fill for the fifth year in succession.

Korean invasion in the Philippines

2010-04-27T02:39:00.000-07:00

What started as an embracing of foreign guests and their culture has gone to be a noticeable phenomena with a growing and increasingly noticeable presence of a Korean "diaspora" in the Philippines. To date there is an estimated 100, 000 Koreans living in the country while tourists (most are students) who visits every year has been steadily increasing for almost 5 years now.

In 2005, according to the Philippines' Commission on Higher Education, Koreans comprise 25% of the total number of foreign students enrolled in that year, in fact the highest number foreign nationals entering colleges and universities here. And with the increasing numbers of English learning school for Koreans in Baguio, Pasay City, Makati and Davao, the number of students not only exchange students have been steadily increasing.

The Department of Tourism reported that for the first half of 2008 a total of 380,000 Korean residents visited the Philippine compared to 375,000 for the same period last year. Making Koreans the largest group of tourists in the Philippines, surpassing the Americans and Japanese, with a steady average annual growth of 1.5% since 2005.

Koreatowns in Makati, Paranaque, Baguio City and even in Davao in Mindanao Islands are starting to be as prominent as the Chinatown in Binondo Manila. With Korean restaurants, Christian churches, salons, and spas sprouting here and there although Philippine law prohibits foreign nationals to engage on retail trade as well as purchasing of properties under their name. They do so by marrying Filipinas and / or making Filipino workers "owners" of their businesses.

The Philippines' low cost of living as well as its good reputation in English education, are just two of the many factors why this Southeast Asian country of 85 million people has been one of the favorite destinations of Koreans since the Korean wave hit Asia in the 1990s. "Korean wave" refers to the recent surge of popularity of South Korean popular culture in other countries, especially in Asian countries.

With this fast and at first unnoticed influx of Korean community, where existing barriers are now slowly disappearing, Korean community remained as a closed group compared to the Chinese and Indians residing in the country. Korean restaurants and stores cater mostly to Koreans alone compared to Chinese restaurants where everyone can eat and enjoy their menu. Though there is no big issue of discrimination , Koreans have been critised for keeping to themselves and by seemingly bringing Korea to the Philippines.

There are also reports of growing concerns on how Koreans behave themselves in hotels, clubs, resorts and other public places. This results to some hearsay that Koreans were banned in some private establishments. Some say this is alarming, others say that this is a big help to the country's struggling economy. Whatever the pros and cons, it is inevitable that the Korean diaspora has definitely made a mark and will continue to thrive just like the Chinese and Indian did many years ago.

About the author: Edwin Padillo is Manila-based correspondent for Business Trends Asia. This article appeared earlier on www.businesstrendsasia.com

Bangkok demonstrations just tip of iceberg

2010-04-21T02:03:00.000-07:00

This article appeared earlier on www.businesstrendsasia.com

The demonstrations in Bangkok of Saturday, 10 April, 2010, during which 25 people died, caught the attention of the global media. The violence made international headlines but has not put a stop to the demonstrations nor have the Red Shirts (Thaksin supporters) left the capital. But the Bangkok demonstrations form just the tip of the iceberg of the power shift taking place in the country.

All over the Central, North and Northeast part of the country have the supporters of Thaksin, united under the UDD-banner (United front of Democracy against Dictatorship) and characterized by their red shirt outfits, taken control of provincial and municipal institutions, blocking any communication from the Thai government and effectively taken power from the central government who has lost control of the country outside Bangkok and the South.

Rumours about HM the King fuel further unrest. He remains in Siriraj hospital in Bangkok since fallen ill late-2009 and is completely shielded from the public. Prime-Minister Abhisit Vejjajiva is rumoured to have asked the King to leave for the royal residence in Hua Hin where the king has lived for the past years. HM the King has supposedly refused to leave the Bangkok hospital as he feels this would lead to his immediate death. However the actual status of his health remains a closely guarded secret of which the public at large has no knowledge. Should the King still be alive and able to communicate he could reassume his mediating role.

On the other hand many UDD supporters believe the monarchy is not on their side but part of the "other camp", the so-called Yellow Shirts (yellow is the colour of the Thai monarchy), and would no longer accept HM the King as a non-partisan mediator nor accept his judgement anymore. The feeling that the King and the royal family have actively taken sides against them creates a feeling of "nothing left to lose" among the UDD supporters, diminishing the stabilizing capabilities of the king during times of turmoil.

Another rumoured twist sees the "devious" genius of Privy Councillor, and close friend of the king, Prem Tinsulanonda, as a master puppet player despite his well advanced age. Apparently Prem is supposed to have obtained documents signed by HM the King and foreseen with the Royal Garuda seal in which all the king's powers have been assigned to him and that he is now in full control of the monarchy.

The Bangkok demonstrations are just the outer symptoms of a massive power struggle among Thailand's elite whereby the winner will be awarded with the ultimate price i.e. full control of the country.

It still remains possible that Thailand will turn into another Burma !

The Indonesian woman: a century after Kartini

2010-04-21T00:29:00.000-07:00

This article appeared earlier on www.businesstrendsasia.com

Every 21 April, Indonesia celebrates Kartini Day. Born in Central Java on 21 April 1879, Kartini is Indonesia's foremost woman pioneer. It was through her aspirations which she so poignantly wrote in her letters to friends in Holland, and who later published them in the book entitled "Door Duisternis tot Licht" ("Through Darkness into Light"), opened the gates for Indonesian women to break free from the restrainings shackles of tradition, and demand equal education for daughters as for sons.

