Massey University MBA students gain from trip to China
Julian Nixon and David Slack report on a November 2009 trip by 24 Massey University students to Shanghai, Suzhou and Wuxi.
We live in a jaded age. Sports stars fall from grace, scientists produce a machine to recreate the big bang, and we merely raise an eyebrow and turn the page. We are not readily surprised.
But China can still surprise. It has commerce - but not quite as we understand it; it has manufacturing - but on a scale we find almost impossible to comprehend and, of course, it has growth. Growth, in these difficult economic times, is universally understood. China's is very good.
What are we to make of its breathtaking scale of enterprise? What do you do when you realise that the world's largest party is going on, but you're not quite sure if you can even find the door or an invitation? What do we need to do get properly, usefully, meaningfully engaged with China?
Such questions inevitably exercise the minds of today's business student. The students of the Massey University MBA programme are typical. 24 of the students and staff recently spent ten days in Shanghai, Suzhou and Wuxi. The class is a picture of modern New Zealand business, drawn from a range of industry sectors including agriculture, financial services, retailing and utilities. They found themselves discussing two crucial questions:
What market opportunities are there for New Zealand exporters in China? What do we need to break into those markets?
New Zealand has a well-worn exporting track - dairy, meat and wool - and has succeeded in those escorts in China. But what scope is there to diversify?
The students see vast opportunity. China has an emerging nouveau riche, prepared to pay a premium for high-quality goods and services. Its appetite for value-add products is insatiable. A New Zealand company should be looking for niche opportunities in the high-end of the market where they can find a competitive advantage, they say.
MBA Programme Leader, Dr Jonathan Matheny, who organised the tour, sees many opportunities for New Zealand companies outside the narrow band of primary produce. He nominates some possibilities: "Biotechnology, interactive supply-chain technologies and specialised production technologies. Many of these opportunities are aligned with Chinese Government interests." What if we were to extend our expertise in agricultural science and apply it to environmentally-friendly production of high-quality food, he asks, “The only limit to new business opportunities in China will be our ability to recognise and manage them."
It would be wrong to say New Zealand is altogether ignoring a golden opportunity. According to a recent NZTE China strategy document, China has become New Zealand’s third-largest trading partner with exports increasing 38 percent during the year to June 2009.
But has the audacious scale of possibility really registered amongst New Zealanders? A student from Palmerston North, Chris Hubbard, cites figures provided by Professor Jin Wei of Shanghai Jiaotong University to put China’s growing influence in the global economy in perspective: two centuries ago, in 1795, 32% of the world’s manufacturing was conducted in China, but this figure had dropped to five or six percent by 1945. But the tide is roaring back in. In 2009, China accounted for around 23% of the world’s manufacturing and this figure is projected to increase.
Where does New Zealand fit in this picture? If you're small, do it well, and earn a name for yourself, suggests student, Natalie Milne; New Zealand's a small country and can’t be all things to all people, but Kiwi companies must be able to deliver on promises in order to build and protect their reputations. “Brand reputation is very important in China.” (Dr Matheny notes a prominent billboard in downtown Shanghai which reads: “Top brands lead to happiness”.) Milne suggests Kiwi companies leverage New Zealand’s ‘clean and green’ brand image and participate at the 2010 Shanghai Expo collectively, rather than trying to go it alone. “In this way we could get more ‘bang for our buck’ and make an impression at this global event that will involve many countries vying for attention." Milne, who is Zespri Human Resources Manager, cites a key advantage - "The clean, green image is a key point of differentiation for New Zealand in a cluttered market place."
The opportunities are there for the taking, then. How well-equipped are New Zealanders to capitalise on them? What do they need to do?
Achieving success, Dr Matheny argues, will require innovation, creativity, commercialisation, an understanding of how to conduct business in a Chinese environment and a working knowledge of Mandarin.
And he sees New Zealand as uniquely placed among the world’s export nations to prosper in China.
“New Zealanders are typically adaptable, flexible and have integrity – all characteristics that are highly prized in China. Furthermore, the multicultural mix in Auckland and other New Zealand cities means that many New Zealanders who go to China understand that it takes considerable historical and cultural insight into local conditions to succeed in business."
Teach Mandarin in schools, the tour members argue. It's possible to do business in China without that fluency, but learning the language can teach you a great deal about Chinese culture. The sooner Mandarin is introduced into New Zealand schools, the more competitive New Zealand companies will be in China, Dr Methany believes. “In addition, Mandarin speaking ability will enhance business prospects with the vast diaspora of Chinese who feature prominently in the economies of many countries trading with New Zealand."
All students mention the importance of having people on the ground in China who are able to build relationships in commercial, regulatory and government circles.
What's necessary for any business set on success in China is to get to know the culture and people, and above all, to become connected. In China, personal relationships rather than legal contracts are the building blocks of business, more than in Western countries, they say.
A student on the tour, Matiu Julian, who is Client Services Manager at Maori health services organisation, Tui Ora, in New Plymouth points to the great importance placed on getting to know people before conducting business with them. In this respect, he says, Chinese culture is similar to Maori culture.
Student and network engineer with power company, Electra, Ruth English, offers the example of having to juggle conflicting central and local government agendas. "It was explained to us that it is not uncommon for the central government to be asking for X and the municipal government asking for Y; a local government may exert pressure on a foreign company to do something when this contradicted directions provided by Beijing officials.”
Students were introduced to elementary Mandarin and attended lectures covering political, economic and social developments in the Middle Kingdom. Lecturers included best selling author, Foong Wai Fong, who spoke about ‘megatrends of the new China’ and Chinese Government Official, Dr Wang Xin, who outlined ‘the process of political decision-making in China’.
They also visited Shanghai Baosteel Corporation, China’s largest iron and steel conglomerate; Changshu Bosideng Group, China’s largest producer of down coats and Shanghai Lotus Supermarket Chain Store Company, a leading retailer. They were amazed at the huge scale of industry in China. Shanghai Baosteel for example employs more people than the total population of Palmerston North.
The scale of China is undeniably vast, but the tour group's experience reinforces a fundamental truth: business is transacted between individuals. New Zealand's four million individuals have much to offer China, if they are willing to make the connection.
- By Julian Nixon and David Slack
Distinctive concepts, values and codes of behaviour in Chinese culture:
Guanxi is a strategically constructed network of personal relationships. The word guanxi is a combination of two Chinese characters: Guan and Xi. Guan means door, gate or pass while Xi means department, group or organisation. Guanxi therefore means access by a group through a door. To find the door, personal connections or ties must be developed.
Keqi means guest behaviour. The expectation is that a guest will be thoughtful and courteous. In discussions, modesty and patience are important.
Mian-zi or ‘face’ is the basis of a person’s reputation and his/her social status. Causing someone to lose face can damage business negotiations.
Confucianism emphasises respect, personal responsibility and obligation. According to Confucianism, personal relationships are in hierarchical pairs, eg manager and employee. In each social structure everyone has an assigned place. Any behaviour that runs against the hierarchical order is considered abnormal.
Article uploaded: 12 December 2009
