The facts tell the story. Since 2000 the rise of the world’s emerging markets has been one of the defining, but relatively little reported, features of the global economy.
Consider this: In the next ten years McKinsey & Co. predicts that the annual buying power of people living in just the world’s emerging markets will reach $30 trillion a year. Twenty years ago less than 20% of the world’s population earned enough money to afford little more than the basic necessities of life.
Over the past two decades, thanks to global urbanization, a rapidly expanding middle class, removal of trade barriers, leap-frogging technology, and other positive developments, the world’s consumer class has doubled to about 2.4 billion people. McKinsey predicts that by 2025, this number will double again to 4.2 billion out of a global population of 7.9 billion, and that for the first time in history, there will be more people in the consuming class than those who are still struggling to get by, and that the emerging markets will become the dominant force in the global economy, accounting for 70% of global economic growth. Today they are well on their way to dominance by claiming 50% of the world’s GDP in purchasing power.
We’re already seeing the impact. China is now the world’s largest automobile consumer. Recently its largest e-commerce company, Alibaba Group Holding Ltd., launched a share offering in New York that attracted global attention, becoming the largest stock debut in history. Sort of like a combination of Amazon and eBay, Alibaba is transforming life in China, where 80% of all on-line sales pass through one of its sites. Alibaba now focuses its business in China, but following its splashy September debut on the world’s financial stage, their strategic direction likely will broaden. Meanwhile, in another five years more than half of all Chinese households will be solidly in the middle class, up from 6% in 2010.
Leading the global transformation taking place before our eyes in the emerging markets is a generation of consumers who are now in their 20s and 30s. Last year these markets were home to 85% of the world’s population, 90% of which were under the age of 30. This number is expected to grow at three times the rate of the developed economies now through 2020. And while the BRICs (Brazil, Russia, India and China) are home to almost half of the world’s emerging market population, 1.3 billion other folks live in non-BRIC emerging markets -combining for a population considerably greater than all those living in the developed countries. It may be hard to believe but five non-BRIC emerging markets have populations of more than 100 million each – Indonesia, Pakistan, Nigeria, Bangladesh and Mexico.
So what does all this mean? This economic transformation carries with it a lot of pent-up demand – for a better education for their off-spring, for better food and health care and for the finer things in life, especially to see and experience the world beyond their national borders. For its part, Boeing sees a 5% increase in demand over the next two decades for more than 36,000 new aircraft.
As businesspeople, we need to begin developing a deep knowledge of these markets, their people, their customs and their current and ancient history so as to better understand them and communicate more effectively with them. We need to design our products so that they appeal locally – city by city. When crafting your needs/benefits message, think lifestyle. And finally, start now to carefully build your relationships by finding the right local partners.
I spent the last half of my 40-year career with Marriott International traveling the globe as president and managing director of the company’s offshore lodging division. During those years, I visited China at least 5 times a year. I was impressed, at the time, to find the nature of the Chinese people was always welcoming and hospitable. I also learned that their culture and value system was vastly different from ours.
Some of you may be wondering why you should care about this. You should because, in the not too distant future, vast numbers of Chinese visitors will very likely be coming to a town near you and they will have a huge impact on the world around you. Consider this: China’s tourists today are the largest group of travelers of any country. Last year, more than 100mn Chinese people from the mainland traveled abroad, nearly a million of them came to California. By the end of this decade, this number is expected to double. So, it makes a lot of sense to begin preparing the red carpet to ensure these visitors have an enjoyable experience in our communities.
Not only are these folks big-time travelers, but they also have enormous purchasing power. Last year, they overtook the US and Germany as the world’s biggest travel spenders by forking out more than $100bn. And the volume of their travel and the amount they spend when on the road are growing annually by double digits.
If you’re wondering why the Chinese people have suddenly begun traveling in such huge volumes, it’s because over the past 30 years China has transformed itself from a basically agrarian society into a global economic powerhouse. This has given birth to its rapidly expanding middle class. Coupled with the recent easing of the Chinese mainlander’s ability to get visas to visit other countries, the floodgates have opened wide. There’s now a huge pent-up demand in Chinese society to see the world. In fact, about 60% of today’s Chinese tourists are traveling abroad for the first time.
But, make no mistake about it. These are sophisticated tourists. They’re not much interested in seeing how many famous sites they can cram into a 14-day itinerary. They pay a lot of attention to the quality of their travel experience and they do their homework on the Internet before leaving home. More than 600 million Chinese citizens are Internet users, including the more than 53mn who logged on for the first time last year.
