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Taksin’s Back!

Taksin’s finally back in BKK this AM. See here or here

“So what do foreigners think of Taksin?” is the question I being asked by a number of Thai’s everyday this week. Well, I have to admit that if you’re not really interested in Thailand (or Man U) than you probably don’t even know who he is (Former deposed PM of Thailand). My opinion is that he’s well educated, well connected, successful in business, and very rich.

I turned the tables and asked the same question to the Thai’s. The answer—every time was, “There is going to be corruption no matter who is in office. At least the economy was good when Taksin was in office.” Interesting and slightly depressing take on both business in Thailand and the darker side of the easy-going let-it-be attitude Thailand is famous for.

There is really an odd reality in Thailand today: The country is divided about Taksin but still, even people who hate him loved the strong economy that prevailed when Taksin was in power.

So what happens next? I’ll bank on the following: some extended court cases mostly focusing on Taksin’s wife’s assets; some more Man U games in Thailand and Asia; a lot of bluster by both the new People’s party and the military junta; he won’t go to jail but he’ll lose, on paper millions of dollars; and finally, Thailand will look petty, shallow and the economy will continue to languish.

Bummer.

Thailand vs. China

“Every thing in Thailand is slow except for the internet.” “Everything in China is fast except for internet.” Ironic, no? This comes from a conversation that I had with a friend of mine who also does business in both countries.

I’m in Thailand for the week to help a client set up a small assembly facility. As I’m thinking about the differences in the production capabilities in different countries, specifically China and Vietnam, I realize that Thailand has lot to offer too.

1. Were here in Thailand for this client because of the tax and export duty savings over China in their specific product line. The cost differences are substantial and the legal requirements for export are not nearly as burdensome here.

2. Thailand’s infrastructure is at least as good as China’s East Coast’s—ports, airports, toll-ways. Nothing new, I know, but this is one of the major drawbacks of working far inland in China or even close to large cities in Vietnam or Cambodia. The big plus in Thailand is that there are no inter-provincial tariffs or restrictions on the flow of goods like there is in China.

3. Even with the recent wage increases labor is still more expensive in Thailand than in China. I’m seeing cost differences of about $50 to $75 a month between factory workers in China vs. Thailand.

4. The environment is much more “international” in Bangkok than it is in Shenzhen—more so than even Hong Kong, I’d say. Sure there isn’t as much English on signs but the exposure to “the west” is certainly as much or more—To me, Bangkok seems to be becoming more western and Hong Kong more Chinese. There are certainly more foreigners (yes, even in the non touristy sections of town).

5. The advertising is much more sophisticated in Thailand than China where it’s still a relatively immature industry. I was consciously amazed at the higher quality of both radio and out-door media advertising.

6. Nationalism is alive and well in both countries but Thailand’s flavor is much less strident. China seems to be a bit more angry, with something to prove, while Thailand is much more comfortable with it’s unique place in the world.

7. As I work with people in the jewelry industry here I’m constantly being told the same thing when I tell people I live in China, “You know, labor is more expensive here, but you get better quality work too.” Almost to a person, this was the response I heard—more than 10 times in just one day.

8. Thailand has a very well developed export base for automobiles, machinery and electronics, according to the Bangkok Post today. While China does have some of this too, pick-up trucks and hard-drives are especially well developed sub industries in Thailand.

9. Staffing in China is difficult in both retaining top-level local employees as well as low-end factory labor. Thailand has similar tight market in top-level employees. Service levels are much higher in Thailand as is education in general. Professional standards seem, to me, to be higher in Thailand as well.

10. The traffic in both Thailand and China is horrible—but each has it’s own perils. In China you are literally taking your life in your hands when you get into a car—the roads are some of the most deadly in the world. It’s scary, and for good reason. Thailand is completely different—you’re never going fast enough to be in a dangerous situation! The traffic, in Bangkok, is so bad at almost all times of each and every day that estimates are it lowers annual GDP by multiple points!

11. Banking (I can’t believe I’m going to say this); hands down China has better banks—in terms of service and accessibility. In China if you need a bank, you can get one open from 8AM to 5PM 7 days a week. Thailand is 9AM to 3:30PM five days a week and off every holiday known to man.

Customer Service in China?

