Hong Kong, Singapore, Malaysia, and Indonesia. Adrian Kingwell, CEO of the analytics firm Mezzo Labs in London, speaks about the many fascinating issues of building a business in Asia. These include China’s absorbing HK, the impact on staffing, and international companies’ exodus from the territory. While he says Singapore’s business methods mirror those in the UK and global standards, other countries are more conformist and risk-averse, often requiring local partners to smooth the cultivation of local clients. Where much dining and entertainment in the West helps maintain a relationship after a deal is sealed, in the East large investments in dining, after-hours drinking, and meeting must be made upfront to cultivate connections. Adrian also presents how pricing practices and decision-making are implemented in his target markets, and how he turned the company’s Italian name (meaning “half”) into an advantage in a humorous twist.
Working in Hong Kong and Singapore
Working in a country run by The Communist Party
Pricing methods in different countries
Working in Muslim-majority countries
The financial cost of building relationships
Adrian is the founder and CEO of two businesses: Mezzo Labs, an analytics consultancy, and Uplifter, a SaaS platform, both based in London. He is the first to admit that global expansion was driven more by his heart than his head: a passion for meeting interesting people in faraway countries that started as a backpacking student and continued throughout his 30-year business life. In 2017, he opened Mezzo Labs Hong Kong and then two years later Mezzo Labs Singapore. His clients are not only based in those cities, but also in neighboring Malaysia and Indonesia.
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[email return to Philip@Auerbach-Intl.com]
Since today’s guest has operations in Hong Kong and Singapore, both of which speak Chinese, I thought it would be most appropriate to give a slight mistranslation or a blooper from Hong Kong which appeared in English in a dentist’s office there. And it said very simply, “Teeth extracted by the latest Methodists.”
So, with that, today’s guest is Adrian Kingwell. Adrian is the founder and CEO of two businesses, Mezzo Labs, an analytics consultancy, and UPLIFTER, a SAS platform, both based in London.
He is the first to admit that his global expansion was driven more by his heart than his head, a passion for meeting interesting people in faraway countries that started as a hobby when he was a backpacking student and has continued through his 30-year business life. In 2017, he opened Mezzo Labs Hong Kong and then, two years later, Mezzo Lab Singapore.
His clients are not only based in those cities but also neighboring Malaysia and Indonesia. So welcome, Adrian! We’re delighted that you’re with us today.
I’m delighted to be here, Philip. Thank you for having me.
Let’s start by giving everyone a bit more elaboration about your background. Your backpacking wizardry took you around the world. Was it primarily in Southeast Asia when you got the bug for international business?
And this was back a long time ago, in my student days. After I graduated, I decided before I settled down and got a proper job that I would see something of the world, and I set off with a backpack to travel through America, through the United States, then flew out to Japan. And I had a fantastic time in Japan, where I stayed for a year. I met the woman who was going to be my wife many years later.
And traveled through China, flew down through Hong Kong to Indonesia, went up through Malaysia, and then I got sick. I managed to catch hepatitis, even though my ambition was to continue backpacking through the rest of the world and eventually end up back in England. Unfortunately, I had to fly back home early, and I’ve never completed the journey, so I vowed that one day I’m going to go back to where I left off, which was Kuala Lumpur in Malaysia. And so, I’ll fly back to Kuala Lumpur and finish the rest of the journey with a backpack and say that I finally did it, sort of 50 years after I started.
That’s wonderful. How did you come up with the company name, Mezzo? American English pronounces it “Mezzo” while in British English, you say “Metzo.”
That’s right. It’s a strange one, you know when you try and you think you’ve got a great name for a company, anything right? This is it. We’re going to do it, and then you Google it, and you suddenly realize that someone else has beaten you to it. Or it’s easily confused with something else, or you run it by your friends, and they say, “Oh, that sounds like something completely different, something embarrassing.”