What makes the Chinese people culturally different from ours? Basically, their culture is rooted in the three pillars of Group Harmony, Respectful Communications and Relationships and Networks. These pillars date back several millennia and are based in Confucianism—a humanistic, ethical and philosophical belief system that values ethical conduct and the practical order of things.
As a result, unlike western cultures that put a lot of emphasis on “me, mine, my company, my house” and so forth, Chinese people talk in collective terms such as “us, we and our partnership.” So, when you interact with our Chinese guests, or try to forge a relationship avoid a “us versus you” posture. Speak with a Chinese person as though he or she is a partner, even if the relationship is just starting.
Respect, or what is sometimes referred to as Face, is almost everything to a Chinese person. And communication is one interaction where respect is shown. Early on, Chinese youngsters are taught to be humble and courteous. Thus, when a Chinese guest, customer or potential business partner doesn’t overly respond to your compliments, he or she inwardly very much appreciates them, but doesn’t overtly show his or her appreciation. On the other hand, when they say that one of your requests or ideas is “under consideration” or “being discussed,” indirectly this may be their polite way of saying “no.”
Relationship is EVERYTHING to a Chinese person and it is not forged overnight. Thus, if you want to do some serious business with someone from China, start with building the relationship first.
Here are some basic social tips to help you get started.
Take the long view in all your dealings with our Chinese visitors—they appreciate patience and the long-term goal.
Gift Exchanges – Everyone likes to receive gifts and none more so than the Chinese. But there’s a strict protocol to getting the gift-exchange right. Not only is the choice of the gift important, but so is how you wrap it, how you present it and to whom. When deciding on what to give, be thoughtful and considerate and avoid giving something over the top or overly lavish because it could be considered a bribe. Keep in mind that it’s the thoughtfulness behind the gift that’s paramount, not necessarily the cost. Plan to give the most senior person present the most expensive gift and never give the same gift to persons of different rank. And if you’re given a gift, don’t open it immediately.
Titles – As a general rule, refer to your Chinese guests by their professional titles such as Professor Wong, President Wu, Doctor So or Manager Chou or at the very least Mr. or Mrs. And, omit any defining words such as “deputy” or “assistant.”
Business Cards – Exchanging business cards is a big deal and there are some dos and don’ts associated with the exchange. Chinese people normally use both hands to present or receive the card to show respect. All cards should be carefully read. Never put the card into your back pocket or leave it on the table and never write on it.
Body Language – For Chinese people, overly exuberant smiles, using your index finger to show direction, excessive body language and departing before your guests do are all considered disrespectful.
Tipping – When dining out, one participant pays the bill for the table to show generosity and friendship; the western custom of “going Dutch” is frowned upon.
You’ll find no more appreciative guests than those from the mainland of China. Let’s work together to ensure that the hospitality we extend and the guest experience we deliver is positive and leaves a lasting impression that our country is a great place to visit and maybe to invest in.
Everywhere we look these days, it seems, everything appears to be falling apart. New, politically explosive global trouble spots emerge daily while lingering ones become more demanding and complex. Barbaric atrocities have become a staple on the evening news while many of our global leaders seem feckless and perplexed about how to respond to the challenges before them.
Here closer to home in the US, thousands of youngsters from abroad have been tragically dumped on our borders and communities across the country are asked to make room in their local budgets to care for them. Thousands of our citizens are being dropped from their preferred health care plan and are now facing astronomical rate increases to maintain their current coverage levels—even though they were promised they would be able to keep their current plan if they wanted it. And the examples go on and on whether here or abroad.
We all have our ideas about why things seem to be going terribly wrong at this time and what to do about it. For my part, it seems that much of it comes down to a lack of Respect—for individuals; for the ideas, beliefs and traditions of others; for the rule of law and; sadly, for common decency.
Meanwhile, our US President is an excellent example of eloquently speaking the words but not following up on what he has said or being careful to modify his statements so he can’t be held accountable—no matter the outcome of his policies or statements.
The examples are too numerous but the lesson is there as we look at how we, as company executives, provide leadership in a global world. My several decades of working in a global environment with Marriott International taught me that Respect is critical and Perception is reality—both of which are often viewed through a cultural screen. The one constant is that words must be followed by actions to gain credibility.