Interesting insight into the prep leading up to the Beijing Olympics on this Reuters site. It’s mostly, from what I gather, written by professional reports who are not typically located in Beijing. It’s a nice (fluffy) look at some of the things that are happening in the run up. There are some good photos and some light stories and every now and then a bit of real insight. For example, in comparing the service cultures Hong Kong with Beijing the reporter said this:

“But I still stand by the gist of it, which is that Beijing simply does not “get it” when it comes to attitudes towards service, and to building tourist facilties [sp] like airports which are world class.”

So what else is new? Just because Beijing is hosting the Olympics doesn’t mean that Chinese culture is going to change, nor are business practices going to be updated overnight. Beijing certainly has invested billions in the Olympic venues and in training people. But service is an attitude that is not just “trained” but it’s felt/believed and needs time and experience to germinate.

Two related experiences that explain not just the attitude in Beijing but in most of China. And this isn’t just the old hackneyed “Under Communism they didn’t give damn, and they still don’t.” I believe there is more to it than that.

First anyone that has ever been here has heard (in English or Mandarin) the phrase “There are too many people in China.” The one-child policy, the Mao offer to give way 10’s of thousands of women, and thousands of years of over crowding in limited agriculturally prime areas—they all combined to produce an attitude amongst many Chinese that there are just too many of them. (Have you ever heard a foreigner say that?! Of course not. It is a uniquely Chinese attitude.)

The result of this history is that, in my opinion, Chinese are very unconcerned about anyone that is not in their personal network. Despite the Chinese penchant for all terms emotional, there is a real lack of honest human empathy (renqing) compassion for the masses (“ants,” as the Chinese say). How do you serve throngs of unknown others if this is the attitude you’ve been taught/experienced for your entire life?! Answer is: You don’t, at least not very well.

Second, as a foreigner, my life in China is very different from the “masses.” I’ll be the first one to admit that, for the most part, I am treated better (because I’m noticeably different) by strangers in China than other unknown Chinese would be. Of course, the pessimist in me says that this is because service providers probably assumed that I have more money to spend than the other unknown masses. But that’s just the point. Those who are perceived to be worth more, in whatever way, are give the better service and the rest of the masses are ignored.

And there are reasons for the difference in attitude too. As the article points out, Hong Kong is decades ahead of China in its exposure to both the service economy and other (western) standards for customer service.

One of those other issues is that China, when they started their capitalist experience, really started out at rock bottom. I honestly believe that many Chinese believe that it’s so much better than the 1960’s and 1970’s that even if there are still problems people should just shut-up and be glad for the fact that things are so much better than before.

And they really are better, but, of course, that’s no excuse to stop now. As on old boss of mine used to say, “better than a stick in the eye” is not a great customer service slogan. Too many factory managers (and govt officials) mistakenly believe that good enough is just that, good enough. Things won’t get better until this attitude is overcome.

Many people blame 40 years of communism for the bad service attitude, and it certainly had an impact. But look how fast capitalism came back when given the right opportunity. I think that there is more to the (lack of a) service attitude than just some structural issues that are being quickly and consciously removed.

Another part of the equation is something that we foreigners and foreign companies are actually causing ourselves—high demand (for less than average service) squelches the need to improve the service quality. Foreign companies are pouring record numbers of FDI into China year on year and with this much money coming in, you get the attitude from many that “Hey, we must be doing a pretty good job—just look at all the money rolling in.” I have had many factories look at projects of mine and say: “Your standards are too high, we don’t need your business.” There is no incentive to change if the current system is helping people rake in cash hand over fist—in fact it makes the problem worse.

Finally, a side-note to service and the big East-coast cities. If you don’t know already, these showcase cities are not “China.” Ok, they are one of the many China’s that do exist here, but they are not most people’s China. They are A-typical in terms of education, exposure to the west, housing costs, salary levels, developed infrastructure and just about everything else. I have client after client come to Shenzhen and marvel at how “developed it is. And they’re right, it’s amazing. But Shenzhen is not where 90% of their products are made and it’s not like 80% of the rest of the country. In terms of service Hong Kong is not China. Shenzhen is better than Shanghai, Shanghai is better than Beijing and these cities are years ahead of most of the rest of the country.

Business people come to Hong Kong and Shanghai and Shenzhen and see fantastic airports, stay in great hotels, have drivers pick them up and drop them off, have factories cater to their every whim and get great service through out a 5 day trip here and think, “Damn, This is just like at home—maybe better!” But it’s a show—and maybe that’s good enough for the twice a year businessman or even the Olympics. But it’s not a service attitude that you can find for an extended period of time or across a large percentage of China.

