Balancing in-house disciplines with local cultures

Mainfreight continues to expand its international network, balancing non-negotiable in-house disciplines against an understanding of the benefits of incorporating aspects of local business culture.

It underpins its philosophy with a 100-year vision which meshes neatly with Asian business mores.

Don Braid, Mainfreight’s Group Managing Director, outlined his company’s approach recently at the Auckland office of Bell Gully as part of the Asia:NZ Business Leaders Series.

Asia:NZ Executive Director Dr Richard Grant, citing Mainfreight as an example of a New Zealand success story in Asia, noted that the series aims to show that doing business in Asia is not a Confucian task, as some would believe.

Mainfreight is a global supply chain logistics provider. It is involved in the movement, and the IT track and trace, of physical goods across the supply chain.

Founded in 1978, the company has been operating in Asia (Hong Kong/ China) since 1998 when it bought into an agency as part of an Australian acquisition. Mainfreight also bought US business CaroTrans to create what Braid called a “triangle of influence” for imports to New Zealand and Australia from Asia and the US.

In 2008, it bought out the remaining shareholders in the Asian agency, gaining the ability to strategically place its Asian business into its network around the world.

“Three years on, the Asia/USA/Asia trade lane is our biggest lane in world freight,” says Braid.

In Asia, Mainfreight now has branches in Hong Kong, Taipei and, more recently, Singapore. Vietnam, India, Malaysia and the Philippines are on the radar screen, says Braid.

The company has seven branches in China and plans to open a further eight.

Braid noted opportunities arising from high levels of intra-Asia freight. India/China bilateral trade is currently worth around US$60 billion per annum, he said, and “expected volume growth for intra-Asia freight is 10 percent versus global growth of 5 to 10 percent year-on-year.”

In March this year, Mainfreight acquired the Netherlands-based Wim Bosman Group. The transport and logistics company operates in 14 locations across seven European countries.

Braid said he expects trade with Europe will surpass that of Asia/USA/Asia and of Asia/NZ-Australia/Asia.

He sees the company’s 100-year vision as a cornerstone for developing growth and trust in the business.

“In Asia, they identify with it immediately.”

The company’s non-negotiable application of in-house disciplines is “the way we do things around here”.

Braid said such disciplines include a policy of only promoting from within: using a graduate recruitment programme as the first step towards staff moving from the floor to other roles in the business.

There are no private offices. “And no car park with my name on it,” he said.

Every operation around the world manages their part of the business in a weekly branch P&L and that information is shared across the company.

“The weeklies are what judge us. All we’re looking for is that we perform better than the same week the year before.”

There is no cross-subsidisation between branches or divisions. And no written strategic plans. “Don’t ever believe we don’t have a strategy, though.”

Mainfreight balances this with an understanding that its various country offices must be allowed to develop and maintain aspects of their own business culture.

“We went to Australia and tried to tell them how we did business in New Zealand,” says Braid. “It took us some time to understand but we created a Mainfreight Aussie culture: and [later] one for Asia and one for the USA.”

“How bonuses are paid, for example, is very different in terms of what we might do in New Zealand versus what we might do in Asia.”

“And it’s our goal to have nationals leading each of our countries profitably in our style and with lots of growth.”

Braid said that for New Zealand to succeed, this country needs to have more companies located in, and trading with, Asia.

Bell Gully partner David Flacks noted that around 20 percent of merger and acquisition activities in New Zealand currently involve Asia.

Braid said he thinks it is healthy that companies in New Zealand have a long-term vision.

“But, more importantly, New Zealand companies should remain owned by New Zealand companies and have a go at the world rather than selling out too early. [This is] particularly [the case for] small entrepreneurial-type operations that are finding their feet and get seduced by a bit of money.”

He described as “ludicrous” suggestions that a company should require its board members to step down after 7 or 10 years, saying that, in his experience, it can take members many years “to come up to scratch with how we do things and come to grips with the way we are”.

He added that while the Mainfreight board may only meet four times a year for two days at a time, they’re in the business all the time.

“Three board members have been in to Mainfreight in the past two days. So it’s a different structure and it’s the way we think boards should operate.”

He also said he thinks there should be fewer government appointees to boards and more people [appointed to boards] who understand business.

Asia:NZ would like to thank Bell Gully for sponsoring this event.
- by Ruth Le Pla