UCD Smurfit MBA Blog

Posts Tagged ‘International Trip’

I write this blog contemplating the previous 6 weeks of the MBA program which have flown by at break neck speed. I did not think my schedule could get much fuller but the MBA is starting to prove that there is always room for more.

The undoubted highlight of the recent past has been our international study trip. I chose the Brazil option and was not disappointed. Leaving Dublin in sub-zero temperatures and arriving in Sao Paulo at plus 25 degrees was certainly a contributing factor. The Sao Paulo leg of our trip consisted of an introductory lecture at the FIA Business School and 4 company visits. The FIA lecture presented us with an insightful overview of how the Brazilian economy has got to where it is today (6^th largest globally) and specifically the challenges it is facing in continuing its growth.

Of specific interest to me, was how a government policy of poverty eradication through social grants, had inadvertently lead to the stimulation of the local economy through increased public consumption. This is a significant departure from the current populist theory of poverty eradication through industry initiatives and private sector development. I intend performing greater research in this regard and specifically understanding such a policy’s applicability in the South African context.

The business visits and presentations that followed were varied and informative. From a business perspective, I went to Brazil to gain insights into what it is like to do business there and what the key challenges are for international businesses to overcome. The business presentations provided clear and repetitive guidance on the key requirements and challenges for international business in Brazil. I was interested to note that speaking the local language was a prerequisite to building strong relationships, which in turn was a prerequisite for doing successful business. I noted at JWT and Pernod Riccard that this language bridge could be overcome by employing educated locals, but that this would come at a price itself due to the high salaries demanded by skilled local labour.

I came to learn that some things will not change in the near future in Brazil and that making adjustments for the poor transport infrastructure and complex tax regime would be a requirement for undertaking business in Brazil. Much like South Africa, I noted that an approach of seeing opportunities as opposed to obstacles could prove successful in Brazil. This was borne out by companies such as Cosan that had seen an opportunity to enter the logistics and infrastructure fields, or Deloitte who provide consulting services on the complex tax system.

Our 3 days in Sao Paulo flew by and before long we were in the air again heading for Rio de Janiero. The flight and landing in Rio is something I will never forget, for all the right reasons! Flying in over Guanabara Bay, with the smattering of islands below, the Corcavado (Christ Redeemer Statue) and Sugar Loaf Mountains in the distance, and the Rio beaches ahead, is an amazing entrance. Rio’s status as the prettiest city I’ve ever been to was affirmed when we took the tram to the top of the Corcovado and spent the afternoon enjoying the views of the city.

The business part of the trip started up again in the morning with visits to the Brazilian multinationals of Petrobras and BNDES. These visits provided examples of the potential for Brazilian businesses to become world leaders in their fields, and exhibited the rich talent and skills that Brazil possesses. I was impressed with the ambitious nature of these companies, their striving for excellence and their national pride.

Having seen some of the best Brazil has to offer, I was eager to get a fuller picture of Brazilian life which our next scheduled visit to the infamous ‘favela’ slums of Rio, would hopefully provide. Entering the drug-lord controlled ‘favela’ under surveillance from a teenager with a radio and hand gun was always going to leave a lasting impression. I was surprised however with the relatively good condition of the houses and living areas, and saw no trace of the abject poverty that I was expecting. This dangerous illusion that crime does pay is possibly a detractor from the superb social work being done at the development centre we visited.

Ending our week with a view of the darker side of Brazil helped provide a broader picture of life and business here and its related complexities. Our 12 hour flight back to Dublin gave me time to reflect how fortunate I was to have had the opportunity to experience at least a taste of the diverse country that is Brazil. I was leaving with fascinating insights that would assist me in my life and business decisions into the future, and a much deeper understanding than any readings could ever supply. I found myself pleasantly surprised again by my MBA experience far outweighing my initial expectations, no matter how swamped I feel at times.