One example comes to mind involving the building and branding of one of our hotels in China. We had reached an agreement with one of China’s wealthiest real-estate investors. He would build a spectacular, full-service hotel in a major Chinese city and we would manage it for him. In time, it became clear that the owner’s contractors were cutting corners. The building materials were second-rate and the workmanship was slipshod. In a series of meetings, we delivered the same message: we had high standards and this particular property was not up to par. The owner refused to change his approach and we never wavered—“Build the hotel the right way, or we won’t accept it.” He nicely responded, “Yes, you will.”
A competing hotel had recently opened a substandard property and our prospective owner thought we would follow suit. We refused. He held out for two years, somehow managing to withstand the financial pressure to move ahead. Finally, the stalemate was broken when he realized that his contractors were letting him down and costing him a good deal of money by not doing the job right the first time.
Later he told us, “I hate what you people did, but I respect you for doing it.” We eventually opened his hotel and it has been successful. When the dust settled, other owners of Marriott properties in the city told us they approved of our stand. What they did not say—though it was clearly understood on all sides—was that if we had yielded to him, they would have looked foolish for agreeing to maintain our standards in the hotels they had previously built.
To be sure, the building and opening of a hotel is small potatoes compared with many of the problems we’re facing today across the world. But, the principle is the same. Respect is paramount and you have to not only mean what you say, but to follow through on what you say. It’s time those in leadership positions understand that words have meaning and require action.
Later this month, on September 27, people around the world will mark World Tourism Day as they have every year since 1980. That’s the day the United Nations designated as the one on which we recognize the positive contributions that global tourism makes each day to the world’s economic, cultural, political and social life.
Tourism today is a trillion-dollar industry involving the movement of more than one billion tourists across borders and another five to six billion travelers domestically every year.
As we currently experience serious global uncertainties on many fronts, tourism has the ability to help make things better. It generates socio-economic opportunities that help narrow the gap between rich and poor and gives rise to a robust middle class that benefits everyone. By promoting interaction between the tourist and host community, it provides a wonderful opportunity to sample a different way of life. We taste new foods, hear new music and explore the world’s cultural and historic heritage when we go abroad. By enabling these experiences, tourism lays the foundations and builds the bridges that lead to tolerance and understanding.
Ask any beauty contestant what they most wish for and the reply almost certainly will be “World Peace”. In fact, the majority of the world’s citizens want peace because we know we all can do so much more once we have peace. Yet, sustained peace is probably the one eternal desire among all mankind that has been out of reach since time began.
In my opinion, the very best catalyst toward our achieving our cherished goal of living in a peaceful world is Tourism.
We live today in a world of misconceptions and miscommunications. Many in our global community believe that what they see on TV or in movies are meant merely to entertain, not to inform. The lines between the news and editorial sections of our daily print media have become blurred. Social media bombards us daily with disparate bits of information—rarely in a context that makes it meaningful. Time was when folks were confident that pictures don’t lie; but now almost everyone knows that pictures can be photo-shopped. Often, all we know about an event is a 15-second sound bite caught on the run or what an acquaintance said they heard somewhere. Many of our fellow citizens around the world grow up in environments peppered with propaganda often spread by governments or organizations eager to influence their beliefs and opinions and, ultimately, actions. It’s hard for anyone anywhere to know what to believe anymore.
Nevertheless, we all form our opinions and prejudices and develop animosity based on this misinformation. None of this is new, but the warp speed of today’s global media and the quest to be “first in the know” almost always ensures that the first headline is not the “whole story”.
As a result, we all have a view of the people around us, but we seldom have all the facts. Although 25% of US citizens now carry a passport, almost a third of those that do venture abroad stay in North America, visiting Canada, Mexico and the Caribbean. A relatively small percentage visits any of the emerging countries like the BRICS (Brazil, Russia, India & China), and Korea, the UAE or any of the other emerging countries—all of which are having a profound effect on the world and the global economy.
Just consider this: combined, consumer spending in the emerging countries has outpaced that of the developed ones every year since 2000 and is expected to continue on its rapid growth trajectory for years to come. The emerging countries now account for more than 50% of the global GDP in purchasing power and, in less than 10 years, the BRICs will add a combined $3.3 trillion to their consumer spending—a figure that equals adding another France and Germany combined to the marketplace.
