Speaking at a BusinessBecause event on MBA Jobs and business school opportunities in Asia, the former head of leading markets operators advised the next generation of business leaders to differentiate themselves by transferring to Asia.
“If you were applying for a job as an MBA graduate twenty years ago, and you didn’t have a degree from LBS, Wharton or Harvard, people would look at you as second rate,” he said at The Royal Institution in central London. “But if you arrive now with an MBA from a top Asian business school, you will have a tremendous advantage. I couldn’t recommend it more highly.”
David agrees that Asia will “unquestionably” be the leading centre for business. But there is no such thing as an Asian approach. To categorize the booming economies of the region under one banner would be a mistake.
“Asia is not a single entity; it’s a group of different markets and cultures,” he said. “To try and encompass Asia in one sentence is wrong. Your approach to business has to be completely different in each country.
“Each Asian country has a radically different approach to the presence of foreigners. You cannot use the same template to open a business in any Asian city. It’s a non-starter.”
David has a long and distinguished career in finance. Over four decades, he has worked at the London School of Economics, HSBC and ICAP, along with a wide range of other businesses across Asia. Now semi-retired, he is a non-executive director at a number of companies.
Four of Asia’s top business schools - China Europe International Business School, Nanyang Business School, the Indian School of Business and Hong Kong University of Science and Technology – co-hosted the event on Tuesday. David praised the career opportunities available for MBA graduates and shared his experiences of doing business in Japan, Hong Kong, China, Singapore and India.
Starting-Up In Japan
He says that it is often difficult to achieve success without local partners. In Japan, getting a solid business partner is essential. “It is very domestically orientated and you should not try to go it alone,” he said.
“The Japanese are not interested in short-term projects and are not afraid to invest or lose money. They are long-term thinkers and have a different way of doing business in that respect.”
David admits that in his experience, internationals have found it difficult to operate in Japan. He says that the cost of living and personal taxation is high for Japanese citizens and this can cause conflict when bringing in expats.
Japan may have been considered to have a “jobs for life” culture, but that is now a “thing of the past” and there is more freedom to move between different companies.
He says that entertainment is important when securing business. “There is a huge entertainment culture, and the amount you spend on entertainment if you want to sell something (is huge),” he said. “Entertainment budgets are big and you have to pay attention to make sure it doesn’t get out of hand at times.”
He says that it is still a male-dominated society and the same is true in business.
But a Trustee of the Japan Society disagreed: “Foreign females can have a good advantage in Japan, and things are improving for Japanese females in business," she said.
Hong Kong Is The Most Important Market In Asia
David says that the use of the English language and relatively low taxes attract internationals to Hong Kong. “It’s a very attractive place to do businesses,” he said. “It’s easy to set up in the city, and there is little interference from mainland China.
“There is a good equity market for listings and many foreign companies, such as Prada, decide to list there. Hong Kong is well situated geographically, with good transport links.”
There is increasing competition with Shanghai and both cities are fighting to become the best international trading centres for Asia.
“There is a major rivalry with Shanghai, but Hong Kong is much more international than other finance centres in Asia,” David said. “There’s also a game of Ping-Pong between Hong Kong and Singapore; I’ve known companies whose operations have continuously moved between the two countries. It’s tit-for-tat.”
Mainland China Is The Prize That Every Bank Wants To Win
Despite Hong Kong vying to become the largest finance centre in the world, Beijing and Shanghai in Mainland China are “prizes” sought by every financial instituion. “The Chinese economy will probably become the largest in the world,” said David.
“But they exact a very high price from foreigners operating in china. Everyone wants to be in China and the authorities know it, so the price is high.”
David says that a Chinese partner is advised, but also required by law. You do not need to bring in expats to start a business. “If you do, my advice is to bring people of Chinese ethnicity, rather than brash Americans or ‘cockney’ traders from the UK,” he said.
Singapore Is One Of The Best Countries For Private Banking
There is a low tax rate and the quality of life is high in Singapore. But there is zero-tolerance on personal miss-behaviour and “severe” punishment for offences. Regulation is tough but fair, David added.
Switzerland may have been regarded as the leader in private banking, but not anymore. “The centre of gravity has moved to Singapore,” he said. “The asset base in Singapore generates a large volume of genuine, wholesale financial transactions.
“Singapore’s market is unique; normally, ninety per cent of all trading volume is speculative, but in Singapore the volume of genuine business is higher than any other centres because of the growth of private banking assets there.”
Business In India Was ‘A Nightmare’
David said that doing business in India was, in his personal experience, a “bureaucratic nightmare”. “Every attempt to open businesses in India is frustrated by a bizarre set of rules that make little sense,” he said.
But an alumnus of the Indian School of Business disagreed. “India has a huge population, but it is young,” said the ISB MBA. “You have a large pool of customers ready to buy services for your businesses.
“At ISB, over four-hundred companies recruit from our campuses. The top-five companies from all sectors come to our campus to recruit. It gives you huge opportunity (to begin a career).”
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