Neil Krige

- Neil Krige, FT MBA 2013

One of the first things you notice when you land in Shanghai is how clean, tidy and well run the airport is. I compare this to Indira Gandhi International Airport in New Delhi, India, where, on my last visit two years ago, due to a power failure at the airport, my bags were stuck on the conveyer belt for five minutes. Both China and India are deemed to be at a similar stage of newly advanced economic development, a viewpoint formalized by the acronym BRIC to highlight the shift in the global economic power away from the developed G7 economies towards the developing world. But what is it about China that has seen it surge ahead to become such a dominant force in the world? How is it that the “bicycle kingdom” has the first commercially operated high-speed magnetic levitation line in the world and only the third Maglev line to be operated anywhere? Why is an eminent Professor in China asking us to adopt Chinese names for ourselves, much like Chinese people living abroad are compelled to adopt local names now? Why should BRIC be rightly renamed “Crib”, with a capital C to highlight China’s extraordinary dominance as a developing market?

The China trip was a fascinating experience. Getting to meet the individuals and organisations active in the Chinese market and having the opportunity to question them directly really made the trip for me

While I frequently read about China in the news and the Economist, going to China and experiencing the people, culture and environment first-hand, gave new significance to my prior-knowledge of China.

Understanding, cultures and customs are very important as they provide a context for one’s experiences. But just how important these elements can be to doing business in China was a revelation for me.  The concept of “Face” is not hard to understand because, even as Westerners, everyone has face. When equated to Western values, face is very similar to the notion of reputation. Face is a dynamic, which applies to both personal and business relationships in China. Nearly all of the executives that we talked to reaffirmed its importance in Chinese society. It was interesting to note the emphasis westerners paid to this concept.

Corollary to face is the inseparable concept of guanxi or “relations”. Face and guanxi work hand-in-hand.

Similar to the concept of networking in the West, guanxi, was also repeatedly highlighted in various presentations to us. A clear example of guanxi in action was provided by one of the Enterprise Ireland guest speakers. In one incident, a Chinese staff member handed over company IP to his classmate, who was working for a competitor. When asked why he had done this, the response was that my classmate asked for it and so I was obliged to help him out. It may be important to realise that loyalties may not necessarily lie with the person or organisation that pays the bills. Interestingly enough, our Chinese presenter at one of the talks, played down the importance of guanxi to a large extent. While important, not getting “hung up” on these concepts was also an important insight.

While it always helps to know the language of the person that you are doing business with, its true importance was brought home to me during the China trip. I had always seen language as a “nice-to-have” when doing business, as a way to show that you made some effort or have an interest in your business partner. However, it is essential in the Chinese context. Several small experiences during my trip brought this point into focus.

Due to the tonal aspect of the Chinese language, pronunciation becomes particularly difficult for Westerners. At a restaurant in Shanghai, we wanted to order a bottle of water but ended up ordering a bottle of local white wine! Having directions written in Chinese was a time consuming way to get around the big cities.

Note that this level of difficulty was in Tier 1 cities in China. The importance of Chinese in other cities and the countryside was only going to grow.

During some of the presentations, the importance of the Chinese language was also highlighted. The head of multinational in China clearly stated that while he did not speak Chinese, he was certain that his replacement would need to master the language. In fact, he was adamant that to be truly successful in China the emphasis on language was important. I would have been unaware of the extent of the importance of the Chinese language in doing business in China prior to my trip.

Hand-in-hand with the commitment to learn the language was the importance of being based in China. The CEO of a fast-expanding online-business gave us some truly unique insights into doing business in China.

According to the CEO, an outsider in China, the only way to be successful is to work with local partners and staff that you can trust. While this may sound obvious, it has specific relevance in the Chinese context. The CEO pointed out that the Chinese take a long time to warm up to their business partners. He gave us an example of how he won over his secretary’s trust. He made a special effort to go to her wedding and gave a heart-warming speech at it. This gesture, he found, helped him build a lasting relationship with her and others in the company. He is adamant that your business will not grow unless your customers and staff trust you and like you. And this trust can only be established by showing your complete commitment to the business.