The emerging countries are home to 85% of the world’s population and 90% of these people are under the age of 30. The total population of these countries is expected to grow at three times the rate of the developed economies now through the end of this decade. These projections are mind-boggling and we all need to sit up and take notice because the world as we all know it today will certainly be a far different place a decade or so from now.
This is where Global Tourism can play a huge role. We don’t really know what we haven’t seen and personally experienced. The world is out there for anyone of us who wants to learn and explore.
Everyone agrees that there is no better way to learn about a new culture than to experience it first-hand. And when you truly learn about other people by investing the time to meet them face-to-face and learn about their history and about what they cherish the most, you come away a far better, more informed and discerning person. You will be able to put what you hear from others into the context of your own life experience and make your own, informed opinion. Bolstered by your empathy and understanding of the world—as you have experienced it, you will become an advocate for how best to resolve the inevitable political and economic conflicts that arise. Most of all—you will have your own ideas on how best to achieve peace rather sitting in your arm chair, simply reacting to what others tell you.
No two ways about it: Tourism is our best bet for a peaceful, bountiful future. So, let’s all celebrate the many contributions Global Tourism has already made. More importantly, let’s all go out into the world and explore, learn and enjoy yourself!
When I joined Marriott Corporation in 1972, the company’s portfolio consisted of 22 properties—three franchises, one managed property and 18 company-owned hotels. As a business model, Ownership was easily understood. The Marriott corporate culture and values applied. Capital decisions and development were in Bill Marriott’s hands. We were growing, so considerable focus was placed on developing our associates. The company had clear objectives and direction.
At the same time, similar experiences were being replicated at Hilton, Sheraton, Western International and the other early giants of the U.S. hospitality industry. Most started with a focus on Ownership; while others, like Holiday Inn, focused on Franchising.
During the 1980s, in a quest for more rapid expansion, many of the Ownership companies began their transition to Management contracts while others moved into Franchising as their preferred growth strategy. By the 1990s, major branded chains had reduced their Ownership portfolio to a minimum and continued to operate with a combination of Franchising (Hilton, Wyndham, Quality Inn and others) and Management contracts. They started to create and acquire brands and aggressively applied the Franchise model in the economy and select service categories.
Today, the Management model is fast giving way to Franchised operations in the United States, Europe and parts of Latin America as all the major branded hotel companies pursue aggressive growth strategies and move into new markets abroad. Franchising has become a proven route to successful expansion and now accounts for turnover of US$300 billion in Europe, US$850 billion in the U.S. and US$130 billion in Australia. This trend will continue into the remaining global markets when local market conditions are right.
While Franchising allows the brand companies to attract strong local investors and local market insight and know-how, it takes the management of the brand culture, fulfillment of the brand promise, consistency of product and quality control of assets out of their direct control and places them in the hands of a mixture of operators with divided loyalties and priorities.
So, as Franchising becomes the dominant business model in the industry, who will win and who will miss the mark?
Winners will be:
1. Brand companies like Marriott who have a strong culture and are able to integrate their culture into the operating teams by reinforcing the culture at every turn.
2. Brand companies that focus on training for their franchisees and develop specific training programs that encourage brand loyalty and by conducting annual conferences for executive management and senior operators (general managers).
3. Brand companies that maintain strong, clear, effective and motivating communications between themselves and the operating companies, that use the rule of “selling,” not “telling,” and ensure that their message reaches all levels of the operating hotels.
4. Brand companies that differentiate their brands to the point that they are clear to the brands staff, the operators and the consumer.
5. Brand companies that enforce customer and brand standard audits. Underperforming operations reflect poorly on the entire portfolio.
6. Brand companies that focus all their efforts on reaching individuals who serve the customer so that they understand and can deliver on the brand promise.
The transition to Franchising is impacting almost all major brand companies and it will take several years to reach every corner of the world. But, the trend is accelerating faster than expected.
Whether you are a brand associate, brand company executive or operating company manager, the winner will need to excel at all these attributes.
The world has become increasingly global and interconnected in the past 10-15 years. And while people have been on the move since time began, welcomed immigration has tended to move in step with economic conditions—rising when the local economy is strong enough to accommodate the influx of new people and dropping when it is weaker.
Today, it is estimated that more than 200 million people globally live outside their home countries, a number that has increased by more than 40% in the past decade, according to the United Nations. Immigrants now comprise 3.1% of the world’s population, up from 2.9% in 1990. No one knows for sure how many of the global immigrant population is illegal, but the International Organization for Migration in Geneva estimates the number to be between 15% and 20%.
