Any joint venture is more than just business. A mutual respect for another's culture is the glue that seals a successful joint venture, agreed panelists at the session "Negotiating Joint Ventures in Asia."
"Getting the right partner is winning the battle. Having a good partner relationship is winning the war," declared Soo-Se Chen, professor of international business at Ming Hsin University in Taiwan, who has been involved in joint ventures including Debier/Lion Breweries and QianJiang Motorcycle.
Chen said that he has gone so far as to sing patriotic songs such as "Guarding the Yellow River" and "Without the Communist Party There is No China" in order to make an indelible impression on potential partners. On a serious note, he observed that business people coming to Asia need to understand the system and be able to work within it. They should also look carefully at local competition and be aware of the process of government influence and approvals, added Rob Westerhof, CEO of the electronics company Philips North America, who has twenty-five years of business experience in Asia.
| Indian customers are as sophisticated as customers in the West. |
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— Lalita D. Gupte, joint managing director of ICICI Bank Limited, India. |
Deals can fail due to a lack of mutual trust and proper goal alignment, they said. Deals will degenerate if an "us versus them" attitude takes over, observed Kriengsak Chareonwongsak, executive director of Bangkok's Institute of Future Studies for Development. Even seemingly simple initiatives such as promoting an individual while not acknowledging the effort of an entire team can damage a harmonious corporation, he said. Asian values that must be recognized include a respect for seniority, strong family ties and the need to save face.
Chareonwongsak offered the audience six strategies for creating effective joint ventures.
- Be administratively flexible. Implement the style of work that will be most effective, and consider cultural adjustments on a case-by-case basis.
- Avoid direct conflict.
- Create a cultural bridge. Hire a group of people who share the characteristics of both cultural groups.
- Create access to various communication channels.
- Develop internal relationships in the organization.
- Use a shared administrative method based on a shared vision for the company.
Financial markets look ahead
Thanks to the rapid advance of technology and a volatile regulatory climate, this is a time of tremendous change for Asian financial markets. So agreed speakers at the conference session "The Future of Asian Financial Markets."
Just five years ago, no one believed that India could reinvent itself as a financial force, said Lalita D. Gupte, joint managing director of ICICI Bank Limited, which has thirty-two offices in India. In her experience, even the "poorest of the poor" are getting networked. Indian customers are as sophisticated as customers in the West, she added, so companies need to be technologically savvy in order to satisfy high customer expectations.
Going forward in India, it will be important to strengthen the regulatory framework, Gupte said. Services such as microfinancing for women in villages may look very small on her bank's balance sheet, she said, but are terribly important. Her bank "cannot afford not to do it" because microfinancing is the future of developing countries, she said, and the service is necessary when a company wants to be a good corporate citizen.
The conditions of Asian financial markets have led to five particular issues for clients, said Allen Merrill, managing director and head of the Asia Financial Institutions Practice for Bain & Company, who is based in Singapore. These issues are:
- Finding a partner or investing in a financial institution in China
- Developing a winning multi-product wealth management approach. (This reflects the fact that regulation has caused a convergence of products that once were separated, Merrill said.)
- Upgrading risk management strategies and capabilities.
- Strengthening card business profitability.
- Developing more effective strategic, financial operating metrics and management approaches.
In varying degrees, these are issues for global and local banks and insurers, he said.
Lessons for media
Television is blamed for shortening attention spans all over the world. But anyone interested in building a media business in China had best learn patience.
"If you're looking at the Chinese market—as so many companies do—for instant gratification, you're barking up the wrong tree," said Alexander P. Brown, President and CEO of CNBC Pacific, at the "Asia Media and Entertainment" panel.
Panelist Yifei Li, managing director for MTV Networks China, agreed that success in the Asian media markets is going to require a great deal of analysis. She encouraged audience participants, many who were HBS students from Asia, to spend a few years working for an international company and then bring their experience back to China. As with other consumer-oriented companies, Li said MTV has discovered that the power of its international brand doesn't mean it can take a cookie cutter approach to its individual markets.
For example, she said, while MTV had originally launched one Mandarin channel for China and Taiwan, it soon discovered local tastes varied. The music and fashions that young people in China are interested in "can be very different from what young people like in Taiwan," she said.
But some business challenges are universal. Brown, who launched ESPN in Asia in 1992 and helped merge the company with Rupert Murdoch's Star TV in 1997, said both companies had far too much programming and too scattered a focus.
"When the company was created, we had practically everything you could imagine in the world of sports, and you can't run a company with the kind of losses we had," he said. He said that Star and ESPN together were running a $103 million operating loss at the time of their merger. After the merger they drastically pared down their programming to cover only the more profitable sports.
Entrepreneurship opportunities in the highly regulated Chinese market are limited, according to Li and Brown. Li said the only entrepreneurs in the industry are programming production companies.