Sunday, 13 June 2010

Preparing for expansion to the ASEAN

By BERNARDO M. VILLEGAS
Manila Bulletin
http://www.mb.com.ph/articles/261838/preparing-expansion-asean

Investors from all over the world are increasingly convinced that the ASEAN, comprising some 600 million consumers rapidly graduating to middle-income status, should be considered together with Brazil, Russia, India and China (BRIC), as emerging markets that will lead the global economy in growth in the next twenty years. The Great Recession of the last two years actually helped to attract more attention to Southeast Asia as three of its most populous countries – Vietnam, Indonesia and the Philippines (VIP) – were among the few who avoided a recession in 2009. For this reason, there is increasing interest among the top 500 corporations of the Philippines to follow the pioneering examples of such companies as United Laboratories, Jollibee, Southeast Asian Food, Del Monte, Century Can, San Miguel Corporation and Liwayway Manufacturing (Oishi) in expanding their operations to such ASEAN countries as Indonesia, Vietnam, Thailand, Malaysia, and Cambodia, in addition to launching operations in the vast market of China.

This expansion to Southeast Asia is not limited to consumer-oriented businesses. Already the EDC, the alternative energy company of the Lopezes, is exploring transferring their geothermal energy success stories to Indonesia. Conglomerates like the DMCI group may soon tie up with Indonesian companies in mining ventures. Before long, there will be ASEAN-wide alliances in tourism as the whole region becomes a seamless area for Northeast Asian and European travelers. I also know of some Philippine universities contemplating tying up with counterparts in China, South Korea, and Indonesia in order to leverage on our being one of the largest English-speaking countries in the world. No top management of a large or medium-scale company in the Philippines should be left behind in considering a strategic move in the next five years to expand operations in the emerging markets of the ASEAN.

Philippine firms crossing borders should, however, prepare for the cultural land mines that could make their expansion to other countries very difficult. I am not referring only to obvious differences in consumer tastes, say in food, beverage or personal care products. Jollibee learned the hard way that fast food products that are smashing successes in the Philippines could very well fail in China or Indonesia. Oishi snack food items may have to be modified for entry into Vietnamese or Indonesian markets where consumers prefer super-spicy crackers. The way McDonalds had to adapt their menus to Filipino tastes (hamburger with rice, spaghetti) has already become legendary.

But differences in consumer tastes constitute the easy part of cultural adaptation. More challenging are people management practices that are significantly determined by differences in cultural traits. One does not have to be a psychologist to observe, for example, that many South Koreans in the Philippines rub Filipinos the wrong way in golf courses, restaurants, and other public places because of the clash between the directness and loudness of many Koreans and the smooth interpersonal relationships highly valued by most Filipinos. Even Japanese and South Koreans often find it hard to work with one another. Already some Filipino executives in Vietnam are realizing that their usual preference to spend time with their families during weekends and after work may not sit well with their very demanding Vietnamese employers.

To prepare more Filipino entrepreneurs and executives to cross cultural borders, the University of Asia and the Pacific has invited an expert on cross-cultural management from the famous IESE Business School in Barcelona, Spain--whose full-time MBA Program was ranked No. 1 in the whole world by The Economist. It was also ranked by The Financial Times as No. 5 in the world for executive education program and No. 2 for open enrollment offerings. The IESE Professor visiting the Philippines is Professor Yih-teen Lee, who teaches People Management at the IESE Business School and does a lot of research in cross-cultural management. He is especially qualified to talk about this topic in Asia because he hails from Taiwan but has taught for many years in Europe, first in Lausanne (Switzerland) and then in Barcelona. He is fluent in Mandarin, English, French and Spanish. He is collaborating closely with Dr. Pablo Cardona, who recently lectured to different business audiences in the Philippines about the new management concept called Management by Mission which is an improvement over Management by Results and Management by Objectives that have dominated management practices over the last fifty years. Professor Lee contributes to understanding and developing the competences required in managing in a cross-cultural context. Some of the cases he will use will actually introduce executives to the complexities of working with South Koreans and Chinese.

The seminar in which Professor Lee will speak is entitled "Developing Cross-Cultural Competences for Global Leaders." Scheduled for June 30, 2010 at 1 to 7 pm at the Telengtan Hall of the University of Asia and the Pacific, the seminar is valuable for organizations that either have cross-cultural staff and officers, or have commercial presence in more than one country, or serve international markets. Registration fee is Php 10,000 per participant, inclusive of snack, dinner, and seminar materials. To ensure in-depth discussion, participants will have to study two cases prior to the seminar. For reservations, please contact Ms. Alonica Salazar or Ms. Lea Rinon at 634-3095 or 637-0912, loc. 222 or email sbep@uap.edu.ph. For comments, my email address is bvillegas@uap.edu.ph.

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