Here, in the U.S., which at 42 million has more immigrants, legal and illegal, than any other nation, the media reports bits and pieces of the situation, but doesn’t seem to look at the big picture. Congress seems not to want to make the hard decisions and choices in an election year that are needed to address the issue and our President, well, he just doesn’t seem to want to deal with real issues except to orate or to use his “phone and pen.”
Today, across the globe, while the nationalities of the migrants may be different, governments in developed nations are facing huge local public pressure to increase border enforcement and security, even as they welcome legal immigrants to help combat a shortage of skilled labor, such as in Canada, or to back-fill a rapidly declining population, as in Japan.
Over the years, America has prospered through legal immigration. My relatives were German and my wife is Italian. Past legal immigrants to the U.S. and their families have helped make this country great. Recently, I read an article in the Los Angeles Times that described the positive impact Asian immigrants from Korea and Japan to Bangladesh have had on Orange County where I live. They noted that in a county of 3 million residents, today nearly 600,000 Asian Americans make their homes here, up more than 40% since 2000. They discussed the resulting diversity of restaurants, shopping malls, languages spoken and the transformation of sleepy communities into bustling commercial centers as all positive developments.
No matter where you live, positive legal immigration refreshes the community. The problem we face today is illegal immigration that has no true regulation and generally invites immigrants who often include the criminal element trying to escape from the pursuit of the authorities back home. Several years ago, I served on a Federal Grand Jury in Orange County. About 30% to 40% of our time was focused on deportation cases of illegal immigrants who had committed crimes in the U.S.
Many of our citizens see the negative impact of illegal immigration on the infrastructure of our country. It’s a fact that schools, medical facilities, police, related local services and other community resources are stretched well beyond capacity today even without the added burdens of illegal immigration.
When immigrants are legally living and working in the community they too look on the current situation with dismay. A friend of mine, June Farrell, told me the following story:
”My housekeeper is a citizen and a native of the Dominican Republic. She recently asked me what I thought about what’s happening on the border. She is totally perplexed. She came here legally, earned her citizenship, reared a fabulous 21-year-old son on her own as a single parent and now feels threatened by this onslaught. I told her the kids involved are pawns and regrettably must go home because they are here illegally and that maybe we can help them in their own country. I was thinking maybe we could devise something like a Marshall Plan. She asked how and where these kids are getting the money to come here in the first place if they’re so poor…and I asked her what mother sends a child on such a journey in the first place. She asked how we can stop this. I told her we have an election in November and we must ensure that the Congress is Republican so that maybe we can fence in our current President. She agreed. She’s worried about her own son’s chances in this country if we don’t stem the tide of illegals.”
The fact is illegal immigration needs to be stopped and stopped now. The White House can take immediate action to seal the border as Texas has tried by mobilizing its National Guard to assist the border patrol. If we are going to be global, we need legal immigration; but, first and foremost, we need immigration that’s legal, measured and that meets our country’s long-term needs and strategic priorities.
For more than three centuries now, noted philosophers, historians and politicos of the day from Edmund Burke to George Santayana to Jesse Ventura have all told us to know the history of a place or a people or “be doomed to repeat it.” Seems like simple enough advice. Yet a quick look through recent global headlines, particularly those related to events now unfolding in the Middle East, and it makes one wonder if anyone is paying attention.
Less than 25% of all Americans have passports that enable them to travel abroad to explore other cultures. Most of our children are exposed to very little history in their schools. Our universities tend to not include history in their required curriculum. Our national leaders seem to not focus on, or think about, the history of a people when making strategic decisions that are consequential long into the future. Nor do they seem to invest time in understanding the culture of the countries with which they want to ally or even to go to war.
In my lifetime, I’ve seen Hitler fail to learn from Napoleon. Both not only attempted a two-front war but were so foolish as to allow their armies to become bogged down deep in Russian territory as the brutal Russian winter set in. Like Napoleon a century earlier, Hitler’s armies also went down to defeat.
After World War II, America had an opportunity to ally itself with Mao Tse Tung but chose the wrong Chinese leader. In Vietnam, our leaders underestimated the radicalized passion of Ho Chi Minh, who, inspired by the U.S. Declaration of Independence, was among a group of Vietnamese nationals who unsuccessfully petitioned the Versailles Conference to help his country shed French colonialism following the First World War, 50 years earlier. Soon thereafter, Ho embraced communism and the rest is “history.”