Living in the latter of part of 19th Century, Kartini was the daugther of the regent of Rembang in Central Java. Although living a life of comparative luxury for the time, yet following tradition, she was, nonetheless, confined to her home and was only allowed to play with her sisters in the backyard. Seeing Kartini's strong desire to learn more, however, her father hired a private Dutch tutor to teach the sisters reading and writing, embroidery and western cooking. Through the tutor, Kartini received and read women's magazines and newspapers from Holland, which opened up her horizon. Reading about women's emancipation in far off Europe, Kartini dreamt of the day when Javanese girls would also be allowed top enjoy equal education and freedom to pursue their dreams as enjoyed by boys. Kartini yearned for independence, if not for herself, at least for other girls. "I dream of the Javanese girl, who holding her head high, will step lightly and confidently out into the world", writes Kartini, at the young age of 24.

Tragically, though, and still true to tradition and obeying her parent's wishes, Kartini was married off to a neighbouring regent as his fourth wife, albeit his chief wife. But even during this time, Kartini never lost sight of her dreams, founding a school for girls. She also promoted the establishment of more Kartini schools around the region. But, at the tender of 25 Kartini died, four days after giving birth to a son.

Today, in the first decade of the 21st Century, more than a hundred years after her death, much of Kartini's dreams have been realized. Indonesian women today enjoy much by way of freedom and equal opportunities in education. The Indonesian Consitution guarantees equal education and opportunities for all regardless of gender, race or religion. Indonesia had a first woman president, Megawati Soekarnoputri, daughter of the country's first president, Soekarno.

Today, President's Yudhoyono's cabinet includes four women Ministers holding important and strategic portfolios. These are the Minister for Finance, Sri Mulyani, the Minister for Trade, Mari Elka Pangestu, Minister for Health, Siti Supari, and Minister for Women Empowerment, Meutia Hatta. While, in Indonesia's Central Bank, the second in command in the position of Senior Deputy Governor is a woman, Miranda Gultom.

In local government, Indonesia today has a popularly elected woman Governor in the province of Banten, Ratu Atun. and the most recently appointed Mayor of Central Jakarta, as well as a number of popularly directly elected district heads.

In the private sector, outstanding industrialists include Martha Tilaar and Mrs. Mooryati Soedibyo, who have both built themselves empires in herbal cosmetics and traditional court beauty treatment. There are also oustanding women CEOs in banking, telecommunicatiosn, sports fashion, and other areas. Indonesia now also has a woman Police Officer with the rank of Brigadier General and even has a female trained astronaut, although she has not had actually had the opportunity to be launched into space !

Dress-wise Indonesian women are also free to choose their own dress code. Those wishing to wear the Muslim dress, wear headscarves to cover the hair. While other women wear western dress daily, office attire or tight-fitting jeans, or local or national costumes on official occasions.

Nonetheless, despite this progress, Indonesian women still face substantial challenges which include access to education (mostly held back by poverty), and protection from domestic violence. In regard to marriage law, Indonesian women may now also refuse to accept polygamy when her husband insists on taking a second wife. The wife is allowed to file for divorce. Such cases have been widely published especially involving TV idols or well-known public figures.

In society today, with the enforcement of regional autonomy in Indonesia, women activitists observe with concern the increasing number of bylawas that are issued by regional legislators citing "public morality" and "religious considerations", that in effect aim to seriously restict women's freedom from reaching her utmost possibilities. Prof. Saparinah Sadli, former Chairperson of the National Commission for Women, added that, while the state has issued 29 new policies at national, regional and local level to readicate violence against women, yet on the other hand, regions have issued 27 new bylaws that discriminate women, regulating women's dress, behaviour and mobility.

In this regard, Director for Executive Reform Insitute, Yudi Latif, explains that in Indonesia today, following the Reform movement, which since decade ago transformed Indonesia from a highly authoritarian regime to the present-day democracy, civil society now finds itself no longer facing the state but instead now faces fantaticsm that is anti-equality.

About the author: Wuryastuti Sunario is the Managing Director of Indonesia-based TBSC-Strategic Communication, which publishes news bulletin Indonesia Digest

Pancasila & Islam in Indonesia

2010-03-24T01:27:00.000-07:00

Recent surveys in Indonesia found that the large majority of respondents stated that they were convinced that Pancasila is still the most ideal ideology for Indonesia.

The "inclusive" Pancasila ideology that was formulated at Indonesia's independence 65 years ago and applied until today, is still the best political system for the country. Because, adhering to Pancasila, the nation's religious and ethnic diversity are recognized and are allowed to exist in harmony side by side.

Most Indonesians do not favour adopting a strict Islamic system in which sharia laws would enforce the wearing of head-scarves for women or stoning for adultery. The overwhelming majority support the Five Pillars of Indonesia's State Ideology which was formulated by the country's founding fathers led by Soekarno in preparing Indonesia's Independence in the years prior to 1945.

This philosophical formulation was later incorporated as the "soul" of Indonesia's State Ideology as expressed in the Preamble to the 1945 Constitution. The Five Basic Principles of the State are: 1. Believe in the One True God. 2. Humanity, 3. The Unity of Indonesia, 4. Democratic decision-making through consensus among representatives and 5. Social Justice for All.

With the adoption of Pancasila, Indonesia, depite the fact that Indonesia's population was and is predominantly Muslim, nonetheless, is not an Islamic State. It is, however, also not a secular state in the strictest sense of the word, since the Constitution determines that Indonesians believe in the One God. In essence, Indonesia's state ideology stands for pluralism, inclusion, tolerance, moderation, democracy, justice and non-discriminination for all of its citizens.

With the arrival of the Reform Movement in 1997 and in the post-Soeharto years, the Pancasila ideology was considered to be anti-Reform as Soeharto had reaffirmed the ideology to deny the existence of communism, western-style liberal democracy and fanatical religious teachings. During the following years of Reform and transition to democracy, however, Pancasila gained ground again among the silent majority.