Is it getting better? Absolutely. Gone are the days of a store clerk standing next to the product you want to buy and telling you “meiyou,” we don’t have it, because he doesn’t want to work right now. Are there industries and companies that are world class or working to be world class? Sure, but great service is still a pleasant surprise and nowhere near an expectation.

Need to improve customer service in China? Start with the basics, understand where you’re service people are coming from. While their experiences and even standards of good customer service may be low, even in the interior of China people can tell you about a good customer service experience they’ve had—capitalize and build on that.
Set top-down goals and standards that are realistic and measurable.

Have teams (bottom-up) create own their own steps to accomplish and monitor the corporate goals.

Teams and individuals need to hold each other responsible rather than being forced to have a good attitude from above.

Having a goal or standard of “less bad” service is actually not a goal or a standard. LCD is not acceptable and just gets you more of what currently exists.

Whether it’s though teams creating their own goals or some other system you have to have frontline buy-in. If there is not buy-in at the point of interaction, then what’s the point?

Corporate incentives need to target group achievement of their own goals and, AND “small” individual actions that make personal connections and a personal difference.

Understand that it’ll take time. Lots of time.

Finally all of your efforts and plans will be for not unless you, the people at the top, are giving the service to those working for you that you expect them to give to customers.

Baseball Players took Steroids. So what?

Great article about Baseball and business ethics at the site Knowledge@Warton . The point there being that gaffes, mistakes or even all out lies are not damaging to a companies value until those (un)ethical events strike directly at the core of their consumers’ mission/vision/values. I would add: until those issues cost consumers money.

So what does baseball’s current steroid problem have to do with China? Maybe nothing directly (unless we find out later that the roids came from here), but the parallels are there for sure. Baseball is scoring record high attendance numbers despite the steroids scandals of the last few years. Similarly, no matter what the perception of human rights, disease control, freedom of information, or even illegal work-place activities, FDI is at record highs in China right now. Like baseball fans who aren’t personally affected/affronted by the steroids issues and so still going to games in record numbers, foreign companies will continue to work in China until their bottom line is seriously and directly impacted.

One particularly applicable example from the article tells a story about a company in New York that could just as easily be told about any factory in China. From the article:

“The Soho, New York-based company Yellow Rat Bastard is another example, says Schweitzer. The trendy clothier faced an employment suit from the state in which it was accused of violations such as unpaid overtime, below-minimum-wage salaries and improper employee firing. In early January this year, the company settled the suit by agreeing to pay $1.4 million in fines and back wages. But because their closes still look cool, they probably won’t take a hit from customers, says Schweitzer.”

Exactly. Because things are still cheap, quality is continually rising and no one is really getting “busted,” business as usual will continue in China. (If you missed it, the implication here is that the situations in most factories in most third world countries are pretty bad.)

Where does this lead? To an entire society that is “unethical” in both practice and perception. Speaking about Moscow the article states:

“Economies where kick-backs and bribes are the norm or considered part of “relationship-building,” represent s similar sort of ethical dysfunction. Schweitzer relates how a businessman in Moscow told him recently: “‘I spend as much of bribes as I do on taxes. I have to. Otherwise, I can’t compete.’ Once that behavior is the norm, it’s very hard to break out: It’s a corrosive atmosphere.”

Amen. This is the same environment that exists in China and, as I mentioned before, shows that China is not as unique as many think. But more important than that is the reality that, like in baseball, the desire to compete, both from inside China and from foreign companies investing here, will drive people to do anything they can get away with to get an edge. And while this desire to get ahead is not any different than the US or anywhere else, the frequency at which it is pushed to unethical levels and the degree to which it is (not) controlled is much greater here in China.

So what is the answer to China’s (perceived, real or ignored) problems? It’s certainly not a boycott of China (or the Olympics) as some have called for. And a call for higher standard is meaningless without enforcement. The answer is, the same thing that is required for any project any where: Investment into the process, regular testing, on-site confirmation and consistent detailed reporting. This means holding individuals and companies responsible to clear and consistent guidelines.

Reminder: if you didn’t confirm it, it didn’t happen.

Paperwork is not enough.  Most of the time lack of on-site inspection just costs you money, which is bad enough.  But some times it cost lives.  It doesn’t matter how big you are, you need to have someone on the ground to confirm that things are indeed being completed as required.