In recent days, a lot of global media attention has centered on the 100th anniversary of the start of the First World War and its aftermath. Nowhere were its repercussions more keenly felt than in the Middle East, where the dismemberment of the Ottoman Empire following the war caused national borders in the region to be arbitrarily redrawn with little to no regard for local tribal, religious or cultural sensitivities.
William Faulkner once wrote, “the past is not dead; it’s not even the past.” So, today we reap a whirlwind born out of decades of simmering tensions and tribal and sectarian hatreds. It often seems like our national leaders have not studied the Middle East or taken the time to understand its culture. Of course, brilliant historians and leaders abound, they have counseled wisely. But, our leaders, including our current President and our most recent State Department Secretaries, have not heeded their advice or simply have chosen to ignore the realities.
We’ve all read or heard that the root of today’s problems in the Middle East can be traced to the sectarian bad blood between the Sunni and Shi’ite factions of the Muslin faith. The tensions date back more than 1,400 years when the Muslim community had to decide who would lead after the Prophet Mohammed passed away. Some supported the idea that succession should run directly within his family (the Shi’ites) but other Muslims believed a pious individual who would follow the Prophet’s customs was acceptable (the Sunnis). Today, Sunnis represent 85%-90% of the global Muslim population.
But others, today, believe there is more to the story than a one-to-one correlation between these doctrinal differences and what is happening now in the region. They suggest the fighting now is more a fight for power than the variations in beliefs held by the Sunnis and Shi’ites, and the dwindling presence of the U.S. in the region means there isn’t anyone who can broker a deal or keep the tensions in check.
Thus, the region is in turmoil today. Our allies wonder if our words have any meaning anymore, and we, as a nation, seem to be floundering on the world’s stage, chasing after straws blowing in the wind.
As subsequent events have proven, the Arab Spring turned out to be far more complex than first reported and portrayed.
Today, in Iraq, the U.S. installed and still supports a Shi’ite majority government, while the country’s Sunni minority population, which ruled the country since the end of World War I until Saddam Hussein was toppled and now fears a Shi’ite backlash, seethes. Over in Afghanistan, one has to wonder what those in that country, who cooperated with us over the past decade, are thinking as we prepare to exit that theater too.
The Tunisian revolution, meanwhile, was economic, not political. Egypt’s revolution (I was in Cairo as it unfolded) began as an economic protest and evolved into an effort by the Muslim conservatives to gain power.
Syria’s conflict began as an attempt to overthrow a Shi’ite minority government by a Sunni majority population. The U.S. considered supporting the Sunni insurgents, but didn’t follow through. Now, this conflict has erupted into something much more menacing as the ISIS insurgents try to establish a caliphate throughout the region.
And the examples continue to grow. We supported Saudi Arabia when it moved its troops into Bahrain as the country’s majority Shi’ite population challenged its Sunni minority government. In Libya, we supported the overthrow of the dictator in what was an internal tribal conflict.
Today, there is a Leadership vacuum in the Middle East due in part to our government’s failure to understand and to be sensitive to the region’s history, culture and people. We appear inept and feckless when dealing with the new/old regional power brokers of Saudi Arabia/Qatar and Iran. All this is enough to make one’s head spin. It’s like listening to that classic Abbott & Costello comedic skit, “Who’s on First.”
You’re probably wondering why I’ve devoted an entire column to events now unfolding in the Middle East. It’s because we must learn from others’ and our own mistakes. However complex the events may seem, what’s happening now in the Middle East will have far-reaching global consequences if we don’t get it culturally and historically right this time.
Closer to home, cultural understanding can play a key role in your personal and business life as well. It can improve your relationships with your employees, partners and customers. And if you work for an overseas company, either in the U.S. or abroad, it will serve you well to make the effort to learn its culture and heritage. So do your homework, be realistic about what you learn, use what you learn to your advantage and be flexible as long as you’re not violating your own basic values or breaking any laws.
You’d be hard pressed to identify a culture that isn’t proud of its cuisine or doesn’t make a big deal out of dining. But nowhere is this pride more evident than in the Chinese culture where dining is an art form that extends well beyond the food being consumed, and is the garden in which most relationships, both business and personal, can take root and flourish.
