Famed Chinese Canadian geomancer Paul Ng has released his business predictions for the coming year ahead based on analysis of the I-Jing (I-Ching).

According to Mr. Ng, the year 2012 is “EarthThunder Restart”, containing 5 “Yin’s” and 1 “Yang”.   The “yang” (positivity) is just beginning making this is a year of major changes, with “yin” (negativity) reaching an end.  Hence the “yang” (positivity) is taking over.  In life, all things must reach the bottom before they can bounce back up.  This is a year of changes, adjustments, new directions and new strategies – sounds like a reboot!

There has been speculation that the world would end in 2012.  According to I-Jing, there is no such happening. On the contrary, we will see new directions for the better.

The best elements for this year are “fire, earth and metal”. “Water and wood” are negative.  Energy and hi-tech fields will continue to do well, so as real estate, metals, especially gold and silver.  Travel and textile sectors will be unstable.  There is no root for this year, causing most things to be unstable and unpredictable.

Business involving “fire, earth or metal” will do well.

• Automobiles
• Those driven by new energy sources
• Wind-related businesses, such as wind turbines
• Electronics and computer/storage media, especially those with Nano technology
• Communications and Internet
• Hi-tech securities
• Household securities
• Mining
• Real Estate
• Education
• Communications
• Entertainment
• New building materials
• House renovations
• Food business, especially those targeting weddings

Those involving “water” or “wood” have to work much harder.

• Water-oriented businesses
• Clothing
• Fishing
• Travel
• Airplanes
• Smugglings
• Imports & Exports

PROJECTION FOR THE WORLD STOCK MARKETS

February: Negative
March: Negative
April: First half negative; second half volatile
May First half negative; second half positive
June First half positive; second half volatile
July Positive
August: Positive
September: Positive
October: First half positive; second half negative
November: First half positive; second half very negative
December: Negative
January (2013): First half negative; second half positive

You can download the original version from Paul Ng’s website.

(Gong Xi Fa Cai) Have a healthy and prosperous 2012!

Why are companies making this effort to learn how to cater to Chinese travelers?

“Chinese residents made over 30 million overseas trips in the first half of 2011 alone, up 20% since 2010. For comparison, US citizens made only 37 million outbound air travel trips during the whole of 2010.”

In addition to a huge growth of sheer numbers of Chinese traveling abroad, Chinese tend to spend more money while traveling.  According to the Economist, “Chinese people often spend as much as 8% of their annual discretionary income on a single trip.”

Not only should travel providers be looking to customize experiences for Chinese tourists – this could be as simple as making sure that hotel room amenities include slippers and a pot to make tea – but also providing them with experiences that give them “bragging rights” or “face,” according to Hong Kong-based China Elite Focus. For instance, experiences which may not be possible in their own country, like a private tour of an Italian fashion house, wine tasting tours in well known wine regions like Bordeaux, or yachting in the Mediterranean islands.

But as much as Chinese travelers are looking for unique experiences they are also looking for comforts of home.  Many Chinese visitors to my hometown of Toronto are less interested in sampling unique Canadian cuisine as they are in finding a good Chinese restaurant.

But be wary when promoting local activities geared towards Chinese tourists.  While Casinos are  enormously popular, it is illegal to advertise gambling in China.

Resources:

Trendwatching.com 12 Crucial Trends for 2012

Chinese Tourists want Casinos, not Koalas

KPMG Report on China’s Luxury Tourists

Chinese City Shuts Down 13 Wal-Marts

Why?

One of the most important intercultural considerations in international business is the value of hierarchy.  The USA, along with Canada, the UK, Australia, Germany, Scandinavian countries and Austria; places a low value of hierarchy in  business.  This means there is little importance placed on rank and titles, and organizations operate with a high degree of participation by all employees, regardless of position in a company.  And yes, CEOs often get their own coffee ,and don’t really care who sees them doing it.

Additionally, politicians go to great lengths in those countries to show that they are an average joe (consider George W. Bush playing down his Ivy League credentials).  Last year, my Italian partner attended a Parliamentary event with me, and was shocked when former Prime Minster of Canada Joe Clark lined up with the rest of us plebes to get a plate of lunch from the buffet.

In China; like Russia, India, and many Middle Eastern countries; observing hierarchy is critically important, as well as giving off the signals that indicate the appropriate level of hierarchy accorded to your rank. When doing business in China, it is vital to observe the importance of rank, and to follow a more formal protocol in business interactions.  Subordinates are more likely to follow (and require) specific directions, rather than being comfortable taking initiative. One person will speak on behalf of the organization, and a collaborative approach to external communications is rare. These are also cultures where the concept of preserving face is paramount.

