Since we started Mountaintop Web Design, we have made a conscious effort to seek out the best talent available to help us provide top-notch, world-class services to our clients.
Talent is never the monopoly of one country or one region. In a truly globalized economy and with the scope and reach of the Internet, you can access talent from different parts of the world. Collaborating with people from other nations and cultures has been a rewarding and enriching experience for us.
In the years we’ve spent working in the trenches with our friends from Southeast Asia, we made it a point to learn how Asian small businesses differ from Western small businesses when it comes to managing enterprises.
Here are some of the interesting tidbits we learned from working with small businesses in Asia:
1. Family Comes First
Did you know that the vast majority of family-owned businesses come from Asia-Pacific?
According to a study funded by Credit Suisse, the family-owned businesses from Asia-Pacific have a total market capitalization of $4 Trillion. As expected, China accounts for the largest slice of the pie with 159 companies and $1.38 Trillion in market capitalization.
The rankings for the most number of family-owned companies are as follows:
- Asia-Pacific and Japan – 528 companies (53%)
- Europe – 226 companies (23%)
- The United States – 121 companies (12%)
- Latin America – 64 companies (6%)
Why does Asia have so many family-owned businesses?
For years, we’ve heard or read stories of Asian family-owned enterprises being protective of the business’ succession.
Is there more to this ideology than just to “keep it (the business) within the family?”
The Credit Suisse study found out that family-owned businesses outperformed non-family-owned businesses in terms of revenue growth and profitability. For example, in Japan, family-owned businesses delivered more than 25% greater Cash Flow Return on Investment (CFROI) than non-family-owned businesses.
A study conducted by Harvard University on family-owned businesses in the Philippines reveals 2 reasons why these types of businesses perform better than their counterparts.
- In family-owned businesses, management and family are one and the same. The family is the business. Therefore, they do not experience the standard conflicts between management and the shareholders on issues such as governance, returns, and management pay as do non-family-owned businesses.
- In a family-owned business, the founders remain deeply involved in the business even after they have gone past retirement age. The founders have taken up a greater role as a symbol of commitment, hard work, and discipline to inspire employees to perform at their best every day at the office.
Generally, while the founders are still alive, the other key role in the organization – CEO – is delegated to outsiders or non-family members. The reason for this is to create a balance between tradition and the demands of globalization.
In time, when the founders have passed on, the business is carried on by the succeeding generations.
2. Everyone Starts From The Bottom
As discussed in the previous section, when it comes to family-owned businesses, Asia rules the world.
In the Philippines, 80% of small businesses are family-owned. If you are a Filipino, you are expected to work for the family business after you have graduated from university.
That does not mean you will walk straight to the Chief Executive’s office the day after you receive your diploma. You have to work your way to the top and that means starting out from the bottom.
A friend of mine from the Philippines said that when he worked for his father’s ship-staffing agency, he had to start out as a Liaison Officer. The job meant heading off to the Philippine Overseas Employment Administration (POEA) every day to process the documents of the seafarers.
As a Liaison Officer, days are spent waiting in queues for several hours and going from one department to the next getting signatures and having work contracts approved.
The job of a Liaison Officer in a recruitment agency is regarded as entry-level. It is usually given to a seafarer who cannot find work and needs to earn money to pay for his expenses while in the city.
According to my friend, the experience was hard and humbling but gave him a deeper perspective on what overseas Filipino workers go through to find greener pastures in other countries.
He also gained a better understanding of the culture of the overseas worker. It helped him articulate ideas and establish strong, trustworthy relationships with the seafarer and the shipping principals which were based in Singapore and Malaysia.
3. Respect Days of Religious/Spiritual Obligation
Asia is a continent where the countries practice a wide range of religions such as Catholicism, Christianity, Buddhism, Islam, Judaism, Shinto, and Taoism. Religion and spiritualism are a big part of life among Asians.
The Philippines is the only Christian nation in Asia. 86% of its population is Roman Catholic. The Philippines observes the following religious holidays: Maundy Thursday, Good Friday, Black Saturday, and Christmas.
