Hong Kong protests and their implications for business in Greater China

For many, the magnitude and impact of the protests in Hong Kong are difficult to understand. Some may see the protests as an extension of the 1989 Tiananmen uprising and a general revolt against an oppressive one-party regime. Others may see a movement that looks similar to Occupy Wall Street, with streets filled with young idealistic activists. While certainly there are some similarities to these historical protests, the truth is a bit more nuanced. To start, an understanding of Hong Kong’s historical significance is necessary.

Hong Kong’s Historical Significance

  1. Hong Kong as a gateway for unwanted change
    Even prior to the United Kingdom handover of Hong Kong to China in 1997, Hong Kong has long been a region of experimentation. From the mid-1700s, the greater Guangzhou region (the area surrounding Hong Kong, also known as Canton) was the only point of trade and contact with the Western world under the Canton System. This system was meant to not only limit the perceived commercial threat posed by foreigners, but also to limit a perceived political threat from abroad as well. Following the First Opium War, the UK seized Hong Kong as part of the Treaty of Nanking in 1842, forcefully opening more points of free trade. One of the goals of this war was to rectify a trade balance, wherein the West was purchasing large amounts of Chinese goods but were limited from selling products to the Chinese mainland. What resulted however, was the forced trade of opium into China. This was the first of many unequal treaties, in which China was subjected to the whims of the Western powers during what Chinese historian’s describe as the “Century of National Humiliation.” After a Second Opium War and years of forced opium trade, 27% of China’s male adult population regularly used opium by 1906. From a historical perspective, Hong Kong and the greater Guangzhou region represented an entry point for physical poisons. 
  2. Hong Kong as a gateway for controlled experimentation
    Since the United Kingdom handed Hong Kong back to China in 1997, Hong Kong has existed as a Special Administrative Region (SAR), with a different set of rules and regulations than the rest of the Mainland. Under this system, Hong Kong was granted a high degree of autonomy with a separate political system and economy described by Deng Xiaoping as “One country, two systems.” In particular, Hong Kong maintained its own currency, economy, and most importantly, government. The establishment of neighboring Shenzhen as a Special Economic Zone served as an experiment for market capitalism under the system of “socialism with Chinese characteristics.” The investment of large international firms like Foxconn, resulted in large economic successes that drove the rapid acceptance of market capitalism throughout the rest of China.

As a result of Hong Kong’s history, there is a subtle but important cultural gap between Hong Kong and the Mainland. Rightly or wrongly, many Hong Kong citizens see themselves as superior to Mainlanders. Nevertheless, China has continued to allow Hong Kong special privileges not afforded to the rest of China in maintaining Hong Kong as a place for economic experimentation. Given its special status in China, changes in Hong Kong have major implications on business in Greater China

 

Implications for Business in Greater China

Given this historical perspective on Hong Kong, there are a few key questions that businesspeople need to examine in the wake of these protests:

  1. Will China allow Hong Kong’s historical role as a gateway into China extend beyond an experiment in economics into an experiment in politics?
    What started these protests was that Beijing proposed a change that would limit the existing democratic election process, by effectively limiting the chief executive candidates to those handpicked by the mainland government. Thus, the results of these protests have very specific implications for the future of democracy in Hong Kong, and by proxy democracy in China. Although democracy in China is unlikely at this point, any steps towards or away from democracy in Hong Kong will likely effect the political discourse in greater China.As any who have worked in China know, it is very necessary to have relationships or guanxi (關係) in order to do business there. As market capitalism has spread through China from Hong Kong, business reform has also spread. Thus, the political discourse in China will likely have a long-term impact on the way business in China is done.
  2. Will these protests lead to more severe unrest in Hong Kong and Greater China?
    This is a key question with the potential for more severe short-term financial implications. Since the start of the protests, the Hang Seng Index has already plummeted over 6.4% as investors pull money out of Hong Kong. Certainly, these investors are afraid that extended unrest in Hong Kong will negatively impact business potential in Hong Kong.In addition to the effect of unrest on Hong Kong, one must also consider the impact of unrest in Hong Kong on greater China. Instagram has been blocked in China since Sunday, and other social media and search sites are being actively censored by the government. If the unrest contagion spreads to greater China, it is likely that the PRC will clamp down in a much more extreme manner, but this is dangerous territory. Images of protestors being met by police armed with tear gas and riot shields are likely to evoke memories of Tiananmen, even in China where this event is actively censored. China must tread very lightly, as a violent clampdown of prospects in Hong Kong would likely crush the future of Hong Kong as an international business center.
  3. How will this impact cross-strait relations and the prospect of Taiwan joining greater China?
    China has extended to Taiwan the offer of rejoining China as a special administrative region similar to Hong Kong. Given Taiwan’s status as one of the “Four Asian Tigers,” this certainly has large implications for business, especially for the information technology and high tech manufacturing industries. Since the election of Ma Ying-Jeou (馬英九) as president of Taiwan in 2008, cross-strait relations between China and Taiwan have improved dramatically, resulting in substantial Taiwanese investment and emigration to China.In recent years, one of the simpler ways for foreigners to invest in Chinese growth was to invest in Taiwanese firms investing in China such as Foxconn. How things play out in Hong Kong will have a substantial impact on the future of cross-strait relations and continued Taiwanese investment in China.