I spent a long time trying to think of a name for my company and practically gave up while thumbing through a dictionary. Trying to find different words, and I knew that I was going to be in the business of something to do with marketing, so I was looking for something that sounded good next to the word marketing, and I was looking at musical terms, and I saw this word mezzo appear in front of other words like mezzo soprano, mezzo, and forte mezzo. And I thought, well, that sounds good if I put that in front of marketing; it’s Mezzo Marketing, which has a nice ring to it. OK, let’s see if someone has already registered this name; no one has, so I can get Mezzo Marketing Limited. Fantastic as the domain name. Can I get a URL for mezzomarketing.co.uk? Yes, I could. Fantastic, OK, even better. Let’s do it.
So, launch the company. I won my first contract and handed my business card to an Italian guy at Barclays. The first client takes one look at my card and says, “Ah, you have an Italian name on it.” He said yes, a mezzo in Italian means “half.” So, mezzo marketing means you do half marketing. Why, why? Why don’t you do whole-market marketing? That’s what we want! Like, oh, crumbs, got it wrong. I hadn’t bothered to look up what the true meaning of mezzo was, so I thought a little bit about it and realized that the word “half” in marketing came up in a phrase, I think, coined by John Wanamaker, one of the early industrialists who said that half my marketing works. I just wish I knew which half, and so I said that Mezzo Marketing will tell you which half works and which doesn’t.
Fortunately, I managed to dig myself out of a hole anyway after a while. Then they met and kind of stuck, and we changed it from Mezzo Marketing to Mezzo Labs as we moved into analytics. We decided we needed something a bit more scientific. Perfect, and anyway, nowadays people just refer to us as Mezzo, so it doesn’t matter
That’s wonderful. My company, as you may know, provides language translations into 120 languages, and one of the services we offer is name evaluation or name screening: to know whether the name has any negative or pejorative meaning, perhaps in other languages, and then, obviously, you let the client decide whether to use it or to move forward. So yours is another classic one that’s superb.
And tell me a bit about Mezzo Labs and what you do, and for what reasons you’ve been based in Singapore and Hong Kong when your clients are in Indonesia and Malaysia, and while you’re based in London.
When we started, it was just me starting my business. I was just a consultant, and I was working with the digital teams of banks in the EU.
In those days we were just counting the number of visitors that came through a website using a term called “hits,” which is the number of times a web page is served, and that was the only metric that we had to work out whether people were getting to the right place on the website: whether each page had enough hits.
And then one day somebody came in and said that we wanted to install something called web trends on our website. Web Trends was an early competitor to Google Analytics, and it was able to show you things like what paths people were taking through the website or how long people were spending on a page, where they might be dropping out of a process, and it was a tremendously powerful tool that gave us insight into the experience of users on our sites.
And I thought, “Wow, there’s something in this,” and almost by a process of elimination, I focused the business on where the real value of our work was becoming more apparent on the analytics side. After several years, we realized that we were in the business of just providing analytics to our clients by putting in place the right technology, collecting the data, analyzing it, and turning the analysis into insights or actionable insights that our clients could use to improve the performance of their sales in marketing.
So basically, we collect numbers about what’s happening and tell people where they can sell more stuff to different kinds of people. Got very lucky with that as the market kind of opened up before us, we were very much riding a wave of interest in analytics and were also lucky to be based in London, England, where it’s a pretty mature digital market. I mean, the penetration of e-commerce into our market is right up there, and on a per capita basis, it is probably equivalent to America in terms of the amount of money spent per person, there’s plenty of business here. I served companies that wanted to sell more online, and as a result, my business did pretty well as a consultancy.
We won HSBC [originally, Hong Kong Shanghai Bank Corporation] as a client. HSBC invited me to go to Hong Kong with them, and this was probably about seven years ago, and it happened to be around the end of January. The start to February, which you might know, is … Imagine me getting out of the train from the airports in sort of downtown Hong Kong and stepping out at street level, where all the buildings are lit up like—I’m just going to say—Christmas now. It’s beyond Christmas. I mean, it is just an amazing sight to see Hong Kong or probably any Chinese city that’s got its new year lights on. I think it was the year of the rooster.
