My takeaway

Being in two international business classes at Chapman University, I have learned a lot and my perspective has developed into a new direction. Some of the valuable lessons I have learned are: being culture sensitive and adaptive, being open-mind, thinking out of the box, and having the courage to go wherever opportunity appears.

Being culture sensitive and adaptive is not only a requirement but also a powerful mean for any business leader to be successful in the global business. Apparently, many people couldn’t survive in the global environment because they cannot handle with all the cultural conflicts. At the end of the day, you must find yourself comfortable and engage with the local culture because it is your new home. Understanding the differences and respecting the local culture is necessary, but getting involved and excited about the culture can bring your more benefit and eventually help you to win friends and customers. I still remember the story of a guest speaker, who came to our class to share her international experience.  She had a difficult time to get the business deal with some Chinese customers. However in one of the party with customers, she accepted the invitation to drink a glass of very strong Chinese wine. The result was very surprised; she got the business deal the day after the party. It is not because Chinese people like to drink, the underline reason is that they valued her courage to take such a difficult task supposed to be for man and her willingness to mix with the collectivity.

Having an open-mind and out of the box thinking can help you to overcome many dilemma. When we live in another world, our perspective needs to be more opened and flexible to the local context. Things which are considered unethical and illegal in US can be acceptable in other countries. Using child labor, for example, is acceptable in many developing countries and third world countries. Instead of forcing the local manager to strictly follow the ethical standard of US, the leader can think differently. Considering the fact that many families are extremely poor because parent are disability and cannot get any social benefit, therefore letting the children to work to support the family is the only choice. Giving the kids the opportunity to work in the factory is still much better than for him to get on the street to sell the lottery ticket or polish shoes. Many street kids are taken advantage by bad people to sell drug, beg for money, and robber tourisms. With creative ideas, business leader can think of way to improve working condition for kids and have education programs for kids at night to train them become a future employees for the company.

Doing business global is not without challenges. However, a true global leader is the person can overcome the fear and see the opportunity behind the challenges. Taking these into the global SWOT analysis theme, I believe that these characteristics are the real strength for an international businessman/ businesswomen who want to capture the opportunity of the global market.

After Asia, is Africa the next place to go?

In doing business internationally, it is imperative to look ahead than the obvious opportunity. Now with most of the eyes are steering at Asian emerging economies such as India and China, there is other opportunity for company to capture for a longer term. That opportunity names Africa. One of the most supporting evidence for this opportunity is the figure “over the past decade six of the world’s ten fastest-growing countries were African”1. The reason behind the fast growth of these African countries maybe due to a high revenue from natural resources, which becomes rarer and more essential for countries like China, India and Brazil. High population grows is one of the factor that make Africa a promising place to do business. High population can lead to higher commodity consumption. African enthusiasm for technology is another opportunity that US companies should consider to make a quick move and capture the market. Africa has more than 600 million mobile users, which is higher than the America or Europe.

Other countries such as China, Brazil, India, Turkey, and Malaysia have also started to enter these markets. Thanks to the investment of China in the infrastructure, it will make doing business in Africa less troublesome. US in the other hands, still has very limited involvement in the business activities. US main focus is in helping African countries against HIV and poverty via some aid programs. It is good to help the countries get out of poverty at first hand, but in the long run people need more things like infrastructure, factories, and technology. There is opportunity for US companies to leverage their strength in innovation to help African countries get close to technology and services at more affordable prices.



Is it a time for fighting?

There were many blames from US and European countries that China is playing an unfair trading game. They accused China for depreciating the Renminbi to make China goods cheaper in the international market, and boost China’s export. For many years, China has enjoyed a steady growth in GDP, which was contributed mostly from export. Not until when global crisis deepens, main buyers like US and European countries feel China’s action has made their slowing economies more distress. As a result they force China to act quickly to rebalance the global trade if China doesn’t want to receive punishment from them.

China reassured US and European countries by saying in public media that since the international financial crisis, China has changed the macro-economic policy toward a more balance trade. China is trying to expand domestic demand to increase import and stabilize export. China economist pointed out that from 2008 to 2010, China import has increased considerable, and GDP growth has slowed down accordingly. China has also reduced many import duty and tariff lines to make it easier for import. China shows that its strong and steady growth economy is a potential export opportunity for the rest of the world. Recent statistic shows evidence of China effort in rebalance import and export.  In October, China Import rises sharply, while export growth slows. China trade surplus has reduced to 2.4 %, down from 3.1% last year.

Certainly, without pressure from US and European countries, China would not have changed their action like now. However, when China begins to have some effort to change their policy to follow the rule of the game, should we still impose punishment on China as some politicians are requesting? Gone are the day US is the only dominant player in the world economy. We must accept the fact that China now has become an important chain in the global economy ecosystem. If we want to revitalize this ecosystem we should encourage China to act for the benefit and health of the whole system rather than attacking them. Whenever we hit a ball we get a bounce. When we hit China we get a reaction. Fighting with China might lead to the falling down of the whole system.