The PRC has a very delicate task ahead in figuring out how to address these protests. Extended protests and backing away from previous moves will certainly cause the PRC to “lose face,” but violent clampdowns would have very dramatic repercussions. For businesspeople, it is important to understand that these events could radically change the future prospects of doing business in greater China and Asia Pacific.

Identity in the Business World

Over spring break, I traveled to Copenhagen, Denmark to work on a short engagement with Danaher. Over the course of the week working with my Danish and Polish teammates, I noticed something peculiar about our conversations. After a few days of trying to put my finger on what it was, I realized that they were treating me as an American rather than as a Chinese American. When I told people I was from the US, there were no followup questions like “What about your parents?” or the more insidious “Where are you really from?” It was simply accepted that I was an American. When discussing Danish food at lunch, I was asked questions only about American cuisine, and not Chinese. Teammates were excited to tell me about the time they went to Pennsylvania or Ohio, not the time they went to Shanghai.

While the distinction is subtle, this came as quite a shock. In the years prior to business school, I worked a cumulative one year in China, often leveraging my Mandarin-speaking ability to attain new professional opportunities. Certainly there were instances where I would downplay my identity as a Chinese American, like when I was working with blue-collar workers in the South. Nonetheless, being a Chinese American has always been a large part of my identity in the workplace.

Over the last few years, I’ve had a number of professional identities, ranging from chemical engineer to project manager to negotiator. My racial identity is just one component of who I am as a professional. In this case, the lack of a racial identity allowed me to avoid some of the stereotypes associated with Chinese Americans, but also forced me to think actively about perceptions of Americans. As businesses become increasingly global and complex, professional identity will become increasingly multifaceted. Understanding how you are perceived is important to effective teamwork and management.

International Student Recruiting

As the international student representative for my section, I strive to maintain an understanding of how well our international students are integrating into the classroom as well as recruiting for internships and jobs. My understanding of the current pulse is that though international students are becoming more comfortable engaging in the classroom, recruiting has been a bit of a struggle. Over the last couple weeks, I’ve made a concerted effort to chat with as many international students as possible one-on-one to find out how they are doing in the recruiting process. I wanted to compile several issues I’ve noticed, and hopefully provide some actionable solutions to help students, both international and otherwise, to perform better in the process. Please note that I am writing specifically about the consulting recruiting process, but this advice should hold true for just about any recruiting.

  1. Get feedback. One of the most common answers I hear when I ask people how they are doing in the process is “I don’t know.” Failure to get an invite to a closed-list event should not be the first data point you get in regards to how your recruiting is going. Students succeeding in the process are constantly seeking feedback from their peers, second years, and even recruiters. After chatting with a recruiter in office hours, ask people who sat next to you how they think you did and what you could improve on. Talk to peers who are recruiting for the same positions to get a gauge on how many phone chats they’ve made. You can’t succeed in networking if you don’t know where you stand.
  2. Know yourself. One of the most basic questions a recruiter will ask you is “Why consulting?” You’d be surprised how many people cannot even answer this question. The key to answering this question is not to memorize the “About Us” page on their website. The key is to understanding yourself, what your strengths and goals are, and how those intersect with consulting. If you can’t answer this question on your own, recruiters are certainly not going to answer it for you.
  3. Don’t treat recruiting as an academic exercise. Some skills in life may be learned through careful study of textbooks and other material. Soft skills cannot be learned from any sort of guide. The way to become better at recruiting is to practice beforehand with others. You should be practicing your pitch, your “Why consulting?” answer, and everything else before you try it with recruiters. To quote Sun Tzu:

    “…the victorious strategist only seeks battle after the victory has been won…”

    There are so many people around you who can help you prepare, whether it’s your second year coach, your peers, second years, or the CDC. You cannot learn how to network or perform a case interview by simply reading a book. Get out there and practice with others.

If you are struggling with recruiting please don’t wait for others to ask you how it’s going. I and many others are willing and available to help. Be proactive and reach out.

Lessons Learned from MBA Competitions

This past weekend I competed in two different competitions at Darden. The first competition was the Accenture Innovation Challenge, organized by members of the consulting club. In this competition, groups of four worked together to find a solution to a problem posed by Goodwill Industries. Over the course of five hours, we huddled together in a conference room, drew issue trees on chalkboards, and built a slide deck to present our strategic conclusions. This competition was designed in many ways to emulate the consulting process.