And I looked up, and it was like a scene from Blade Runner. If you know the opening scene of Blade Runner, where there’s the flying taxi is coming into London, and it says Los Angeles 2019. Underneath, it felt like I’d gone to the city of the future without the backpack this time, just to sort of travel on a suitcase. I was walking through the streets of Hong Kong thinking it would be so cool to open an office here, and then a few days later, HSBC said to me, “HSBC.” You know, if you opened an office in Hong Kong, then you could be serving us in Hong Kong and not just in London. So, It would make sense if you did that. So, as you said in my introduction, more from my heart than my head, I wanted to open an office there.
It was a question of figuring out whether it was cost-justifiable and whether there was going to be enough business. From HSBC and other businesses, are there other customers that I could win out there?
Well, if it took about a year to make that decision and to find the right person to head up the Hong Kong business, and I found the guy, and he was a British ex-pat, he’d been living out there for three years already. He understood our market, so he was the ideal choice.
So, we started the business in Hong Kong, and then almost immediately we were winning clients in Hong Kong and also in Singapore. Or it’s probably a 50/50 mix in terms of the clients that we’re winning between Hong Kong and Singapore. Ironically, not one of them was HSBC, and to this day, HSBC has not decided to go ahead with us. We thought that might change, but it’s a big organization, and they don’t make decisions very quickly out there, however, and it has been a really interesting, challenging, but interesting journey out there, particularly in Hong Kong through the COVID years. That has been a big challenge, and just before the COVID years, we had civil disobedience, or civil unrest, that occurred in Hong Kong as well. If you remember the guys in the streets with the umbrellas, this has made Hong Kong itself quite unpredictable as a market, and this relationship with mainland China has made doing business in Hong Kong a pretty challenging thing.
But what typically happens in Asia, as you probably know, in the Pacific, Hong Kong suffers when Singapore gains. So, it seems that a lot of business has switched from Hong Kong to Singapore, and because we have officers in both territories when one goes down, the other one goes up. So overall, it’s been good.
Has the Communist Party infiltrated your operations in Hong Kong and been telling you what to do? And how do you do it?
Not directly, I mean, ultimately, it’s just a business that’s the same wherever you are in the world, as far as I know.
You look for an opportunity. You look for clients who have a problem that you can solve, and if you can do it cost-effectively, then you have a big client. So any market has its challenges, and I think Hong Kong is no different from that. The Chinese Government hasn’t specifically said you can’t do this, you can’t do that, or you have to do it this way. That hasn’t happened. We’re just aware of the fact that the environment is challenging. A lot of larger companies that were our clients have decided to leave. And that’s really why we’re needing to reduce our operation in Hong Kong.
It’s just that, uh, a good 50% of our customers have moved somewhere else, and most of them have moved out to Singapore, so we’re not losing them. We just have to shift our focus. It’s an ever-present feeling that the market is not going to be what it was a few years ago.
You know Hong Kong as a business location has changed. It will no doubt become something different; going forward, whether that’s good for us, Mezzo-labs, or not remains to be seen. But I don’t think it’s reinvented itself yet. It’s in the process of doing that, and clearly, it’s going to become more of another Chinese city rather than that sort of safe harbor in the center of the Orient.
So, in terms of business practices, I understand them, of course. You’re losing clients; your clients are moving; you’re not losing them, but your clients are moving to Singapore. But in terms of Hong Kong itself, have the business practices changed? Have you had to adjust anything because of Communist rule?
No, no, it’s a good question.
And I think we’re aware that things might change. I think where things have changed is from a legal point of view. Hong Kong was a very attractive place to start a business because the system, particularly the legal system, was essentially colonial British. Hong Kong was a very attractive place to start a business because the system, particularly the legal system, was essentially colonial British. The legal system looked practically identical to the British legal system, so it was very easy for us to look at something and see whether we liked it. The question of whether we have protection or not—and I’m thinking particularly about IP protection or intellectual property protection.
Mainland China—is a whole different story. So, we felt a sense of protection when we located our business in Hong Kong, and what appears to have changed over the last few years confirms that. It’s the fact that if you wanted to, you could still go through Hong Kong’s legal system, but there’s a right of appeal that could go up into mainland China. So, at that point we couldn’t afford to take things much further.
