BY SAMMY KARDON
Everyone knows that Asia is the largest, fastest-growing, fastest changing venue of the increasingly global world economy, but what makes it tick? What is in store for local and global business in Asia in the next few years? No one knows for sure, but anyone who attended the 2005 Asia Business Conference at Harvard Business School this weekend left with a few ideas.
Over 70 members of the highest levels of government, business and academia –corporate lawyers, corporate executives, consultants, investment bankers, government ministers, professors, etc.– converged on the Harvard Business School this weekend to collectively offer perspectives on everything from outsourcing to innovation. There to gather it all in and meet each other in the process were nearly 700 well-dressed law, business and government students, as well as practitioners from all over the world.
“I had a chance to meet students from the Kennedy and Business School, catch up with old friends and meet new people, some of whom have impressive records building businesses in Asia,” said Yilu Zhao 1L, one of the conference organizers.
“I plan to keep in touch with them and work on future activities related to Asia together.”
The contacts made at the conference may yield new ventures in the future, but the one that brought them together was pretty impressive, too. The event, now in its 10th year, required over five months of organizational and logistical effort by over 100 students and faculty affiliated with Asian organizations at Harvard Law School, Harvard Business School and the Kennedy School of Government.
Much like the continent it represented, the scope of the conference was massive. Starting with Bain & Company Partner Ed Lin’s opening remarks at 1:00 p.m. on Friday, the next 30+ hours featured a whirlwind of content:five keynote speeches, four executive and career roundtables, 14 discussion panels, five meals and two gala receptions.
By the time Paul Etchells, the CEO of Coca-Cola, China, ascended the podium at the conference-ending Valentine’s Gala at the Boston Harbor Hotel on Saturday night, most of the attendees were happy just to eat, dance and simulate gambling (there were blackjack tables).
The topics covered by panels and speakers ranged from public policy reform to legal issues like corporate governance and intellectual property to industry by industry synopses. A common theme was how best for multi-national corporations to enter and continue to grow in Asian markets with efficiency and social responsibility.
It is hard to generalize across economies in countries ranging from highly developed (Japan) to positively protean (China). Recognizing and accounting for cultural differences is very important, both in terms of starting new businesses and working with existing ones.
Todd Tucker (HLS ’85) is the general counsel for McDonald’s Asia. He explained how McDonald’s meticulously planned each entry into a new Asian market, preparing extensively with local partners, including setting up local supply infrastructure, up to five years before opening a restaurant.
McDonald’s operation in Japan, established in 1971, is now so firmly entrenched that it is a separate company, publicly traded on the Tokyo Stock Exchange. It is only just now starting to penetrate and expand in China.
He attributed his company’s success to making adaptations before they were necessary, aiming to tailor its corporate model to the new culture as opposed to a straight transplant.
He told a cautionary tale about a competitor, Bob’s Big Boy, which imported its trademark mascot-statue when it started in Thailand. Unfortunately, Big Boy executives neglected to note its similarity to local representation of the Buddha, and potential customers layed offerings at the feet of the Big Boy instead of eating in the restaurant.
Several corporate lawyers with experience completing deals in Asia also stressed the importance of understanding cultural differences.
“You can’t just come in and be the big, bad U.S. lawyer,” Jon Gray of Simpson, Thacher & Bartlett LLP observed.
Generally, it makes sense to forge a close realtionship with the local counsel and act through them.
“We’re not competing with the local firms. We’re working together,” Toby Myerson (HLS ’71), the co-head of the Corporate Department at Paul, Weiss, Rifkind, Wharton & Garrison LLP, observed.
He also attributed the continued success of American lawyers to the education they receive. Studying amorphous common law encourages them to come up with creative and unconventional solutions to problems that would be unsolveable with a more rigid outlook, often dominant in Asian legal cultures.
Still, some areas of the Asian business climate are desperately in need of reform, notably intellectual property. Piracy is rampant and governments have been somewhat indifferent to it.
However, according to Scott Kronick, President of Ogilvy Public Relations, China, that is starting to change.
“If China really wants to protect IP, it can,” Kronick asserted, citing the dearth of piracy in Olympic-Ring gear related to the 2008 Games in Beijing as an example of the government recognizing its own interest in creating a stricter regime.
Other speakers also agreed that any change in the standards of IP protection, anywhere from India to China, would need to come from within and could not be imposed by international authority.
In other areas, like capital markets, there are greater barriers.
Howard Jiang, a partner at Baker & McKenzie LLP, stressed the difficulty of investing in a public Chinese company when 70% of its shares are locked up by the government and not tradeable.
While the conference covered all of Asia, it is fair to say that China was the elephant in the room: even when it wasn’t being talked about, no one could forget that it was there.
“The phenomenon of 1.3 (more like 1.5 in reality) billion consumers in a country growing at more than 8% a year is unprecedented in history and certainly hard to ignore,” Jimmy Gao, an HLS Student who also served as a Vice-Chairman of the entire conference, observed.
The last few years have seen the Asian markets open up to multi-national corporations to an unprecedented degree, in addition to presenting new opportunities for venture capital and investment. This new era in Chinese economic openness is different from past ones, notably the British Imperialism that used opium and superior technology to impose its own terms. Today, China is powerful and aware enough to impose its own terms.
Another point on which all the attendees agreed: the only constant is change. Next year’s conference will definitely see a shift in everyone’s perspective.
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