The second competition was the Darden Capital Management Stock Pitch competition, organized by Darden Capital Management. In this competition, individuals evaluated equities, performed valuation and analysis, and presented their ideas and thinking.  This competition was designed to emulate the process by which you sell your ideas in an investment management institution.

Though the two competitions were focused on different industries and functions, they shared two common themes. I believe that the skills developed by these competitions are fundamental skills necessary for being an effective leader in any organization.

  1. Story telling ability. In both competitions, understanding whom your audience was and how to communicate to them effectively was the key to success. For the Accenture Innovation Challenge, the judges identified the distinguishing factor for the winning three teams as their ability to connect with the Goodwill vision and really speak about the human element of the problem.For the DCM Stock Pitch competition, being able to tell a clear, cohesive story was key. While stock pitches often include multiple reasons to buy a stock and address different risks associated, making sure the thesis was clear was crucial to success. There were several pitches where multiple theses were presented, and this made it difficult for the judges to buy your story.Story telling ability is crucial leading any organization. Great leaders are able to effectively convey their vision and mission to their organizations. At the higher levels, you must tell these stories to shareholders in the market, your board of directors, and your company as well.
  2. Dealing with ambiguity. For both competitions, there was a tremendous amount of ambiguity due to the time constraints. For the Accenture competition, we had only five hours to evaluate the materials provided and come up with a solution. This meant that inherently our solution was not as developed as we would have liked it to be. As a result, the questions asked could be fairly tough. One of the toughest questions they asked was “Summarize your plan in one sentence.” Luckily, one of my team members came up with a succinct statement on the spot. If you had a solid plan but couldn’t come up with concise answers on the spot, it would be really tough for you to succeed in this competition.For the DCM Stock Pitch competition, the primary constraint was finding time to work on my pitch after allocating time for coursework and recruiting. One of the struggles for me was that the pitch I had was not the caliber of pitch did not have the rigor behind it that I would like to have. As a result, even though the questions asked were not really that rigorous, I had not had enough time to think about them beforehand.There is ambiguity in every organization. The ability to prevent ambiguity from affecting your performance is essential. Conveying your ideas confidently in the face of ambiguity is crucial to your ability to convince others to trust your judgment.

Although I still have a lot to learn about both the consulting and investing worlds, the skills and experience I developed through these competitions is applicable across many fields.

Coming Out as an Ally

This weekend, I’m heading down to New Orleans for the Reaching Out MBA conference (ROMBA). When I tell people this, the response is often confusion as I do not identify myself as LGBT. I’m writing this post to explain why I am interested in LGBT issues, why I’m coming out as an ally, and why I’m attending ROMBA.

Growing up in the South, it was common to hear sexual slurs used casually at an early age. Often these were used with some negative connotation, not necessarily directly attacking people. As a result, I became accustomed to overlooking casual discrimination, whether it was regarding sexual orientation, or race, or any other way that people cast judgment upon wide swathes of human beings. As time went on and people matured, slurs were used less as people learned to be politically correct. While it was certainly nice that these slurs were being used less, the fact that people were still holding on to these prejudices was not great. On top of that, the political correctness prevented dialogue, and these issues were things that I never really considered before.

Fast forward a few years to 2010, I was in Hong Kong for work for a couple days, and was able to meet up with my cousin Whitney, who had relocated from New Zealand to Hong Kong after graduating college. I was asking about our other cousin Carla, as I knew they were close and I hadn’t really kept in touch. Whitney responded: “Yeah, Carla is great, Harry and Julia are doing well too!” I had no idea who Harry and Julia were. “Is Harry Carla’s boyfriend or something?” I inquired.

Over the next few minutes, I found out that Julia is Carla’s partner, and they have a son, Harry. I had no idea about any of this. Many aspects of Chinese culture are very conservative, and views on sexual orientation are no exception. My aunt and uncle had kept this a secret from much of our extended family for nearly five years. Discussions with Carla and ultimately meeting Harry and Julia really pushed me to think more about LGBT issues and helped me come to the realization that these issues touch on very basic human rights which should be inherent to everyone.

Over the course of the last few months, I’ve realized that although my thinking has become more supportive of LGBT issues, I have allowed my experience growing up in an anti-LGBT setting prevent me from actively discussing these issues and growing. Not only that, my inability to discuss these issues restricts my ability to help others within my class to grow as well.

Coming out as an ally is an important step for me to continue to grow as a person and to avoid the complacency of passive “open-mindedness.” Being passive makes it too easy to err on the side of heteronormative thinking, i.e. assuming everyone is heterosexual. By coming out as an ally, I hope to correct my own thinking, and become a stronger resource for those who identify themselves as LGBT, as well as those who are also interested in becoming more active in supporting others.