Over the years I’ve been fortunate to attend numerous lunches, receptions and dinners in China. I learned early on that the act of dining in the Chinese culture is where relationships are built, where business deals ultimately get done and where respect is shown. Dining provides the stage where you can get to know associates, colleagues and potential partners while celebrating a holiday, a wedding or other event. After all, as the local thinking goes, if you can’t find common ground in a setting like a festive dinner, how can you expect to have a deeper relationship when serious issues are involved.
I quickly learned the basics: show respect by being on time; bring business cards with details in Chinese and present the card with both hands with the Chinese face up and to never write on someone else’s business card. I learned to greet my host first, not to overlook anyone, and to try to create small talk throughout the event by sticking to safe topics like sports, the weather, travel destinations, food and hometowns, sightseeing, how much I enjoy Chinese hospitality and their city (the one I’m currently dining in) and not to talk about business specifics unless my Chinese host raises the issue first. Lastly, I learned to anticipate the long-haul (Chinese dinners can extend well beyond three hours), stay engaged and animated throughout, and to never leave the meal first even if everyone else has finished eating except in an emergency.
Recently, I attended an official Chinese banquet for 7000 guests here in Southern California. It was a dinner recognizing the high achieving participants in the largest Chinese incentive travel group to ever visit the US. I was seated at the head table – a setting that sat 30 people! This honor and recognition was not given lightly.
The head table was populated by the group’s key executives. I was seated to the right of the chairman and the former Chilean President. How did this come about? It was in recognition of my relationship with the Chinese tourism industry that reaches back decades. Our hosts were simply giving “face” to a long-time friend. It was an honor and I was deeply appreciative.
Like most occasions, dining in the Chinese culture has its protocols. Take seating arrangements. Aside from indicating hierarchy, seating arrangements give “face” to attendees, especially those who are guests of the host. At a round table, the seat directly facing the door is usually reserved for the most important or highest level attendee—whether or not he or she is host. The second highest level attendee sits to the left of the highest and the third highest level attendee sits to the right of the highest level attendee. From there, the seating continues with left taking precedence over right when distance is equal.
Toasting also has its “rules of the road.” Usually, the host offers an initial toast to the group as a signal that the meal is starting. After several rounds of toasting, you should toast back at least once to the host and party. As you make your toast, be sure that your glass touches a lower part of the others’ glasses, taking care not to touch the bottom of anyone’s glass.
As the dinner winds down, take your cue from the host. He or she will signal an end; and, if you are invited to linger after dinner, take advantage of this additional chance to further develop the relationship in a social setting.
Finally, plan to bring a small, inexpensive gift, but with significant meaning and appropriate to the occasion, for the host and his party.
As China globalizes its economy and plays an ever larger role on the world stage, business in China will more likely be conducted in its secondary and tertiary cities where it likely will follow local traditions. It will be even more critical for you to develop ”guanxi” with your potential partners. Remember, to be successful doing business in China has little to do with your power point presentation, the company you represent or your wardrobe. It depends on the “guangxi” you forge and who you build this relationship with. And even though, today, expansive and expensive dinners are being scrutinized in China because of the perception that these can be a form of a bribe, there still remains no better venue for building a relationship than over a good dinner – no matter where you are, but especially in China.
So, what do sea turtles and China’s economic prowess have to do with the rest of us anyway? … Plenty! It’s time that we take notice and welcome the sea turtle presence among us.
Since 1978, more than 2.6 million Chinese students have gone abroad to study and America’s elite universities and colleges have ranked among their top choices. Last year alone, these institutions claimed more than half of the 400,000 Chinese students who went abroad – positioning China as the top sender of international students to this country for the fourth consecutive year, beating out Japan, India and South Korea. China’s Ministry of Education reports that about half of these students return and, over the years, have made a huge difference in the country and to its people. They point out that whereas earlier returnees such as Jiang Zemin and Li Peng revolutionized China, todays are globalizing the country.
In today’s China, these returning students are often referred to as haiku, or “Sea Turtle,” a term that means a returnee to China who has studied or worked overseas. They have long been applauded for bringing back advanced skills. They are well-educated, young, hold degrees from foreign universities, often in the sciences, and they represent the brains China needs to power its continued growth.
Sea turtles are not a new Chinese phenomenon. Some 1,300 years ago, imperial China sought out the best and brightest people to become its civil servants. For centuries, these Mandarins ran the world’s most advanced government of that time. The modern-day tide began with the Industrial Revolution in the 19th century and each wave of returning scholars since then has left its imprint on the industrial or political life of the country. The present wave is by far and away the largest and has the potential to have the most impact on the future political and economic life of the country.