The majority of Indonesian Muslims have long been more orientated to pluralism and nationalism. In three general elections (in 1955, 1999, 2004 and 2009) the winning political party has always been one that is based on nationalism rather than on one specific religion.Furthermore, Indonesia's two largest Muslim civil organisations, the Nadhlatul Ulama and the Muhammadiyah embrace Pancasila.

This article appeared earlier on www.businesstrendsasia.com

Why should China solve global monetary chaos ?

2010-03-17T03:04:00.000-07:00

On 12 March 2010, UNCTAD released its policy brief, titled “Global monetary chaos: Systemic failures need bold multilateral responses”. According to the brief, amidst continued financial crisis, the question of the global trade imbalances is back high on the international agenda. A procession of prominent economists, editorialists and politicians have taken it upon themselves to “remind” the surplus countries, and in particular the country with the biggest surplus, China, of their responsibility for a sound and balanced global recovery. The generally shared view is that this means permitting the value of the renminbi to be set freely by the “markets”, so that the country will export less and import and consume more, hence allowing the rest of the world to do the opposite. But is it reasonable to put the burden of rebalancing the global economy on a single country and its currency? This policy brief contends that the decision to leave currencies to the vagaries of the
market will not help rebalance the global economy. It argues that the problem lies in systemic failures, and as such, requires comprehensive and inclusive multilateral action.

The international community has allowed global monetary incoherence to reign before and after the crisis. Indeed, “markets” were permitted to manipulate currencies in a way that made some sovereign governments and central banks look like penniless orphans. The need for a new approach to global macro-economic governance is more urgent than ever, because today’s currency chaos has become a threat to international trade and could
be used as an alibi by major trading countries for resorting to protectionist measures.

In fact, the calm after the storm of the recent financial meltdown did not last for long. Institutional “investors” are back in business in global currency markets. With their resurgence, countries are again facing huge inflows of hot money that cannot be put to any productive use, but which create severe price misalignments and trade distortions. The global “casino”, nearly empty a year ago, is crowded again, and many new bets are on the table. However, the
recovery in the real economy is modest at best. In fact, the rebound of stocks, commodity futures and currency trade in several emerging and developing economies since March 2009 displays the makings of highly correlated big new bubbles and the threat of a new round of financial crisis. Of even greater concern is that the crisis notwithstanding, faith in “market fundamentalism” is unswerving. That faith continues to sustain the naïve belief that a solution
to misalignment may be found by leaving the determination of exchange rates to unregulated financial markets.

The effects of the new exuberance on financial markets are adverse for countries with once-fragile currencies, such as Brazil, Hungary and Turkey. Exploiting the differentials between interest rates, the so-called currency carry trade in these countries and in the big financial markets of the North has become even easier today. Rates in the North are generally close to zero, whereas maintaining “confidence” in countries with weaker currencies – under the aegis
of IMF programmes since the onset of the crisis – has called for higher rates than before. The first results of the new “confidence” in weak currencies are ominous. An appreciation of the Brazilian real and the Hungarian forint has forestalled urgently needed gains in competitiveness and could again lead to severe overvaluation, a dramatic distortion of trade patterns and new imbalances.

Recent actions taken by some developing economies, such as Brazil, to intervene in foreign exchange markets have to be evaluated in light of the dramatic failure of the currency markets to get the prices right. Re-imposing a 2% tax on purchases by foreign investors of real-denominated fixed-income securities and stocks, for example, is not a marketunfriendly policy. Rather, such measures serve to safeguard the efficiency of markets for goods and
services by protecting their prices from becoming a punching ball of financial market prices, which are driven by an undifferentiated (if not irrational) appetite for risk. In the brave new world of liberalized global trade and finance, the treasuries of sovereign governments of the largest developing economies – and even some developed countries – can be seriously challenged by the power of financial flows. And in the absence of a truly multilateral exchange
rate system, each country naturally pursues whatever works best in the circumstances.

In fact, as a response to the current global crisis that originated elsewhere, China has done more than any other emerging economy to stimulate domestic demand, and as a result its import volume has expanded significantly. Private consumption is rising at breakneck speed. According to several estimates, Chinese private consumption increased by 9% in 2009 in real terms, dwarfing all the other major countries’ attempts to revive
their domestic markets. But even in the preceding decade, real private consumption, at an average 8% growth rate, was an important driver of growth, backed by wage and salary increases in the two-digit range and strong productivity growth. Unit labour costs (nominal compensation divided by productivity) are rising more there than elsewhere, resulting in a continuous loss in competitive power even with a fixed exchange rate. Expecting that China will leave its exchange rate to the mercy of totally unreliable markets and risk a Japan-like appreciation shock ignores the importance of its domestic and external stability for the region and for the globe.

Chinese better English speakers than Indians ?

2010-02-24T01:33:00.000-08:00

Are the Chinese becoming better English speakers than Indians? This question was triggered in my mind after a conversation with a summer intern in my team. She is pursuing an undergraduate law degree in a local Chinese university.

She speaks good English, albeit with occasional grammatical mistakes, at the right pace and with an accent that is more than understandable. There are few business managers around the world who will confidently say the same thing about the Indians they have worked with, after either having offshored business processes to India or having done business with Indians. Most of the Indian workforce today probably speaks English with fewer grammatical mistakes, but there are huge question marks on their pace and accent, which makes it extremely difficult for a large percentage of the world to understand them.

Upon digging deeper, I realized something nothing short of phenomenal: the English speaking ability of Chinese students is getting better with each passing batch. This means, chances are that a student graduating from university this summer speaks better English as compared to a student who graduated last year. This of course is not true for everyone who graduates, as individual will and hard work play an important role, but the system has been designed to enable this.

