For startups expanding overseas, the most challenging is often not about obtaining capital or orders, but rather cross-cultural operations and collaboration. Evy Chang, head of investor relations at Vietnam-based Wiziin, comes from a mixed cultural background - Taiwanese and Indonesian - knows much about such challenges. Before moving to Vietnam two years ago, Chang had worked as management consultant at the Business Development Institute (BDI) and the Economist Intelligence Unit (EIU) in Shanghai.
During a recent interview by Digitimes, Chang talked about how Taiwanese companies and startups can overcome the challenges of cultural sensitivity when operating in Southeast Asia.
Q: Vietnam has signed free trade agreements (FTAs) with many countries, attracting many manufacturing industries to invest and set up factories in the country. But how can investors overcome the disadvantage of unfamiliar environments when operating overseas?
A: Taiwan is good at manufacturing, but frankly speaking, Vietnam is no longer a cheap place to run mannufacturing operations. So you must not still think about how to use the cheap labor in Vietnam; but rather how to transform along with Vietnam. Therefore, we should face the reality, understand the needs of local consumers and customers, and transform in line with the local conditions. I have been doing fieldwork in university and graduate school studying the cross-border expansion of Taiwanese businesses, and I deeply feel that it will be very difficult to work oveaseas markets if one refuses to get out of his or her own comfort zone.
Even if you move Vietnam, you will still have to step out of the small circle you are familiar with, or you would find yourself mingling with foreign expatriates. In District 2 where many foreign expatriates gather in Vietnam, the atmosphere is very much like the West. If most of your colleagues are still foreigners, and you live in a place where most of the people are foreigners, you won't know Vietnam well.
Q: What should I do then?
You must be willing to put yourself in an uncomfortable situation all the time, because there is no faster learning opportunity than making yourself a minority. In my previous company, less than 10 of the 100 employees were foreigners, and I was highly immersed in the local culture as I spent time with them every day. Although there were many challenges, it was the quickest way to learn.
It is necessary to learn the local language. If you speak English, you will be able to jump around in the urban areas of Ho Chi Minh City, Singapore, Jakarta and Kuala Lumpur, but it will be hard to look at a menu without pictures. If you are the founder of a new business and do not speak the local language, it is important to find a partner who speaks it and who is familiar with the local system and culture to be the chief of operations and help you keep an eye on all the operations and execution.
You set the general direction, but you need him to drive it and restate it in a way that the locals understand. This is especially important when pushing for change in your company's systems. Often, we all have good intentions, but when there is a language barrier and you are not sensitive enough to the language and culture, I'm afraid everyone will be upset when the order is given. The ideal person for such a partner is a local who speaks the local language and understands culture but who has lived overseas for a long time.
There are many Vietnamese who speak Vietnamese, but have grown up in the West and have returned to Vietnam to start their own businesses in the past few years. Although teamwork is always a matter of integration, it saves a lot of effort to find a reliable person who understands the local area.
Q: The manufacturing industry likes to talk about overseas expansion in terms of "replicating business models," but it's actually very difficult in the complex and diverse Southeast and South Asia, isn't it?
A: This is probably because the manufacturing process is very clear: three raw materials are added together and the result is three. But in the service industry, one plus one plus one does not necessarily equal three. Take North, Central and South Vietnam for example. Many people see opportunities in Vietnam's manufacturing industry, which is concentrated in Binh Duong, west of Ho Chi Minh City, the home base of Taiwan's manufacturing industry.
The bustling scene of traffic and horns that I experience every day when I commute to work is mainly in districts 1-4 of the more than a dozen districts of Ho Chi Minh City with nine million people. Da Nang in the central part of the country is known as the Hawaii of Vietnam and is a famous vacation spot, and there are many Internet technology companies there. But not far from there are rural areas where people still live in traditional houses.
Indonesia is actually the same. You can't look at the Southeast Asian market as a collective one with 900 million people. You have to identify your target groups of customers. Is it the top 10% of the pyramid in Vietnam? Or the top 20% in Java? And then you move on from there.
Vietnamese people are more hardworking, and their values are more similar to those of Taiwanese people, because Confucianism does have a deep influence on Vietnamese culture. In every culture, there is a big framework of "what I live for." It is worthwhile for entrepreneurs who want to expand their presence in Southeast Asia to understand the influence of these cultural backgrounds on the local people.
Q: Taiwanese companies are learning to become multinational companies. What advice would you give them, given your cultural background and experience in working with multinational colleagues?
A: One of the weaknesses of Taiwan is that we are very homogeneous and therefore take a lot of things for granted and lack sensitivity to other cultures. Cross-country operations may encounter people from multiple cultures working together, and the need to communicate and reach consensus is not something we are familiar with. We have also seen some large technology conglomerates go to overseas markets and still follow the corporate culture of the parent company, lacking a bridge and buffer for communication, thus causing many conflicts.
We also need to find the right person who is familiar with the local culture and system, and to learn how to immerse ourselves in the local culture.
It is very important to find such a person to take on this role, otherwise there is no way to deal with the problem of people in the organization. It is often the people who are the most complicated. It is very important to let each person give full play to his or her strengths in the position he or she is given. It is not that Taiwanese do not have an international outlook, but they are not accustomed to the existence of people who are different from us. There is no right or wrong culture, but we tend to put foreigners either too high or too low, without getting used to the fact that they have different thinking and values.
Many people respond by adapting to what they perceive as the higher side and abandoning the lower side altogether, or by thinking that the lower side must conform to them. In fact, it is more important to find a third way between two different cultures and values, not to divide "either you or me" but to find "us," to enter into the cultural context and values of the other side, and to communicate in a way that he or she can understand.
Evy Chang, head of investor relations at Wiziin
Photo: Shihmin Fu, Digitimes, January 2021