The CEO decided to move to China, as opposed to conduct his business remotely. He immersed himself in the local culture and customs, an experience he found rewarding for both his personal and business life. In fact, he even married a local Chinese girl. Not sure if I would go that far to show my commitment to the Chinese people, but the points he made really struck home. As a foreigner living and working in Beijing, his opinions carried a lot of weight with me.

Some other important lessons that I learnt were that signing a contract with a Chinese firm just means that they are now ready to do business with you. Prior to the trip, I would have assumed that once a contract was signed, the deal was sealed. However, listening to some of the people active in the field made me realise that things were very different on the ground. The idea that western business knowledge and education will enable me to succeed in China was also debunked by one of the presenters. Operational challenges are often deep and unique to China (such as the subtle differences between Tier 1 and Tier 2 cities). When cutting back, focusing on deep cuts to non-payroll costs are supported by Chinese staff members. This information is very useful and helps us understand the pride that Chinese people take in their jobs and their perception of how the firm values them.

Some of the key learnings from the trip were on getting the basics right when starting and maintaining a business in China: a) build the relationships first, b) localise your business and technology for the Chinese market, c) invest in recruitment and training, d) prepare “bibles” for each part of the operations, d) reward success among your employees and make it personal, and finally, e) focus, over communicate and stay very close to your competition.

I particularly enjoyed the talk by a leading brand management company based in Beijing. The presenters gave real insights into China’s consumer culture, a lot of which we experienced on the trip. China is a civilisation state and this affects the way in which Chinese people see things. The need to project and protect status is clear in present day Chinese society. Expensive cars and western influences abound. Yet, these influences have a distinctly Chinese feel to them.

China’s modernisation does not mean westernisation!

Like inhabitants of many countries, Chinese people are interested in accumulating wealth. In fact, they are now moving from “Show” to “Show you know”, phrases that hint at an interesting dynamic in the need to project wealth while maintaining some level of self-respect. Like many Asian countries, there is a strong emphasis on providing the best possible education for the next generation, “Baby MBAs” being the latest fad on mainland China. Unique to China was the importance of fitting in. According to one of the surveys presented, 86% of the Chinese people wanted to fit in. The concept of “soft-individualism” was also very unique to China. Stand-out but don’t stick-out was thought provoking. The idea of not sticking-out in the Chinese concept was new to me. I hadn’t considered the importance of being part of a group to Chinese individuals and this was an important learning point that is sure to help me in any future dealings that I have with Chinese businesses. Looking at the levels of motivation through the prism of a) me, b) we, c) the world also provided a unique view into the Chinese mindset.

While I continue to be impressed with China’s progress to date, I can’t help but feel uneasy about the way Chinese society is structured. The lack of religious and political freedom made me uncomfortable.

In fact, the influence of the Communist party in all aspects of public and private life repeatedly surfaced in the many talks that we attended.

One of our presenters stated that he was happy to have an open and frank discussion about their business. Yet he asked people not to tweet or blog about any conversations we would have. He half-jokingly said that he had family in China and he did not want to upset the authorities. The meddling nature of the government was also brought to light in the way in which the central government dictates the laws to be implemented. The case of the 70-90 rule, where 70% of the apartments being developed had to be under 90 square feet, is a case in point. Foreign and local developers active in China were given little prior notice before the law was enforced. This uncertainty in the business environment makes it very difficult to do business in China.

Corruption is a massive issue in China and a few of the presenters hinted at its adverse effects when doing business in China. During a frank discussion over dinner with one Irish engineer that works locally in China, the level and extent of corruption was laid bare. A reporter’s experiences with Chinese authorities also left a lot to be desired.

Prag Sharma

Overall the Chinese trip was a fantastic experience in which I gained insights into doing business in China that I would not have otherwise experienced.

Would I go back, yes I would……

- Prag Sharma, EMBA 2012-14

Reflecting on our recent international study trip to Brazil, I am enthused by the prospects for the country. Our opening visit to FIA provided us with an excellent macroeconomic overview of the country and its forecasts.  The young population (38% below the age of 20) bodes well for the country in providing a large labour force to fund retirement obligations that will only increase as the standard of living rises and life expectancy increases. In the short term however, this demographic structure creates significant costs for the state in education and healthcare. There are bottlenecks in infrastructure and skills (only on average 7.5 years of schooling) which if not dealt with with harm growth prospects and make inflation more difficult to control.