This is very obvious at the work place as well. There is an almost visible disparity between the English language ability of a 27 and a 23 year old. This particular discovery assumes even more significance when you put it against the fact that in India, unless you are studying at a convent school or one of the elite public schools, it is likely that your English language ability is not even at par with people of your parent's generation.

Today, a large number of Chinese students do not just stop at English, as the one foreign language that they know. Learning French or Spanish, amongst other foreign languages, is becoming very common. More and more universities are facilitating this further by encouraging their students to go on exchange to Europe and other parts of the world.

This development, if sustained, is bound to open many more opportunities, in the manufacturing as well as the services sectors, for the next generation of Chinese entrepreneurs and business leaders. There reach will not just be limited to the English-speaking world, but can expand to other parts of Europe, Latin America and Africa.

About the author: Shantanu Bawari is Shanghai-based correspondent for Business Trends Asia. This article appeared earlier on www.businesstrendsasia.com

Guest lecture at Rotterdam Business School

2010-02-14T04:38:00.001-08:00

In his guest lecture at the Trade Management Asia faculty of the Rotterdam Business School, on 12 February 2010, Matthijs van den Broek outlined Asia's response to the global economic crisis.

Highlighted were:

1. Asia's focus on domestic consumption

2. Accelerated emergence of new trade & investment lines; intra-Asia, Asia-Middle-East and South-South.

3. "BIC instead of BRIC"; Brazil, India and China, without the "R"of Russia.

4. Indonesia with China and India in the top-3 of Asia's best performers.

5. Added value of, and new opportunities for, European SMEs and larger companies

Matthijs van den Broek is Managing Director of Further East Consult and Editor-in-Chief of e-magazine Business Trends Asia

Toys Not 4 Us

2010-02-03T00:32:00.000-08:00

Toy retailers -local and international- in Indonesia and other Southeast-Asian countries like Thailand and the Philippines are struggling to stay in business. E.g. international giant Toys "R" Us tried to establish a presence in both Thailand and Indonesia but failed to make an impact.

The US toy retailer has withdrawn itself from both countries. Consumers in the expanding economies of Southeast-Asia will absorb many features of Western life. Toys for children are not among these. Several reasons lie behind this fact:- Traditional Western toys often imply an indoor lifestyle. In warm tropical countries life is traditionally outdoors and without air conditioning living indoors is uncomfortable. In countries like Thailand, Indonesia and the Philippines domestic aircon use is still in its infancy with a very low penetration level. Children are used to play outdoors which does not require an access to many toys making them unfamiliar with the concept of using toys for playing.- Gift-giving to children at certain fixed occasions in the year is in most Asian countries a non-existing phenomenon.

In Thailand, an occasion like Christmas does not exist and birthdays are traditionally not celebrated. Gifts to children come mostly in the form of new clothes. When toys are given it is rarely because of a special occasion.

In Indonesia, Christmas is an official festival but mostly a religious one without the gift-giving aspect. For most Indonesians the end of Ramadan celebrated during Idul Fitri marks the most important festive occasion of the year. Normally children will receive new clothes during this period rather than toys.

Children in Southeast-Asia are now more familiar with computer games than traditional toys. As computers and computer games also hold the interest of many parents the purchase of a computer plus games has a higher preference since more family members can enjoy the product which is not the case with a childs toy.The last factor also plays an important role in Western countries where children move away from traditional toys and more into computer games.

Children in Southeast-Asia attach themselves straight into this new development without first going through the traditional phase. In Thailand, for example, this happens either at home or in computer games arcades. Mostly these are shops with a few to up to a dozen computers on which children can play games, also interactively against an hourly rate of THB 20.- (€0.42). Children (99% boys) from as young as 6 up to late teens will occupy all machines when school is out.

Traditional Western toys like miniature cars, board games and dolls hold very little attraction for most Southeast-Asian children and traditionally they are also not exposed to them. Toy retailers in these countries normally survive on a Western (expat) clientele and a small percentage of the high-middle to upper-class local population. However, increased economic development and a higher standard of living will not create a demand for Western style toys in Southeast Asia.

This article appeared earlier on www.businesstrendsasia.com

Social network users go mobile

2010-01-15T01:55:00.000-08:00

Social network site (SNS) users in Asia/Pacific indicate that MOBILE is now the way to go, potentially overtaking PCs as the device of choice, according to market research company IDC's recent survey-based report, Examining Usage, Perceptions, and Monetization: The Coming of Age for Social Network Sites in Asia/Pacific.

In countries such as China, India, Korea, and Thailand, over 50% of the users interviewed have now made accessing SNSs via the mobile phone a weekly habit. This is particularly widespread in the China and Thailand markets, where 62% and 65% of respective users regularly obtain news alerts and notifications, receive and reply to messages, upload photos, or update personal status and profiles on popular SNSs via mobile phone browsers.

By contrast, Australia and Singapore see the lowest percentage of users who access mobile versions of SNSs, where only 19% and 25% of respective users login weekly via their mobile browsers.

"The prevalence of owning a cellular phone over a PC in China, India and Thailand has directly boosted the popularity of mobile SNS access," said Debbie Swee, Market Analyst, IDC Asia/Pacific Emerging Technologies Research. "In Korea, however, there is strong usage for a different reason - the market is technologically advanced and has already seen mass adoption of mobile Internet as compared with all other countries surveyed in the study.

"As for Australia and Singapore, despite also being technologically advanced markets, the overwhelming importance of the PC over mobile has created strong inertia against adopting regular mobile access of SNSs," Debbie continues.

The IDC survey further indicated that mobile operators' pricing strategies are possibly keeping many non-users away from mobile social networking. Majority of users who have never logged in to SNSs through mobile phones before have cited the hefty data tariffs as the main obstacle. These service fees can be in the form of mobile Internet, SMS or MMS access.