Opportunity for US companies: Exporting business services

In the new book, “Global Trade in service: Fear, Fact, and Offshoring” published by The Peterson Institute for International Economics 2011, Bradford Jensen discussed new opportunity for US companies on the global market in the 21 century.  The author’s argument is that US companies, instead of competing with developing countries in exporting goods, should utilize their competitive advantage to export services.

Apparently, there is a large and growing service sector in the developing world. Countries like China, India, and Brazil will spend enormous of money in infrastructure for the next 20 years. Accordingly, there will be the need for engineering, technology and business services. Good news, there were not many big players, who are ready to grasp the opportunity.

So what is the competitive advantage of US companies that can make them stand out in the exporting services competition? The US competitive advantage roots from its human resource. According to the statistic, business services sector in US (including information, financial, scientific and managerial services) accounts for 25% of all employment. During the period 1997-2007, employment in business services increased 30% while employment in manufacturing sector dropped 20%. More importantly, the quality of high-skill labor in US is among the best in the world. Business service jobs require high-skill and high-wage labors, which often mean higher education attainment. Because US education system is far more advanced than other countries, it can supply more qualified high-skill labors. Finally, thousands of researches from top universities are other sources of competitive advantage for US companies.

Some people may argue that more and more business services are transferred to low wage country like India. In fact, most of those jobs require very low skill labor and pay very low wage. According to statistic, low-skill jobs accounts for only 1/3 total jobs of the services sector. The other 2/3 of the business sector requires very high skill and high wage labors.

Taking the opportunity is without challenges for US companies. They will encounter language and cultural differences; regulation and technological barriers. Many developing countries are less open to services trade than US.  Many spending in infrastructure is controlled and financed by the government. These governments tend to protect their domestic producers and prefer to grant contracts to local contractors. Although the WTO organization was established with the intention to reduce member countries’ preference to domestic firms in public procurement and open public works spending to international trade, not many developing countries are members of WTO yet. Therefore, to win in this game, US companies need the support from US government. US government has to coordinate with other developed countries in the effort to persuade developing countries to join the WTO and follow the rules.

To sum up, with the inherit strength in business services and the opening door for exporting services, US companies are in a good position to be the first mover and become dominant player in the near future. If you are interesting in this opportunity, I would recommend you to read this book to have a perspective about exporting services.


“Global Trade in service: Fear, Fact, and Offshoring” published by The Peterson Institute for International Economics, 2011

Leverage your strength in a new dimension

Last week, Baruch introduced an interesting definition of “haircut” in the financial market. It seems that the current crisis in Greece will not only affect the European economy, but will also have a prolonged impact on the global economy. I believe Baruch will bring you more insightful information in the coming weeks about the Greek crisis . 

Today, I would like to share with you some of my thought about the global SWOT analysis topic. Sure enough, you are all familiar with SWOT, which stands for Strength-Weakness-Opportunity-Threat. Any company, when entering a new market or making important strategic decisions, must implement the SWOT analysis. This blog will focus on the application of SWOT analysis for companies, who want to enter the international market. This post will discuss the first element of the SWOT analysis: strength.

For years, companies have spent a great amount of time and effort to discover and develop their strength in the domestic market. Their strength maybe excellent customer service, high quality of food, low cost advantage, or supply chain management etc. If lucky enough, they can gain competitive advantage in the domestic market. When entering the international market, however, there is one question the company’s manager must answer: how are they going to leverage that strength and be as successful as they were in the domestic market.  More often than not, international market conditions will not allow companies to utilize their strength initially. Culture, economics, and consumer behavior difference are some factors that make it difficult for companies to do so. McDonald, for instant, was popular for the Mac in the late 1990’s in US. One of McDonald’s strengths was consistent quality of food. However, when McDonald entered the Indian market, they encountered an unique challenge. First of all, the majority of Indian are Hindu, and see the cows are the gift of the gods. On the other hand, there were also many Muslim in India, who do not eat pork. Facing a challenge like this, many companies would decide not to enter the market at all. Other companies would ignore the fact, and bring a successful receipe from domestic market with the hope that customers will like it eventually.  Only a few companies have the ability to address the challenge successful. In late 1990’s, McDonald decided to create the Indian versions of the Mac, which is make from mutton and chicken. McDonald also strictly separated section for vegetarian and nonvegetarian, to respect the Hindus’ belief. Today, McDonald has more than 235 stores in India, and Indian consumers still love McDonald for their consistency in food quality. What made McDonald successful is their ability to reinvent and leverage their strength in a new way. They proved that they could not only make a good American Mac but also good Indian Mac. Today there are different version of Macs depend on the local preference accross the country.

To leave you with something to think about, I will give you one challenge. Assume that you are a good sale manager for a US company. Your ability to understand customer need and close the sale quickly has brought much success for your company. Unfortunately, your company is not doing well in the US market anymore. Your company wants to enter the Vietnam market. Your boss has put you in charge to oversee the sale activity in Vietnam. The problem is that your sale experiences and techniques may not be applicable for the Vietnam market. In Vietnam business practice, to win customers sometimes you need to spend extra amount of time with customers in social setting, for example: going out for drink. Customers need to trust you first before they can consider buying your products. In some scenarios, the person who is in charge to buying of his/her company may want unofficial commission. How are you going to leverage your sale strength to win customer in Vietnam?