We have not had, unlike most businesses, any reason to take any legal action. We haven’t had any legal problems in Hong Kong, so we’re not coming into contact with how that system works, so I’m probably not the best person to comment on if the entire system has changed to the detriment of local businesses—because I’ve not needed to use the Hong Kong legal system—is there anything else that’s changed? I mean, I think we’re aware of that. If we were to employ people that Beijing didn’t like, then we might get a tap on the shoulder.
You know that that’s something I think we’re quite aware of, or if any one of our staff decided to become a little bit militant, we might get a tap on the shoulder, so you know we’re conscious of that. It hasn’t happened.
When you hear stories, you don’t know whether you know how much truth is in them or not, but you certainly are aware of the fact that you have to be careful. What are you about? Whom you employ, what they’re saying, and what you have—you know you’re held in some respects responsible for what your employees might believe or what they might be saying.
So, do you vet new employees by perhaps looking at their Facebook pages or their social networks? And the Communists have not tried to steal your IP, I presume.
No, to be honest, I don’t think they’re interested in it.
What we do—and there’s a reason we haven’t gone into Mainland China, and it’s not really to do with politics—it’s a fact that, um, the digital infrastructure in Mainland China is very different from what it is in the rest of the world; people don’t tend to have websites as you or I would know them.
They set up shop in, you know, Alibaba, they set up their storefront within those closed-wall environments. So, if I go in there and say, “Hey, we can track users through your website,” which we can, we can put Google Analytics in there and find out what’s there. Going on, people will say, “Well, that’s just not the way it works here.”
So, Metso Labs doesn’t have much of a proposition for a mainland Chinese company, and that’s probably the main reason that we don’t operate there. You know that side of the Great Wall of China, and it’s not there. It has less to do with them.
Your IP itself?
The IP exactly. So there’s very little risk of a Mainland Chinese company stealing our IP because it wouldn’t be of any great gain to them in China, so the rest of the world has it. I think that other companies would be higher on the list with that sort of thing.
And then, when vetting new employees, do you check their social media pages? And what if you do find one who’s got the skills, the technical skills that you’re looking for, but perhaps someone who has protested against Chinese rule?
It’s a very difficult situation for us as UK employers to get right because, of course, we can’t discriminate against somebody because of what they believe in, or because of any other previous political history or something like that. So, it would be breaking the law of our own country if we were to say, “I’m sorry, you can’t have the job because you believe in something that the Chinese government doesn’t.”
Fortunately, the number of staff that we employ in Hong Kong is relatively small, and we’re moving out of the territory anyway, so it will become less. But you know, I do know of companies that have been told not to employ so and so, and even companies in London that have been told not to employ somebody because of … You’d be breaking the law if you fired somebody because of what they believed in. But it’s a difficult thing to do.
The Chinese say, of course, that they don’t impose their will on other countries, which of course is a huge lie, and this is a good example of how it’s a lie. Singapore more or less also has a British system and a Western system. Do you find that doing business in Singapore differs in some way from doing business in the UK or other countries?
Singapore, I’d say, is probably one of the easiest places in the world to open up a foreign company, and for several reasons, and one of them is because it is. So, kind of global as a city, it doesn’t exist. If it doesn’t think globally, that’s just in its nature.
Originally it was a port, not a country, it’s a very new country, and it’s survived. It’s thrived because of that flow of international trade, so it has a very highly regulated market, and It has certain constraints. But in terms of attitude toward doing business, it’s very recognizable, particularly for a western company like my own.
You go out there, and you don’t notice any cultural barriers. You don’t notice any different ways of doing business that you wouldn’t see in your own country. There are almost bigger differences between my clients in the UK from different industries; there is a difference between, say, a major retailer and a major bank, just as there is between a bank in London and a bank in Singapore. They’re practically connected in terms of business and culture. They’re practically identical.
English is the first language of the country. So even though they have different ethnicities within Singapore, the lingua franca is English, and it has a very, very high level of proficiency. It’s all taught in schools; written and spoken English are superb. So, there’s very little barrier to doing business once you’ve got yourself set up. You know you need to tick a few boxes to create a limited company as you would anywhere else, but once you get going, you find that actually, it’s a pretty straightforward market to operate in.