SNS users have, however, asserted that more are likely to try out mobile versions of SNS if telcos offer more affordable data rates. The availability of user-friendly mobile applications is also perceived as a notable area of improvement, albeit to a lesser extent.

This article appeared earlier on www.businesstrendsasia.com

Greater Mekong Subregion Asian affair

2009-11-18T00:17:00.000-08:00

(this article appeared in e-magazine Business Trends Asia (www.businesstrendsasia.com)

On 8 December 2009, the Netherlands Council for Trade Promotion in associaton with the Netherlands-Thai Chamber of Commerce and the Netherlands-Vietnam Chamber of Commerce, will stage a Greater Mekong Subregion Seminar in the Dutch port city of Rotterdam.

Among the speakers at the Seminar are representatives from the Asian Development Bank, a key initiator and facilitator in the Greater Mekong Subregion (GMS), and engineering and construction companies, DHV and Royal Haskoning, both active players in the region.

Although Western companies have a significant presence in the region, in particular in Thailand and Vietnam, and to a lesser extent in Cambodia and Laos, Asian companies are by far the leading investors in the countries along the Mekong River. The US$5.9 billion Vietnam International Township project by Malaysian conglomerate Berjaya Land Berhad makes Malaysia the largest foreign investor in Vietnam, while Thailand and Vietnam are the largest foreign investors in Laos, mainly in tourism and hydropower projects. Also the Chinese are appearing more and more on the GMS investment scene. Recently, grants and low-interest loans for funding of the US$86.4 million expansion of the airport of Luang Prabang in Laos were underwritten by the Chinese government. Also, Chinese investors are eyeing several hotel development projects in the country.

The recent removal of Laos and Cambodia of a United States blacklist that limits government support for U.S. companies doing business with the two nations, in an effort to counterbalance the rising influence of China, will therefore have little impact on the investment landscape in Laos and Cambodia. With or without the U.S., the Greater Mekong Subregion, is facing a bright economic future.

Buddhism in the Thai workplace

2009-10-30T07:24:00.000-07:00

Foreign employers and foreign managers in Thailand need to be aware of the extreme importance Buddhism has in the lives of all their employees.

Most Thai employees will express little outward religious fervour but this does not mean they feel indifferent towards their religion, even though most might break the Buddhist moral codes every day. Employers who neglect to observe the basic rules regarding Buddhist rites and obligations at the workfloor will face difficulties and sabotage.

The vast majority of the Thai people takes enormous pride in being Buddhist. This is not necessarily displayed openly and if one is not observant it might completely escape attention. Should that be the case then chances are high the Thai staff feel their foreign employer/manager is insensitive towards Thai religion and culture, straining professional relationships.

The Lord Buddha is revered above all else and the monks are His representatives on earth and are therefore at the pinnacle of society. Their position ranks even higher than that of the king. Even the least religious Thai will consider a negative attitude towards Buddha and the monkhood as an insult towards the entire Thai nation and its culture.

An extra element of Thai Buddhism is the fact that actually the majority of the Thai people is not Buddhist at all (although they would strongly deny this) but animist. Spirits have an extremely important place in every day life and will often reside inside Buddhist religious elements, thus blending the two perfectly.

A foreign manager can gain enormous face and goodwill if he/she will organize Buddhist rites almost immediately after taking up his/her position in Thailand. Some possibilities are:- Organize the visit of a prestigious monk or monks from a prestigious temple to the workplace for blessing of the operation. This requires some insider knowledge as not all monks or temples are considered equally good. To hire a monk or monks from a temple held in low esteem might create actual damage instead of creating goodwill. The reason is that literally every man can be ordained as a monk should he wish so, even the hardest criminals will be allowed to receive the blessings of monkhood. To unwittingly invite a monk of known disrepute will not create the anticipated goodwill.- Have a shrine established on the grounds of a new workplace.- All existing buildings will have a shrine on the grounds. Monks could be invited to conduct a cleaning ceremony or erect a new replacement. This should be handles with extreme care as the original shrine will be endowed with special powers and the residing spirits must be pacified first before the shrine be properly cleaned or replaced by a new one.- Organize a visit to a prestigious temple with the entire staff for merit making. This activity has the advantage of providing fun or “sanuk” in Thai, a necessary element in every Thai working environment.

Offices all have a small shrine attached high up on a wall with a little Buddha statue and some cups containing food and drink as offerings plus an incense holder. These will be refreshed every day. Foreigners are not expected to pay attention but they are certainly expected to allow the presence of the office shrine. Contrary to Thai offices Chinese companies will normally have a large shrine placed on the floor and besides a Buddha statue there will normally also be one Kuan Ying, the Goddess of Good Fortune. Keeping the shrine clean and foreseen with the daily refreshments is something office workers will organize by themselves. There is never a need for the foreign manager to become involved.

Almost every Thai man will enter the monkhood at some stage of his life. This is normally for a brief period of time: 3 days, one week, 3 weeks or 3 months. Most young men will become a monk as a symbolism to close one chapter of their life before entering another one. Becoming a monk prior to marriage is quite common. It can also be done as a means of honouring the parents. Employers must allow employees time off (with paid leave) to enter the monkhood for a specified period of time. Up to a maximum of three weeks is customary. It also needs to be granted only once. When an employee enters the monkhood it is common for the manager to be invited for the ceremony and the party afterwards (on which Thais will always spend enormous amounts of money as a son becoming a monk, no matter for how brief a period of time, is a tremendous auspicious occasion). Attendance is greatly appreciated and provides the employee concerned with face and the manager with respect.