Filipinos also observe the days of religious obligation as instructed by the Catholic Church. Many businesses do not have work during religious holidays. It is a tradition for employees to be with their families and to maintain the practices that have been handed down for generations.
For example, during Maundy Thursday, Filipino families visit and pray at 7 churches. On Good Friday, Filipinos troop to Churches at 3:00 pm to hear a special mass and listen to the priest’s rendition of Christ’s “Seven Last Words”.
Although Asia is home to different religions, spirituality has a big influence on how Asians live their lives and make decisions. Historian Teodoro Agoncillo once described Filipinos as “fatalistic”.
Filipinos have a favorite phrase “Bahala na” which translated to English means “I leave it to fate”. Another version is “Bahala na si Lord” or “I leave it to our Lord Jesus Christ.”
Applied to business, the Filipino will do his best to succeed but he understands nothing in life is certain.
The industry can be very competitive and others want to succeed as much as he does. Thus, he will leave the outcome to fate or to his faith in Jesus Christ. If success is for him, it will happen. If not, he will try again.
Faith gives Asians hope. If everything else fails, he has his beliefs to fall back on. If he succeeds, he gives credit to his faith more than anything else.
4. Perform Beyond the Value of Your Service
Outsourcing has grown to become a very profitable industry for nearly 20 years. Outsourcing’s jump-off point was the year 2000 when the industry was valued at $45.6 Billion. By 2014, outsourcing hit a high of $104.6 Billion.
Asia became the global hub of outsourcing. Countries such as the Philippines and India became the primary destinations of companies that wanted to outsource services.
The biggest benefit of outsourcing for businesses is its ability to lower costs by capitalizing on comparative cost advantages particularly labor.
For example, hiring a full-time accountant in the United States will cost you $29.63 per hour. In comparison, outsourcing services to an accountant in the Philippines will only cost you $3.33 per hour.
However, when you outsource to Asia, the saying “You get what you pay for” does not necessarily hold true. The reason why the outsourcing industry continues to thrive in Asia is that the quality of service and deliverables is world-class.
According to the online job platform UpWork, freelancers from the Philippines are the 3rd highest earners in the world which confirm the continued demand for their services.
In general, Asian businesses do not want to commoditize their services by driving prices to basement-bargain levels. The rates are lower simply because these are in line with industry standards.
Asian businesses share the belief that once they have proven their worth to the client, requesting for an increase in fees should be within reason. Thus, they provide work that is over and above the monetary value of their services.
Yes, companies in Asia do respect religious holidays but many will set up small-size workforces to render services to clients during these days of obligation. The businesses don’t mind paying their employees twice their daily wages to make sure the clients’ needs are covered.
Asian businesses don’t view their clients merely as clients but as strategic partners; one that shares a common interest to succeed in the industry.
Conclusion
Close-family ties, a strong belief in honorable work, respect for faith and spirituality, and unwavering commitment to provide their best to clients and customers – we learned that Asian small businesses do not separate the enterprise from who they are.
The popular thought process is to keep life and work separate – who you are at home should not be the person running the business. We should be more professional or formal at work so that our employees will respect us.
But how is it to be a “professional”? Does wearing a formal tie, dress shoes, a pressed shirt, and slacks and a face-forward appearance fit the bill of a professional business owner? When employees say “Good Morning!” or “Good Afternoon!”, should it be considered as a sign of respect?
As the popular saying goes, “respect should be earned, not given.” If you manage people and clients from the position of your values – the principles that made you who you are – you are being authentic and truthful to them.
The employees, clients, end-users, suppliers, and other stakeholders in your business value chain who are aligned with your values would be motivated to help you attain long-term, sustainable growth.
Put it this way, if you manage your business and attend to the needs of your employees and clients with love in your heart – the same way you feel when you are with family – how can you ever go wrong?
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And if you want to learn more about Mountaintop’s services and how we can help your business achieve new levels of success, please feel free to give us a call or an email.