Yeah, I’m not going to say it’s easy. Nothing’s easy, but there are a lot harder places to set up a business.
Yes, and then you also do business in Malaysia and Indonesia. I presume from Singapore?
From Singapore, yeah, we haven’t set up a limited company in those countries at the moment. I mean, we’re a stone’s throw away from those geographies, having been located in Singapore, and they’re quite used to dealing with Singapore companies. So, there’s not an issue there.
There are differences in their markets as well. You know, things do start to become more regionalized once you step into Malaysia and Indonesia. To the extent that it often helps to have a local partner to bridge the gap, you know, but that’s not difficult to do in our sector.
You know we’re a consulting firm, and we’re experts at doing stuff with technology. And there are technology companies that we partner with. You know, we use their toolset, and they have relationships, and they can open doors for us. It might take us longer to get into those companies in Indonesia or Malaysia, but really, that’s how we’ve been introduced to those markets. It’s through our partners.
And what was the partner’s name that you mentioned?
Several of the partners that we have out there are different. They would provide technologies that we would use to help us do analytics, OK?
Do you find that the marketing methods and the pricing methods are different in Indonesia and Malaysia?
It depends on how you do the pricing.
Because you’re an agency or a consultancy, one of the standard questions is, “We’d like to see your rate card.” And then, of course, when you show the rate card that’s meant for Singapore or Hong Kong to somebody in Malaysia or Indonesia, they think that you’ve got the international exchange rate wrong.
Our staff has located their expensive people, and they are sitting in expensive countries, so that is the right card.
So, what we end up having to do is come up with a fixed price and then figure out how we’re going to deliver the work for a fixed price, so it’s almost irrelevant what our rate card is. You’re selling the value of your solution in terms of the difference it makes to that business rather than the cost of the labor to do the work.
Since that makes sense in terms of advertising, Indonesia and Malaysia are both Muslim-majority countries, and their languages are very similar. So, when you do business there, do you find that there are differences in the business practices?
Every market, even within the United States of America, has similarities. What are the similarities between the East Coast, the West Coast, the South, and the North?
There are massive differences in every market, I think. You know that culturally there are differences between Indonesia and Malaysia. And what’s more important to us isn’t the cultural differences so much as their maturity with digital and e-commerce.
I would say overall that Indonesia, even though it’s a very big market, is digitally less mature than Malaysia, which is less mature than Singapore. They’re all on a curve, and we’re kind of behind because the UK and America are much further ahead. We could almost point out to them where the future lies and what they’re going to be doing in a few years.
What we generally find is that we don’t sell to the mass market in these geographies. We’re selling to the Pioneers, the leaders – ones who have blazed a trail. And so, for example, our Indonesian client is one of these cryptocurrency platforms, so this is not what you’d expect to be popping out of Indonesia, but you know that they’ve got a proposition for trading Bitcoin and things like that. And of course, they are far more digitally advanced than your regular Indonesian company, and that’s why we have them as a customer.
But that’s essentially what we’re looking for in those markets—not the mass market, but the early adopters. We’ve got something interesting to offer them.
What kind of industries do you penetrate? Do you target banks or retailers? You said cryptocurrency and manufacturing. What other kinds?
Yes, Philip, anyone that’s got money—
That says is all.
And honestly, that’s probably why we focus on banks. I think as John Dillinger once said when he was asked by the judge, “Why do you rob banks?” He said, “Because, your honor, that’s where the money is.”
We are based in London. You know we’re right on the doorstep of the City of London. You know, it’s one of the largest financial centers in the world, and we’d be crazy not to knock on a few doors around there. And my business is very network-driven.
Once we win Barclays as a customer, the chances are we will win the other High Street banks at a certain point because people move around, and they’ll take us with them and so there’s a lot of growth by osmosis. You know, the banking sector has been very good to us through the peaks and troughs of the economy.
But there are other sectors, and effectively anyone that has a website and spends a decent amount of money driving traffic to that website cares about whether that traffic is converting into customers. Or not, then they’re going to be looking at the numbers and trying to figure out which half of their marketing is working, and which half is not.