Foreign employers and foreign managers cannot overestimate the sensitivity of Thais towards Buddhism. It is never expressed fanatically and foreigners are not expected to participate themselves but their possible failure to respect established Buddhist practices (e.g. allowing an office shrine etc.) will result in an immediate backlash. And, like the King, the Buddha can never be ridiculed, not even in a joking manner.

This article appeared earlier in e-magazine Business Trends Asia (www.businesstrendsasia.com)

Why China will not save the world

2009-10-19T03:56:00.000-07:00

This article appeared earlier in e-magazine Business Trends Asia (www.businesstrendsasia.com)

Why China will not save the world

The "West" is trying to push China into the limelight as saviour of a world reeling from the chaos of the global financial crisis. However nothing in China's recorded history of almost 5,000 years points to a structural Chinese desire in a world outside its immediate cultural sphere of influence.

China’s recorded history of almost 5,000 years does not cover China as is known today. The nation state China with it’s current borders exists since 1950 (1949 conquering of all China by the Communists and 1950 the inclusion of Tibet). Before the fall of the last Imperial dynasty, the Qing, the current state of Mongolia was part of China as well for almost 400 years.

The largest territory once governed by China’s rulers was during the Yuan dynasty at the end of the 13th century AD when the country’s borders stretched across southeast Siberia and included the Korean peninsula besides most of the territory of modern day China.

For a large part of this 5,000 year recorded history China consisted of a number of fragmented independent states with constantly fluctuating borders. These Chinese states and dynasties where most of time located in the country’s eastern half. During certain periods (Yuan, Tang and Qing) China’s territory expanded westwards but shrank back again to the east when new rulers took over.

Some dynasties would open up China (or the territory they ruled of what is now called China) during some period of their rule e.g. the Tang (7th to10th century AD) and the early Ming (14th and 15th century AD) but for large periods of time the country was basically closed to foreigners. Under China’s last imperial dynasty, the Qing, its borders expanded westwards but foreigners remained unwelcome and the country was basically forced open in the 2nd half of the 19th century by the European world powers of that time.

When the communists took over China in 1949 the country was once again sealed off from the outside world. Only in 1978/1979 opened the government the doors again. The current state of open interaction with the world at large covers a mere 30-year period and cannot be considered as the “natural order of things”. Chinese society does not have a natural regard for other cultures and peoples as the current standard Cantonese word for Westerner still shows which is the negative Kwai Loh or Foreign Devil.

Chinese rulers have always been much more concerned with domestic policies and trying to maintain social stability as this has always proven to be China’s Achilles heel during the past few thousand years. The current authorities form no exception to this rule. Their first and foremost concern is how to prevent the current global economic crisis from damaging Chinese society and how to prevent social unrest and instability.

China’s authorities have never been concerned about the opinion of the outside world and never expressed a serious interest in the position of other countries. On the one hand it means China is not overly interested in overpowering neighbouring nations but on the other hand the country is hesitant to use its power and influence “for the greater good of mankind”.

China will stimulate its domestic market for the benefit of Chinese companies not foreign corporations and its manufacturers will continue to export their cheaper products around the globe. The exchange rate of the Yuan will reflect China’s needs not Europe’s or those of the USA.

A senior Chinese economic policy advisor has already raised the suggestion that the Chinese government should abandon the US-Dollar as its main foreign reserve currency. The fact that Chinese government officials dispelled this idea cannot be considered as a commitment to global cooperation and support of the US government and US economy. The real message lies in the circumstance that this senior economic adviser has been allowed to voice this opinion in public and on a world stage. This means that the Chinese government is actually contemplating this decision, that it will do what is in the best interest of China and will undertake the action which ensures internal social stability. How this will affect the world at large is of little importance.

A culturally deeply ingrained mistrust of foreigners and strangers in general, the pre-occupation of any Chinese government over the past few thousand years with maintaining internal social stability and their reflex to seal off the country when the domestic situation seems to spiral out of control are not characteristics of a globally engaged nation.

How to prepare your market entry ?

2009-10-13T02:18:00.000-07:00

Recently, I published this report in e-weekly Business Trends Asia (http://www.businesstrendsasia.com/). Please, react.

How to prepare your market entry ?

Introduction

Before companies decide to expand into international markets normally their home market position is strong and healthy. It´s a market they know well and know how to operate successfully in. The (business) culture is their own so they’re not confronted with “surprising” behaviour and attitudes from staff and customers. Self-confidence and a strong home market position lead to the question why international expansion could not be successful?

Companies who already have expanded into international markets and have a career development programme in place will send high performing / high potential employees to take on an assignment in their international offices. Staff with good to excellent track records is rewarded with well-paid international positions.Companies that expand into international markets for the first time will use the elements of their success on their home market as the basis for their international expansion.Companies that are already internationally active will reward well-performing employees with an international posting.

International expansion and careers

When companies expand internationally for the first time management and staff guiding the expansion process will of course perform market investigations to the best of their abilities. Market research encompassing the statistical chances and growth opportunities will be investigated. Figures and other hard data will be collected as much as possible and evaluated.

These hard data will justify the actual expansion and required investments. The actual –human- approach of the new international market will be based on experiences gained on the home market. Where a lot of energy and effort will be put in the collection and evaluation of hard data the so-called “soft” side of the operation is in most cases completely ignored. The standard attitude is one of cultural self- centeredness. The home culture is deemed to be universally applicable and correct.

The attitude believing one’s own culture as the international standard of what is considered “normal” and of not being able to place other cultures at the same level is a universal human trait and difficult to replace with a more “open” approach of different values. And this is where the operation normally runs into difficulties.

It may seem like an open door but business is conducted between people and not companies. Successful business is therefore the result of successful interaction between individuals. People with different cultural backgrounds will evaluate the same situation with different views which might lead to completely opposite and conflicting conclusions. These hurdles are real and will affect the outcome of a business venture negatively if not recognized and addressed properly.

