Taxi Drivers and Cultural Intelligence
A common aspect of life that struck me in both Singapore and Indonesia was the inequality of wealth. In Jakarta, this income disparity was blatantly displayed in the juxtaposition of the shiny grand office buildings in the central city and the bustling average blue collared workers jammed in the crowded buses. Another interesting thing about Singapore and Indonesia is the attitude of the people. In Singapore, I did not see many people lounging around or doing nothing, but everywhere in Jakarta there were people just sitting there or standing there.
In terms of culture, Singapore surprised me by its lack of cultural and heritage sites. Perhaps I had been expecting all countries in Asia to care deeply about preserving culture and tradition, but in Singapore I saw none of this. Although there were religious sites scattered around, all I saw in this modern city-state were shopping malls and palm trees. Singapore is a place that values the new and modern. It is a young country that has worked hard to get to where it is today, and you can tell in the people that they are a very progressive society. However, although everything appeared pristine on the surface, they were not as perfect on the inside. Earlier, I talked about the inequality in both Indonesia and Singapore. Actually, on one of the many taxi rides in Singapore, I came to have a lengthy conversation with my taxi driver. The first thing I said to him when I got in was complain about the lack of taxis during the shift change time. (Did you know, Singaporean taxis actually have such a thing called shift change. Occurring usually at 8pm, this is the time when it is almost impossible to hail down a taxi! I tried to catch a taxi for over an hour and more than 10 taxis rejected me.) Hearing my complaints, he immediately commenced to talk about his own complaints about Singapore, its high standard of living, how difficult it was to make a living in this country, and so on. Upon hearing that I come from Hong Kong, he grieved about how he had tried to emigrate there but was rejected by the Hong Kong government. It was evident that this guy is quite upset about his lot in life. Quite frankly, I was surprised, as it was the first time that I had come in contact with an unhappy Singaporean. (Cantonese people have always tended to be a very happy and optimistic lot, and the vibe in Singapore reminded me a lot of Hong Kong.) To him, life in Singapore was much too expensive. He travelled to a place near Phuket, Thailand for a week every month because it was so much cheaper there.
One of the concepts we talked about in our program at NUS is cultural intelligence. Each of us answered a short questionnaire to gauge what our CQ was. In reality, most of us probably think our cultural intelligence is much high that it really is. In order to succeed in doing business in a country, it is important to really understand and embrace that country's culture. In Jakarta, many companies entered the market without thoroughly understanding the various cultural and political aspects of the country that affect business. At Kawan Lama, their local expertise and understanding of the domestic market gave them the initial advantage. For students and young professionals like us just learning about the world, maybe our primary concern now should be developing the ability to easily adapt.
People People People
Despite their differences in level of development, there were several points of similarity that struck me on our company visits to Jakarta, Bangkok and Ho Chi Minh City (HCMC). First is the rampant necessity to tip off officials at every city we have encountered. At each company, we have heard of the importance of having government connections and knowing the importance of tipping off the officials. This is particularly the case in Jakarta and HCMC, which are infamous for the level of their government corruption. Even on the level of the workers at the companies are petty corrupt practices that affect company operations.
From the many company visits we have gone on in Jakarta, Bangkok, and Ho Chi Minh City, it appears to me that out of all the parts and pieces that make up a business, the most important is the people at the bottom. These are the people that are performing the daily operations that make the business run. Without smart, dedicated, and ethical people at the helm of the company, it would be impossible for the company to grow and improve. In Jakarta, the executives of Linc Group spoke of the challenges of managing driver behavior--how they have to make the conscious decision to not purchase good tires because of the fear that their drivers will sell them off in between drives. It is exactly this kind of thing that has make choosing the right people a priority at Kawan Lama, which is a company that emphasizes their manpower. And again, at the Dupont Innovation Center in Bangkok and at the panel speakers at Ernst & Young in HCMC, the presenters spoke of the importance of having a large supply of workers with the skill sets that the company needs. As a manager at the Futuris factory in Bangkok said, people in Southeast Asia are critical to how businesses work. Everything is hand done by the people. The efficiency of a company depends on the efficiency of the people. And this reminds me of what Rob Daley of 4Moms once said about why everybody is offshoring to China. It's not only because they are cheap. It's because they are both cheap and have the necessary skills that the company needs.
On a completely unrelated note, a surprising topic of discussion that has been popping up in every country has been the future opportunities in Myanmar. The country has so much potential in terms of even the basic infrastructure. Everyone wants to go into Myanmar, but nobody wants to be the first mover into the country. Nobody wants to take the burden of the initial costs of building up the infrastructure and deal with the corrupt government and political instability. They are just sitting and waiting for somebody else to do it for them, and when things are better in Myanmar, they will go in and reap the benefits. But as someone on the panel in Ernst & Young said, you can pretty much do anything in Myanmar and do well. The country has so much potential, and can be a possible opportunity for globetrotters such as ourselves in the future.
Southeast Asian Consumers
When I think about all the shopping malls I've visited in each city in Southeast Asia, the one thing that amazes me is how identical they all are. The same brands are present in each city, from Louis Vuitton to The Gap. It shows the mentality that many have in Southeast Asia that brands and products that come from the West are good. Everybody likes American products in Southeast Asia. You walk down the streets of Singapore, Jakarta, Bangkok, and Ho Chi Minh City (HCMC), and you can see all sorts of knock off brand products. In Bangkok, the Thai's are very brand conscious. Brand name items are like status symbols that show off your income level. In Ho Chi Minh, fake Chanel bags and Rolex watches are scattered all over the street markets.
In Southeast Asia, I feel that the effects of brand equity are magnified. Any American branded product is perceived as premium or luxury quality. Even a simple pair of Calvin Klein underwear at the department store next to our hotel in HCMC is $20 with a 50% discount. When you realize the power that these international brands hold in these areas, you also realize that establishing a new brand in these parts is very difficult. For entrepreneurs looking to start up their business in these countries, they will be hard put to differentiate themselves from the local competition as well as with the top international brands. People in the middle to upper classes with a reasonable amount of disposable income tend to aspire to buy the top international brands that everyone recognizes rather than homegrown or obscure niche brands.
So, for the small entrepreneur looking to enter a new market, the first thing you should consider is this kind of consumer mentality. An easier way is to enter the market with a well-known brand name, such as Kawan Lama did with Ace Hardware. They used the franchise to minimize the risk inherent in opening a new business in a new part of the world. Franchises offer a set business model and general directions on how to operate the business, which is a potentially better way to get a foot in the door in terms of starting a new business in Southeast Asia. We see in HCMC that many franchises are now trying to enter Vietnam. It won't be long until the rest of the league of global brands finally enter HCMC, and Vietnamese shopping malls and consumer behavior start looking like Thailand's.