Understanding how to conduct business within a culture that places a high value on hierarchy has more than the impact of “being polite.” Intercultural values such as hierarchy form our unconscious assumptions and attitudes, and drive the “rules” and outcomes of business engagement.

Fortunately for Locke, his position and authority is well known in China.  Therefore, his self-sufficient behaviour drew a positive response from the Chinese public, who are accustomed to their own bureaucrats’ grandstanding.  However, a less well known senior business executive to China would do well to practice behaviour that reinforces their high level status.  Why? Because Chinese decision makers (the ones you want to meet) will not deign to engage with anyone that they perceive to be junior to them. A few simple tricks:

• Dress up.  Chinese have a mental image of a successful business exec (male & female), and that includes a sharp suit and nice watch.
• Control the conversation from your team.  No matter how interactive and collaborative your meetings are at home, advise your staff not to speak at meetings with Chinese decision-makers, unless you invite them to.
• Always be the first person to enter or leave a meeting room.
• If a group picture is taken (and it probably will be), make sure you are front and centre.

In China, the motivations behind environmental awareness and actions are different.

Contrary to what many westerners assume, China has begun to recognize the consequences of its economic development at all costs, with the biggest price being the impact of pollution and environmental damage.  The central government has made cleantech themes a major component of its stimulus package, and some forward-thinking regional officials have taken leaderships roles in understanding and inculcating sustainable values.

(BTW, China Environmental Forum, Harmony Foundation – providing Canadian sustainability training to China’s mayors, and China CSR are 3 terrific sources regarding environmental direction in China).

In China, concerns about environment relate directly and tangibly to individuals instead of to an abstract cause. People care about environmental issues when they perceive the impact on their health.  They connect the dots between the factory dumping waste in the local water supply and people in the community getting sick.  Sure, it may be providing jobs but those matter less when someone you love is suffering from environmentally related illness.  It’s this encouraging grass-roots realization that is motivating positive change at all levels in China.

The challenge comes when environment and health are at odds with one another.  Nothing was so immediately obvious in this regard as the issue of bottled water.

Water quality is an enormous issue topic in China. Although other issues such as air quality of product safety get more airplay in the western press, clean water is becoming a severe concern in China.  The degree of pollution in many of China’s water sources is becoming too high for industrial or agricultural use, never mind drinking or fishing.  When living in China several years ago, I began boiling my tap water, distressed at the alternative of buying bottled water for drinking and cooking.  A friend advised me that the contaminants in the water – such as lead and other industrial chemicals could not be simply boiled away.

So when faced with the choice of questionable drinking water on my recent trip to Beijing, vs buying bottles, I was faced with a dilemma.  My hotel room came stocked with a steady stream of 500 ml water bottles.  But with heat in the upper 30s C (near 100 F) I knew that I could go through 5 bottles a day, contributing to China’s landfills of plastic water bottles.  If Americans use dispose of 50 billion plastic water bottles a year, imagine what that volume would be in China?

My solution?  Ignore the 500 ml bottles in the hotel room, and haul back a 4 L bottle from a nearby Watson’s (despite my partially dislocated shoulder).

What would you do, when health and safety concerns conflict with your environmental beliefs?

“Status, authority and power are perhaps the main drivers behind most Chinese consumer behavior. Shopping trips, therefore, are often the result of the need to increase social status with the purchase of what are to considered to be prestigious, exclusive brands.”

With this in mind, consider the though-provoking article in the Times,  “China’s Wealth Drain;” translated from its original in the Beijing-based Economic Observer. The article ponders whether “too many of the best and brightest — and above all, richest — Chinese dream of packing up their accumulated capital, and going to live abroad?” Beyond the social and economic risk of China’s class departing, a more troubling picture emerges.

Despite China’s growing wealth, the majority of people still feel to be struggling, according to a recent Gallop Wellbeing Survey.  It is understandable that a country which has suffered so much financial instability in this century would have assumed that the recipe for individual and societal contentment would have been to have more money.  Yet China’s rapid pursuit for economic development has at times been at any cost – and more Chinese are finding that the price has been too high.  The article lists factors causing frustration to Chinese, rich and poor alike, that cannot be resolved regardless of how much wealth one has: “laws and regulations, the education system, social welfare…quality of air…food safety, [and] ability to travel.”