Companies who venture across their own borders for the first time need to spend just as much time and devote the same level of energy in properly evaluating the different (business) etiquettes of the country they want to be active in as they do in gathering and evaluating hard statistical data concerning their business opportunities.

Companies who are already active internationally run the risk of falling into the same ethno-centric trap. Multinational companies tend to send employees on international assignments and longer term stay as a reward for previous good performance and/or based on a specific set of professional skills rather than determining if the specific person is capable of successful intercultural interaction. Whereas the employee might be able to operate successfully in his/her own cultural environment this does not mean that the same set of professional skills will be sufficient to be effective in a different culture.

Staff from head office sent out to work in the international branches tend to believe local staff lack the level of technical skills they posses themselves and have a tendency to duplicate the work of their local employees to suit their own cultural perception of what constitutes a job well done. Local staff views this as cultural arrogance which can result in an uncooperative attitude. Foreign management members should accept that local staff probably posses the same set of professional skills as they have themselves and that giving priority to their own approach might backfire no matter how well intended.

Asian outlook

Within Europe even neighbouring countries, no matter how small, differ greatly in their cultural values and approach to life and business. In the Americas, Canada, the USA and Mexico to name just a few, each have a completely different cultural outlook on life. Within the USA individual states have their own unique set of values. And in Australia people from Brisbane, Sydney, Melbourne, Adelaide and Perth approach similar matters with different attitudes.

If cultural differences already appear between neighbouring countries or even within own borders then this is even more so the case between nations and peoples from different continents. And just as the USA cannot be considered as one homogenous entity the same is true for Asian giants like China, India and Indonesia.

The brash and aggressive attitude that is acceptable in Bangalore might be totally misplaced in more genteel Delhi. The Indonesian business elite might reside in the modern office towers on Sudirman Ave. in Jakarta but oil fields are located in rural Riau on Sumatra and most of the country’s mineral reserves are found on Irian Jaya where the population still largely lives in the Stone Age, is hostile towards outside interference and an impenetrable jungle makes local infrastructure almost impossible.Also in smaller countries different ethnic and /or religious groups might require a different approach whether as a partner, supplier or customer/consumer. In the Philippines, Indonesia, Malaysia and Thailand ethnic groups like the indigenous population, ethnic-Chinese and Indians live side by side but in most cases separately. Even in Thailand where assimilation of all ethnic groups has progressed farthest clear distinctions remain.

What might be considered a compliment e.g. a positive comment on the democratic process of Indonesia for one group (ethnic-Javanese) can be viewed as totally ridiculous by another group (e.g. the ethnic-Chinese in Indonesia). Where especially ethnic-Javanese would accuse their ethnic-Chinese countrymen of disloyalty towards the state of Indonesia, the ethnic-Chinese in turn would counter that their persecution by the ethnic-Indonesians does not warrant loyalty.

Operating inside an ethnically very sensitive society like Malaysia will require different approaches towards the main different ethnic communities: Malay, Chinese and Indian. Political tension can easily spill over into daily life.

Where across the Southeast Asian region as a broad generalization the indigenous population can be considered more open towards outsiders, the local ethnic-Chinese and Indian communities remain very much suspicious of outside developments and tend to rely exclusively on support networks within their own (international) communities. When dealing with an indigenous organization establishing the right hierarchal structure might be crucial whereas dealing with an ethnic-Chinese or Indian organization might require eliminating high levels of initial suspicion.These differences matter. They need to be taken into account, studied and evaluated. When operating in a culturally completely different environment it is important to reflect on one’s own culture vs. the culture one is operating in.

Examples

1) Toys

Increasing incomes means more disposable income of course and in general Asians crave the same things as Westerners. When parents earn more money they will spend more on their children, especially in Asian cultures. And all children like toys, right?Gift giving occasions are a Western cultural phenomenon. Receiving toys and other presents at birthdays and Christmas is something Western children see as the natural order of the universe but is completely alien to Asian children. When Asian children receive presents during festive occasions e.g. Diwali, Eid al Fitr, and Chinese New Year these come in the form of new clothes and shoes, cake and candy, not toys.In South and Southeast Asia daily temperatures are simply too high to remain indoors in case airconditioning is not available. For playing outdoors very simple toys like plastic water guns will suffice. Lego, miniature train sets etc. are all unwanted.

Where airconditioning penetration among common households is increasing like Malaysia and Thailand or is already the norm as in Singapore, children jump immediately from no toys at all to sophisticated computer games skipping the phase of traditional toys.

Toy stores in South and Southeast Asia are only few in numbers and cater mostly to an expat Western clientele. Just because parents have more money and their children are more familiar with what happens in the outside world does not make them automatically crave traditional Western toys.

2) Financial services

In general Europeans, Americans, Australians are familiar with long-term saving concepts like pension schemes or private financial programmes. Running periods range from 15 to 35 years. In China, India and Southeast Asia such savings concepts are completely new. Pensions are traditionally only available to civil servants, the police force and the military. Old age care in general comes in the form of offspring who take care of their parents when they are too old to work. Instead of a safety net provided by social services and personal savings programmes siblings support each other and their parents financially when necessary or for business opportunities or educational purposes etc. Financial resources are actually pulled together when necessary thus allowing each member access to a greater financial support system when required.

International finance companies seeking new markets for their Western market- orientated savings programmes need to accept that Asians have completely different savings objectives and therefore a different savings horizon. It’s not enough to study GDP growth figures or to determine that savings programmes do not exist in most Asian countries and that a growing middle-class should need these.Saving money is in general not an Asian feature. Money can buy things, even for long- term investments like gold, land and real estate. But actually saving money in the bank every month for 15 years or longer for retirement or other purposes is unheard of. Besides, how would a consumer know if the bank where she puts her money is safe and reliable and will not collapse and steal all her hard-earned savings? In many countries local banks do not yet have a solid enough reputation that would allow them to attract long-term savings. Savings programmes need to cater to local needs and customs and should have much shorter running periods.