I’ve got two separate questions, I guess.
So you are focused primarily on early adopters, high-tech companies, and so forth. When you do proposals or presentations, are there differences in how you would do them in Indonesia and Malaysia versus how you might do it in the UK or Europe?
It’s a good question, but no.
We tend to believe that at the proposition level, where our values sit with our clients, it doesn’t matter culturally or geographically where they are. What’s more important is whether we can derive some value from our work that will help them improve their commercial performance.
So, what we struggle with in a lot of Asian companies is that there will be a team of people with whom we immediately have some sort of resonance. The digital team will completely get what we’re doing and what we’re trying to tell them. We got you better-quality data, and we managed to turn that data into a really useful, actionable insight that you should be able to sell more stuff to people.
The moment they take that outside of the room and try to get some budget for it and try to get senior figures in their organizations to buy into the concept, there’s a lot of head-nodding and chin-stroking, but ultimately, they’re not digital natives. They’re not bought into it, and they’re much more used to more traditional ways of doing commerce or more predictable ways of doing commerce, so they’re more risk-averse there. There’s less likelihood that one person who’s a maverick in an organization will say, “Damn it, we’re going to do this because it makes sense, and I trust these guys, so we’re going to push this through. And if it works, it works. And if it doesn’t, well, we’ll move on and do something.”
I tend to find that in Asia, that’s not the way that things get done, so we don’t need to change our pitch to them. But we are trying to identify somebody or a group of people who, collectively, will agree that this is a good idea, and it will go forward. I think as a result of that, most of our customers out in Asia-Pacific tend to be global. They tend to be global multinationals. We haven’t managed to penetrate the local markets particularly successfully, and I don’t think that’s because we’re outsiders.
I think it has more to do with the fact that it’s just identifying people with the mindset that would say, “Yes, this is worth doing.” Very often what we hear is: “So who else around here have you done this for already?” But it’s not a global multinational. Well, you know we’re still trying to find it. People that you know, or they’ll find reasons why? OK, they’re outliers in that there are crypto platforms in Indonesia, and that doesn’t count, so I’m looking for someone that runs a department store here in Jakarta. Can you show me three other department stores that are doing this stuff? You know it well, right? Well, no, we can’t, and that’s the problem. The risk aversion is just different, as is the willingness of individuals to step up and say, look, I’m just going to champion this and drive it through, which we find more of in the UK and a lot more of in the United States. So that sort of individual will drive this forward and champion it, we struggle to find similar types in the Asian market.
One of the issues we found in Asia the other guests have highlighted in general.
Certainly, in Japan and Korea and China—it’s different in China—it’s very much a collective decision-making process, and the people to whom you’re presenting may be the junior managers, and the silent person in the room is probably the CEO, the managing director, the president. He may have the final decision, but ultimately, it’s a collective decision, whereas in the Western world it tends to be either top-down or, as you say, some champions can push it through and get a senior person to buy in and then approve the budget.
I presume what you’re facing is this collective decision-making, or the reticence, as you say, because people don’t necessarily like to be different, don’t like to be Mavericks. I guess it’s the best way to say it.
Yes, that’s right, and so we have to deal with it, and we have to find ways of working. It’s not as if Western companies don’t do business in these countries, right? They just have to find a way of getting a sort of very conformist culture to agree collectively and to move forward, or just accept that not every company is going to want to buy your product or service. Maybe nine out of ten don’t, but one out of every ten dozen does. That’s fine. That’s probably more than enough for us.
So just spend more time with the ones who are going to drive it forward, and then do what we do, because we try and make as much noise about the successes in the market as we possibly can. You know, enter awards, and do joint marketing so you get some publicity out of this, and you know that the more that you do this, the more likely it is that the next wave of early adopters just below the Pioneers will get on board.
So that’s kind of what we want—just more stories of success so that people feel that it’s the right thing to do and the right thing to step into.
Interestingly, you use the word conformist.