The visit to JWT, an advertising agency, in Sao Paolo, was a very informative one with interesting statistics on consumer habits and crucially the rise of the middle class or migration from social class C to B over the past decade.  The country is short-circuiting the communications changes that have evolved in more developed countries by information and advertising being accessed through mobile smart devices from a strong traditional television base, thereby bypassing the switch to PC/laptops seen in North America and Europe 10-15 years ago. The rate of change in Brazil is much greater than for more developed markets and this poses great challenges for enterprises, such as Pernod Ricard whom we also visited in Sao Paolo, to keep pace with these consumer trends and stay in the game.

We had a very interesting meeting with the Brazilian development bank, BNDES, in Rio de Janeiro, where they outlined the major projects being funded across the country, solely or in collaboration with commercial financial institutions.  Their portfolio was extensive and wide covering private enterprise and trade, education, transport and infrastructure and health. They are committed to modernising the country and making it more competitive but have tall hills to climb. I was struck by one of their immediate projects being the arenas for the World Cup and the surrounding infrastructure.  Being in both domestic  international airports in both cities, I couldn’t help feel how underprepared they were for the influx of football fans next year and that it was now too late to really modernise the airports at this stage but they might just have to grit their teeth and hope for the best.

Cathal O'Ceallaigh

- Cathal O’Ceallaigh, FT MBA 2013

Give me some sunshine
Give me some rain
Give me another chance I wanna grow up once again.

Humming this beautiful song from a popular bollywood movie, I geared up for my journey to Brazil. Having spent my last 7 months in Ireland I had already seen enough rains and now was the chance to see some sunshine.

UCD Smurfit MBA group visiting FIA Business School, Sao Paulo

“Doing Business in Emerging Markets” module is one of the most eagerly awaited modules of our MBA program. As part of this module half of the MBA class went to Brazil and the other half to China in order to get a better understanding of the business and cultural environment in the emerging nations. While business was always my top priority for this trip, I never lost sight of the fact that this might be my only trip with my fellow classmates as everyone gets busier with job search in the coming months. Hence, I wanted to make the most of it by getting to know them well. This trip was a welcome break for all of us and both the groups wanted to outdo each other in having fun on their respective trips.

With Brazil being another emerging economy like India, my home country, I was under the impression that things would be pretty similar there. While it had several characteristics of an emerging economy it had certain contradictions as well. For instance the price levels in Brazil were similar to or even more than that in a developed nation. Through our interaction with companies like Cosan, Petrobras, JWT, Pernod Ricard, etc. we got insights on the opportunity that lies ahead for these companies in Brazil. We also got an insight on the cultural issues and consumer behavior in this economy.

Sightseeing in Sao Paulo

Visiting favela’s was an experience in itself. We felt a certain amount of fear while going there as we had been told how dangerous the place could be. Our fear was not unfounded as we noticed a teenaged guy with a gun in his hand and possibly keeping a watch on unwanted elements entering in the locality. We were amazed to see how an organization like AfroReggae is transforming the life of adolescents through the use of music. By doing so it is preventing these adolescents from going astray into the world of drugs and crime.

Amongst the various skills one gains as an MBA, multi-tasking is one of the significant one’s. Despite the hectic schedule which comprised of visits to companies and business schools, networking events, etc. we did manage to have considerable amount of fun (definitely more than our friends in China). While we were pretty occupied in Sao Paulo, the business capital of Brazil, we did find some time to explore Rio de Janeiro, the leisure hub of Brazil. The scenic locations of Rio are bound to take anyone’s breadth away and we were no different. We were left spell bounded by the beauty of Rio. These vivid memories make me feel that I took away more than I had bargained for. Obrigado (thank you in Portuguese) to the Smurfit School for providing us this tremendous opportunity to gain first-hand experience of the business environment and culture of Brazil.

Rahul Jindal

-Rahul Jindal, FT MBA 2012/13