Once back home in China, today’s returned students find opportunities especially in the Internet sector. Others find places in local divisions of multinational firms. If they are returning top scientists, they can participate in a Chinese government program called the 1,000 Plan that provides financial aid and assistance. If they want to start their own companies, they can take advantage of any number of “incubator” parks established by local governments. Even if they don’t make use of these tangible opportunities, the returnees are in demand by local employers simply for the insights and breadth of world experience they bring to the table.
Even so, about half of the students who study abroad elect not to return, and if they do, many make the trip back only to leave again within six months or less of coming home. The National Science Foundation recently found that 92% of Chinese graduates with American PhDs still lived in the US five years after graduation. For Indians, the figure was 81%, for South Koreans 41% and for Mexicans 32%. For whatever reason, when it comes to this cadre of China’s sea turtles, it appears Thomas Wolfe may well have been right when he titled his posthumously published 1940 novel, “You Can’t Go Home Again”.
Whether the sea turtles among us today stay here or ultimately return to China, we and all the other countries that host these students have a tremendous opportunity to make a positive impact on how China’s future leaders view and respond to our cultures, social values and business practices.
While living in our countries and attending our universities, these students are not a burden on local tuition aid resources. For many, the daily discourse between them and our young people provides mutual insight and understanding even as each culture influences the other—giving both sides an opportunity to appreciate and learn from the other’s point of view.
We need to be mindful of the fact that increasingly we live in a borderless world. It was reported recently that the unprecedented growth of the Chinese middle class in the coming decade will fuel a surge of 500 million outbound travelers, not the 200 million that was predicted just a year ago. Many of these future visitors will be the sea turtles among us today. The quality of our welcome and the hospitality we extend while they are students in our country now will influence the tenor of the relationship we will have with them down the road – whether as business partners, deal negotiators, friends or simply tourists. I say, “Ni Hao” to them.
The numbers are mind-boggling. Social networking reportedly now eats up more than three hours of the average American’s day. Google logs more than one billion searches each day. On YouTube, 60 hours of content gets uploaded every minute, and over at Facebook, more than 800 million updates are recorded daily. We are becoming so wired technologically 24/7 that before we know it we’ve lost track of time and, sadly for many of us, we learn we’ve lost touch with some of our most important relationships both personally and professionally.
In 1990, United Airlines ran an award-winning TV commercial called “Speech” whose message – one on one is how business gets done – resonates to this day. From a customer perspective, the more transactional the relationship you forge, the easier it is to simply walk away. The deeper the bond between customer and service or product provider, the harder it is to break, and, over time, the more satisfying the relationship becomes for both parties.
In the US where relationships tend to congeal fairly rapidly, it still takes time and effort to reach a solid level of trust. The challenge is much more complex overseas as US companies operating in China today can attest. These companies operate in a business environment best described as “constant flux”. Signed and sealed contracts may be suddenly repudiated as a new partner jumps ship for a richer offer. Local and/or national regulations may be in full force one day and ignored the next. As Marriott discovered early on, the best way to keep abreast of upcoming changes in the Chinese business community is to nurture good Guanzi—good relationships—with those in the know.
To cultivate your relationships, you need to reorganize your time and schedule to make time for personal, face-to-face contacts. It takes a conscious effort to overcome the pressure of everyday problems and deadlines.
In my case, before heading out on a business trip—whether across the sea, or across town—I put together elaborate itineraries that expose me to the maximum number of people in the minimum amount of time. Along the way, I may be a trouble-shooter, a representative for my company at largely a public relations event, a salesman, an empathetic associate to a business colleague who recently experienced a set-back, a celebrant at another’s professional success. It’s the time you take, the personal nature of the service or concern you provide and the very real way that you show you care that matters most.
In a world that daily becomes less personal as technology expands its grip on the medium of human exchange, forming productive relationships with business associates can give you a competitive advantage. Outside the US and a few other Western countries, relationships are the single most important badge of entry into the realm of successful businessmen and–women. Become adept at relationship building and you will have an easier time solving problems, building your business and increasing your profits.
As I write this, I am leaving for Beijing/Shanghai and Dubai to press the flesh, build relationships and visit my overseas offices. I hope to have additional insights on my return.