Confucian cultures – Japan, Korea, China, Taiwan, Singapore and Vietnam to some extent – are conformist cultures, and they are very conformist socially, economically, politically, and so forth, and certainly culturally, but Malaysia and Indonesia are more Muslim cultures, and I don’t think of them as conformists except in the idea that one submits to authority.
“Islam” means submission to God. But it also has a connotation, although Muslims may not agree, that there’s a spillover of submission to a higher authority, such as the managing director, CEO, or whomever, or to the boss, even if it’s a junior person submitting to the boss.
So, when you say conformist, do you feel it’s conformist in the Confucian sense, if you’re familiar with that model, or is it a different kind of conformity?
Well, certainly in the Confucian sense, I think you know that the companies might be based in Japan, where it is very, very conformist to some extent, as well as in other countries such as Singapore and Hong Kong.
I think there is a sort of deference to authority, you know, and getting access to the more senior people, the more decision-making characters, is not impossible, but it needs it. You’ve got to play a longer game. And it’s true in the Chinese and Japanese markets as well. I mean, in China, they talk about having guanxi with someone: Getting along with them as people outside of the office, going out to restaurants, and showing your generosity to them. In Japan It’s extremely important as well that you go out and get drunk with your, your future customer, and you don’t talk about business because they want to see what you’re like as a person and whether you’re trustworthy, and you know the kind of person they can depend on, so getting access to the senior decision-makers does take longer.
But once you’re in there, of course, that presents a barrier to entry for all of your competitors. So, once you’re in there, you’re in there for a long time, and they will be less price sensitive, and they will take you to places that you could only have dreamed of.
I think for us we have to look at the market over a longer period and just see whether some of these short-term storms can get through to the people who matter on our client side, and then it will be good. It’s a market that promises short-term returns, but in reality, all markets only work if you hang in there. for a long period and work out the right way to do business in that market.
Yes, it’s very true. You use the word “guanxi” which means influence, connections, people who can help grease the wheels. Is that the best way to describe it?
Yeah, I guess so. I don’t know whether I pronounced it correctly. Probably murdered the language there, but, yes, I mean, essentially, it’s a kind of in a sense, it’s like the unspoken side of doing business.
It’s that kind of situation where you’ve done all the right things on the outside and therefore feel nice and comfortable in the center. Whereas I think a lot of Western business is like this: it goes back to a contract and a statement of work or a service level agreement, and it’s like, “Did you do this on time and budget?” The “zero defects” sign.
The actual, more social side, which I think we’re quite good at. In our company, you know, we do want to make sure we look after people, and we socialize quite well with each other and with clients, but that’s almost like the icing on the cake, whereas I think in Asia, it’s the other way around that you’ve got to get that around the outside, right? First of all of course, if you get that right, the actual delivery of your product or service is going to be good as well.
Yes, and traditionally, especially in American companies, they’re very strict about conforming to the contract, and if you miss the deadline or something, they could threaten to sue you. Pretty horrible.
But in these kinds of Asian cultures, what counts more is that trust, the relationship, the connections, the credibility that you’ve built up over time, and the contract is less important than what the contract states. The goal is the intention of what you’re trying to achieve, rather than the specific.
Of course, the specific terms are important, but if you miss something, they’ll understand that what counts is the trust, the relationship, and the ongoing confidence in it – the relationship that you’ve built up with everyone.
Yeah, I mean, that’s the tough thing, which is that you’ve still got to run a profitable business in those markets.
So, you’ve got to be careful about cost and know that the laws of economics at some point kick in, and you realize that there’s a lot of money being spent on guanxi here. When are we going to do some business? You know it is a balancing act, and it is tricky because, although you spend a lot of time getting the spirit of things right, you have to get things flowing in the right direction. You can come unstuck as we have. We’ve done a lot of free work for clients, which in the West we would have charged for; in the East, we don’t. We’ve just said, “Look, it’s all good; let’s just keep this thing going.”
At the end of the year, you look at the profitability and think, “Wow, that was not as profitable as we thought it would be; we’ve had to do a lot of free stuff.”
Yes, wine and dine and cultivate.