Beyond these quality of life issues, there is another factor in the emigration of the wealthy class:

“Last year, when a Chinese woman living in Canada was asked by the International Herald Tribune why she had left her country, she said it was because of the Sanlu (toxic baby milk) case, and also because of the “hatred against the rich.” Her answer highlights the fact that, as the gap between the rich and the poor is getting wider, and the poor are complaining more and more, the rich are also getting more nervous. Some rich people even worry that the ‘redistribution of wealth might start all over again,’ “an reference to the Cultural Revolution where anyone with wealth, education or property was persecuted.

Yet, China has long been a country where “face” is vitally important in order to establish and communicate one’s position in society – as clearly illustrated by our first article.  When one has wealth, it must be publicly displayed – this signifies one has arrived and is someone of importance.  And nothing stokes resentment in a country where the poor feel marginalized like ostentatious displays of wealth.  And, “when rich people pack their money and leave, not only are they no longer identifying with their country, but they are also avoiding their social obligations. While the reason behind these people’s decision matters little, the undeniable fact is that they make money from this society, but they refuse to give anything back.”

In culture where Confucius values dictate that one has an obligation to take care of themselves and their immediate family, a call to give back to virtual strangers in the larger community might be a tall order.  But an awareness of social responsibility, while still in its infancy, seems to be growing Chinese companies and wealthy (recommended website is ChinaCSR.com).  Perhaps “giving back” can take hold as the newest and most powerful status symbol in China.

Rapid growth in middle class affluence, coupled with a loosening of outbound travel regulations mean that tens of millions of Chinese who were previously unable to travel internationally, will be doing so in increasing numbers in the coming years.  This is encouraging news for the tourism & hospitality industry in many countries, as the economic downturn in the US and Europe has been devastating.

According to said David Scowsill, CEO of the World Travel and Tourism Council, “the growth of Chinese outbound travel is moving at a huge pace – it’s about a 20 percent increase every year. And the number of outbound Chinese travelers hit 58 million last year.”

But of course, it comes with a price.

According to a recent article in the China Daily, many destinations are not prepared for the infrastructure upgrades, in particular airports, that such a large increase in traffic would require.

But there is one hospitality company that is getting the message.  Starwood Hotels will be sending its top executives on a one month cultural immersion experience in China.  You can read more about this story here. I applaud the vision of Starwood’s leadership for understanding: #1 how important the future Chinese tourism market will be, and #2 that to be successful with this growing market, a company must understand the cultural perspective and expectations of their Chinese customers.

It is not uncommon for top leadership in Western companies to be removed from the day to day operations of business with China, leading to conflict and misunderstanding with their own teams who are responsible for the Chinese market.  More than once, I’ve been called in to train an organization where one unspoken objective is to validate the challenges by China managers to their executive teams (as well as to facilitate solutions, of course).

I do invite Starwood Hotels to reconsider 1 statement from the article: “The executives won’t be tourists [during their stay in China].” While it is of course expected that they continue to work during their sojourn in Shanghai, it will also be important that they tour Chinese sites to see and understand how Chinese like to travel (in large groups!) and the amenities that are important during their stays at a hotel (slippers, hot water for tea and toothbrushes).

It’s important to note that culture is often compared to an iceberg.  What’s visible is merely a tiny fraction of the whole entity, and it’s what is below the waterline that is likely to cause a horrendous impact.

Historically, there is a great deal of common ground for my theory.  Both Italy and China are ancient civilizations, responsible for structures and inventions that still shape our modern societies.  And at least one historian, Gavin Menzies, claims that the Chinese “sparked the Italian Renaissance and that Leonardo da Vinci’s inventions were directly influenced by Chinese technical drawings.” And in more recent history, both cultures have experienced totalitarian regimes.

Certainly, what I would call the “external expressions” of Italian and Chinese culture appear radically different.  Consider the architecture, music, food, and certainly, religion and personal expression. Consider the stereotypical gregarious and affectionate Italian, vs the calm and stoic Chinese. Even the commonly held myth that Marco Polo brought pasta from China and introduced it to Italy has been debunked, thanks to documents predating his trip (such as a will and testament that bequeath pasta to a fortunate relative).

Yet still, consider the importance of food to each culture.  In my life, I have only ever been scolded at a Chinese or Italian restaurant – these cultures take everything involving their food so seriously.  They know the way, after millennia, how their food must be prepared, so don’t bother asking for olive oil with your bread in Italy, or for pork-free ma-po dofu in China.  And food is the ultimate social tool – you take time to savor these meals, and to cherish them with the people who are closest to you.