3) Growth and decline

GDP growth figures of 8% to 12% of countries like India, China but also Singapore have to be analyzed carefully. There is always a catch or at least a hidden story behind these figures.China’s massive economic growth of the last decade has been concentrated in selected parts of the country like Guangzhou, Shanghai and Beijing-Tianjin. It’s not that 1.3 billion Chinese have suddenly all been lifted out of poverty.

India’s growth spurt is more recent although no less impressive. High tech developments in cities like Bangalore, Pune and Hyderabad make international headlines. India’s BPO industry is world-famous. But over 70% of India’s population lives in the countryside and a staggering 76 million households or 400 million people (36.4% of the total Indian population) still have no electricity. It’s not that 1.1 billion Indians suddenly will all buy mobile phones. If you have no electricity how will you recharge the battery?Singapore is a prime example of excellent planning and modern city life. But with a GDP level matching or surpassing West European levels economic growth figures of up to 8% as was reported in the period 2005-2008 is simply not possible without completely overheating the economy. Singapore’s economic growth of this period was solely caused by the rapid development of certain specialized very high-tech industries creating a lot of added value such as biomedicine and medical tourism plus the specialized construction required for these types of industries.

Due to the relatively limited size of Singapore’s economy (approximately €100 billion annually) growth of this new and high value-added industries within a short period of time to over €9.0 billion annually with an added-value of €4.6 billion meant a massive contribution to the country’s overall GDP growth. But due to its specialized nature this did not mean that other sectors of the economy did equally well. General retail, tourism, services etc. did not realize similar growth levels. It was not as if all Singaporeans from scientists to taxi drivers experienced a massive income growth during the growth years.Now that initial investments in the biomedical and medical tourism sectors have been finalized and no need exists for immediate massive new investments the growth in these sectors of the economy has temporarily levelled off. Now other sectors experience a slow down due to the global economic crisis official GDP figures released by the Singapore government show a contraction of 5 -10% . If real it would mean a near collapse of the country’s economy. But just like the economic growth figures affected a certain specialized segment of the economy so is the decline also not a country-wide phenomenon. The financial services industry and retail are taking a hit due to less consumer confidence but other sectors of the economy are keeping up.

Success

Western companies with a successful presence in Asia all have an excellent local network in common. This can have been built up over the decades and even dating back to colonial times like Shell, Unilever, FrieslandCampina Dairy or the Borneo Trading Company or relatively recently. Examples include the Minor Group in Thailand (est. 1967) owned by American Bill Heinecke or the East West Seed Company in the Philippines and with branches in Thailand, Vietnam and Indonesia (est. 1982) and co-owned by Dutchman Simon Groot.

Local partners are crucial to the success of a Western company in Asia. Bad ones will prevent any effort from bearing fruit, no matter how much money, work, attention and energy is contributed. But good ones can take a company to unexpected heights. Eventually this will lead to independence from the local partner and a full integration into the local society.

Besides a local network and/or strong local partner, successful Western companies offer products and services that tailor to the local market needs. This seems also an open door but many companies fail to recognize this and offer standard products developed for their own home market or following only international standards.

Another success factor is recognizing local trade structures and economic realities. An example is the popularity of flavoured yoghurt in small single-use cups in Thailand. Dairy products in general are not part of the traditional Thai diet. Yoghurt is a specialized product with a distinct taste that is popular in India, the Middle East and Europe but completely unknown in Southeast Asia until 20 years ago.

In the beginning of the 1990s, FrieslandCampina Dairy (in Thailand known as Foremost) with a local presence dating back to before WWII, started to promote its flavoured yoghurt products. Part of its strategy was to focus on the countryside where it organized a network of independent (female) door-to-door sales people who came from within the local communities. As these people were known and trusted they were able to persuade the local population to sample some products and when they enjoyed the flavour buy 1 or a few cups. Within 2 years this had led to a wide acceptance of yoghurt products in the Thai countryside. The sweet taste of the flavours suited Thai taste buds for dairy products and the small portions made them affordable for all income groups.

A third success factor lies in trusting, respecting and valuing local staff. Just because they might not be able to speak English well, might prefer rice to bread for breakfast or act differently when confronted with challenges does not mean they are uneducated, incompetent or disloyal.

A Western, Japanese or Korean company also has an advantage local companies lack: they normally attract the better educated, more ambitious, more assertive people. Staff working for foreign companies in Asia in general tend to stick out from the pack, even where it concerns lower-level functions like drivers, messengers or cleaning staff. These employees know they receive higher wages than average and get more opportunities than their counterparts in local companies. They also realize their foreign employer is more demanding than a local one but this combination of challenge, opportunities and better pay suits them and when treated well local staff can display enormous loyalty. Such staff, when nourished and respected, will open up many opportunities for their foreign employers.

Conclusion

Success factors for international expansion are straightforward but not always easy to implement. When evaluating chances in a foreign market, study cultural aspects just as thouroughly as the hard data. When sending staff abroad not only take their technical skills into consideration but also their ability to function successfully in a culturally completely different environment. Make what might seem a disproportionate effort of selecting the right local partner(s). Hire local staff selectively and trust them and respect their own professionalism. Accept that the foreign culture is no less than one’s own and has the same value. Be able to put the different culture at the same level as one’s own and not secretly believe one’s own cultural values are of a higher standard. They’re just different, not higher. Accept local economic realities and make use of local trade structures rather than trying to force one’s own concept of what reality should be on an organization that will be unable to operate successfully with unrealistic policies.