Well, more than that, actual parts of the Yes because a lot of our projects, you know they’re in the fog of war—you can’t see them. You can’t predict exactly how much time and effort it’s going to take to deliver something. But you figure that as long as you’re pointing in the right direction, you’ll make it work. And then there are a few more requirements. You’re logged in, a few timescales have changed, and you go OK: whatever happens, we’ll deal with it. And then, when you do the math at the end of the day and look at that project, you realize that you’ve burned way more hours than you have budgeted for.
Then that’s why it doesn’t happen a lot, but when it does happen, it’s a sting in the tail, and actually, our projects in London are much more likely to land on time and within budget. Whereas out in Asia, there is a chance of it because the scope that reaks of extra stuff being done that you can’t bill for is much higher.
Yes, that would make a lot of sense. One final question before we close. In the Western world, advertising can be very creative with puns on words or the Apple slogan, Think Different. Do you find it advertised in Asia differently in that way, or does it have its unique method?
I’ll be honest, Philip. I’m probably not the best person to answer that question because there are people that are far more attuned to the advertising markets than I am, but it is apparent when you deal with marketing in the Asia that you look at some of their creative and you think, “I don’t know why you can call this creative.” I can’t see the creativity there. And I could have done a similar job in PowerPoint and put that on a post. This has been disrespectful, I guess, but they know what works in their market. It wouldn’t work in our markets.
The sort of style of advertising where they just try to cram as much into their space as possible wouldn’t work in the UK because we’re expecting more of a sort of creatively polished product or a concept of feeling simplicity in the message as well. I think we take for granted how refined our creative industry is. You go to Asia, and the local audiences want to see the very strong reason for buying the products, which is usually their price, and you offer something that will make them feel good very quickly.
So, it’s much more of an It’s more aggressive advertising, and it works. It works; otherwise, they wouldn’t do it, so it would be easy for me to to look at it and say, “Well, gosh, that’s just years behind what we’re doing, But it’s just a different market.”
Yes, if it has different benefits and appeals.
Feels differently, and if it wasn’t working, they wouldn’t do it. So, at the end of the day, yeah, you have to do what works for your market.
Is there anything you’d like to say before we conclude?
Looking back on my time, I think hopefully, it will go on for many years. But my time in global expansion: What are the lessons learned? While I could be criticized for not doing more research and not thinking it through a lot harder and just jumping into a market with both feet, honestly, I could never have planned for the way that things have turned out and some of the challenges that we’ve all faced.
I mean, the pandemic? It’s just weird; nobody saw that one coming. No one saw the political situation in Hong Kong changing quite as rapidly as it did and in the direction that it did. So, I don’t think I could have done all the research in the world and not flagged that as a risk or a potential risk. There would have been other risks flagged, possibly to the extent that I wouldn’t have done it all and I would be a sadder person. As a result, it brought me joy to stand there and say, “Wow. Look at me. I’ve done this.” You know, this tiny company from London, and I’ve managed to open an office in Hong Kong. Another one is in Singapore.
On the board and against all the odds, I seemed to be doing all right, and it was. It’s just doing it for the joy and the thrill of it, but it has to add up at the end of the day to make a profit. Has to do that, and if it doesn’t, then we need to pull out. But so far, we’ve managed to keep our heads above water. Why is that? if not richer at the end of the day, and I think that justifies it, to be honest.
Mind you, we’re not owned by a PLC on our own. I own the shares in the company, so I can make these sorts of decisions. We don’t have to return dividends to shareholders. But unless you jump into the deep end, you won’t know whether you can swim or not, and sometimes it’s better to just get on and do it than to spend forever deliberating over it.
So, my lesson is to keep your overhead as low as you can and be very mindful of the divorce cost of pulling out make sure that it’s not any more money than you can afford to burn, but you will learn things super quickly, and that process of surviving and winning in a foreign market, I think, is just a wonderful experience. And if I had a chance to do it all over again, I absolutely would.
That’s marvelous. Well, thank you so much. That was an extremely insightful, extremely helpful, and wonderful lesson for everyone.
It’s been my pleasure.
Thank you so much for joining us.
You’re welcome. Thank you.
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