Speaking of which, family and relationships are paramount.  In both cultures, whom you know means everything.  I’ve been told in Rome, it is simply not possible to get a job without an insider connection, and once you know the right person, you’ve got it.  In China, business is conducted on the strength of the relationships (guanxi) you possess.  On a darker note, both Italy and China have birthed feared organized crime syndicates – the Mafia (Sicily)/Camorra (Napoli), and Triads in China.  In both countries, the organizations were originally conceived as de facto resistance/rebel forces.

Hierarchy and position in both societies are taken very seriously, and it is expected in both cultures to use formal titles, unlike our “low-hierarchy” North American culture where first names, regardless of status, are far more common.  And cultivating “face,” one’s external presentation to the world is embraced in both cultures – where a great deal of emphasis is placed on well-known status symbols – such as the right watch, and the right car.  Interestingly, the Chinese are now one of the top consumers of luxury products in the world – many of which are Italian labels such as Lamborghini, Prada and Versace.

One other area where I see a striking similarity is in the Italian and Chinese approach to rules.  In North America we have a rather rigid approach to rules.  It’s simple – people who follow rules and laws are respected.  People who break or circumvent them are criminals and worthy of contempt.  Our attitude seems well and just, but consider the luxury that allows it to be so.  In culture, its important to avoid a stance of “this is what we do, therefore it’s right; and anything different is wrong.” In Canada and the US, what are our options when we feel that a rule/law is unjust?  We have many.  We can vote someone in or out of office, start a march, create an advocacy group, write letters to the editor, organize a protest, etc. etc. etc.  In Italy, the bureaucratic process to simply pay a bill is crushing (I was told by an acquaintance here that a TV cable company would only cancel his service if he produced a death certificate).  For centuries, Italians have found creative ways to get around the laws on the books, and all agree that not to do so would be impossible to live.  In China, there is a saying, “the mountains are high and the emperor is far away,” and again, it is widely acknowledged that to survive one must understand how to circumvent rules.  In both countries, being a scoff law is not only tolerated, it is respected. This is a very challenging aspect for North Americans conducting business in China, but it can be helpful to be aware that this is an issue, and to understand the reason why.

So, what do you think of this theory?  Last week, I was gratified to meet a British woman who was transferred to Italy after working in Asia, as her employer felt that her time in Asia gave her the culture skill set to succeed in Italy.

“Brazilian workers complain that their Chinese employers don’t understand the country’s culture of developing personal relationships among co-workers,” according to the article.

As anyone who has done business in the region can tell you, interpersonal relationships are paramount in China, and the Chinese will be very reluctant to do business on a simple, Western-style anonymous exchange of money for services or products. Understanding the concept of “guanxi” is Chinese cultural preparation 101.

Now, I don’t doubt the veracity of the quote from the article.  It simply is another reminder of what 2 different cultures call the same name (in this case, “developing personal relationships”), but approach it from a different perspective. I can’t imagine any country where “developing personal relationships” is not a part of successful business, even in more “business before pleasures” cultures like the US and Sweden.  It’s how relationships are developed that is different, culture to culture.

A helpful analogy is to compare it to the USA and the UK showing up for the World Football Championship game – they both use the word “football,” but they wear different gear, employ different plays, have different rules – in short, it’s a completely different game, and whomever is not on home turf will be at a great disadvantage in the game.

In China, time spent developing interpersonal relationships is a result of a necessity to understand whom you are working with, and where they fit within the dictates of a strict, Confucius-influenced societal order.  How can a relationship be beneficial in supporting an organization’s long-term goals?  For instance, the acquisition of technology or know-how, or the nurturing of an international brand (a growing priority in China as its export market evolves) may be an unspoken desire of the company you are courting in China, in addition to sales and business development.

For Western execs, this can be a frustrating part of the process, as it requires much more face to face interactions with counterparts in China – a challenge in our time-starved work environment. While it can appear to be a frivolous waste of time discussing families or where one went to school is an important part of the business process. And its not just a social courtesy in a different culture; this is your opportunity to get to learn more information about whom you may be working with – a critical step in a country where you will not find the same legal & governance framework as at home.

When it comes to the working with labor, Chinese managers are typically much more hands-on than their counterparts in the west.  And Chinese employees typically expect a fair degree of micro-management.

I’m curious to hear comments from those with experience working in the Brazilian market – what does “developing personal relationships” mean there, and how do managers and executives go about it?