There’s money in there

 

THE business promotion visit made to Russia last week by Mr Goh Chok Tong and Mr Lee Kuan Yew emphasised anew the fact that assumptions about investment and nations' growth prospects are not static. Even after communism was overturned in the Soviet bloc to give rise to nascent market economies in Eastern and Central Europe, besides the more stable of ex-Soviet republics, Singapore businesses could not have imagined that Russians would be a new revenue stream. But here they are, Russian tourists spending big and recording ever- growing arrival numbers. They out-spend even some richer West Europeans. As always, logistic links have been the enabler in tourism, with Singapore Airlines facilitating the process by starting Moscow-Singapore fights.

 

Offshore investment in Russia is a bit different. The two leaders acknowledged after their meetings in Moscow that unfamiliarity with the language and cultural norms were a challenge. But shouldn't it be up to businessmen to crack the code? High-level contacts have been made. If they can sniff out the money-scented opportunities and can network with Russian partners, Singaporean investments need not be confined to the portfolio type led by Temasek Holdings' state-owned enterprises and associates. As with Russia, the template would apply also to ex-command economies such as those of Poland, Hungary, the Czech Republic, Slovakia and Romania.

 

Singaporean businessmen still depend too much on the political leaders to spot nations with growth prospects and to open doors for them. They should shed their provincialism and get aggressive. The Koreans and Taiwanese are role models. They should also be sensitive to the changing geopolitics of business, and not leave all the homework to the politicians. Besides China and India, and now Russia, a wealth of research by the World Bank and consultancies has pinpointed surprises in investment destinations. Did they know that Brazil, Botswana, Malta and Oman were among 13 nations that sustained growth above 7 per cent for over 25 uninterrupted years after World War II? Brazil is tipped as hot.

 

Where are the Singaporeans? In any listing of nations set to catch up with the OECD bloc within 15 to 50 years, China, India and Russia are prominent. Did they know Venezuela and Argentina in South America, and Romania, Poland and Hungary in the enlarged European Union, show growth potential not too distant from China's? Globalisation and the collapse of military dictatorships in Latin America and of command systems in Eastern Europe have altered assumptions in international business. Tax systems are being simplified, air links opened. Are Singaporean entrepreneurs ready?

 

This sort of thinking reminds me of an episode soon after I joined the Civil Service about 10 years ago. I was part of a study trip to ASEAN and we stopped at Ho Chi Minh City to meet Singapore businessmen who were operating in Vietnam. You have to remember these were the days before the Vietnamese economic miracle and Ho Chi Min City was still full of bicycles with a smattering of motorbikes.

 

I had the pleasure of sitting next to a businessman in his thirties who had plainly been dragged to this engagement by the Singapore Mission. He was involved in a project to cultivate rice in Central Vietnam. I asked him how someone like himself got into agriculture when Singapore had no agriculture sector of its own. He spent the next 15 minutes haranguing me about how intellectuals (ie scholars and Admin Officers) analysed issues from a distance and never got down to doing things. Whereas a poly grad like himself, who knew that there was very little by way of career prospects in Singapore for a diploma holder, had taken the bold step of venturing into an emerging market and built a business out of scratch. In the process, he had learnt so much that never found its way into research reports or the media. There were others like him who had succeeded without Government help. And their biggest hope was that, now that Vietnam was getting hot, that the Government not highlight their “success stories”. Probably because to do well in such emerging countries, one has to do many things which are better kept away from the light of day.

 

I have to admit that this exchange was the one lesson that I still remember from my two-week long study trip and one which I have never failed to apply. I wonder if the writer of this editorial has ever started any business, let alone one that involved cross-border investment in an emerging market whose main language is not English.

 

Anyone can open a World Report by the Economist or the CIA to find any number of lists of top performing countries. But it is a huge leap to go from a paper list to investments or exports, to actually making money (and most importantly repatriating the profits). If anything, a governmental visit is the easiest thing to do. It is rare for any country to decline a request for a state visit by another country’s leader. Plus you actually know who to contact. For a businessman with an existing product, finding the right person to talk to or the right business partner, distributor, etc is the most difficult thing of all.

 

To be fair to this hopeless editorial writer, there are many others who fall into this trap of comfortable analysis. I took a class at London Business School by a prominent professor, who has since thankfully left the school. He advocated a similar process of sitting behind a laptop and scouring data on possible countries to expand before using a framework (the favourite word of all business school profs) to sieve out the best opportunities.

 

The facts are that this sort of process might work for a large company such as Google. But in truth many companies expand across borders based on opportunities that present themselves. It could be someone you have worked with and trust who knows someone in another country who then gets very excited about your product. Whatever the case, it is almost never the textbook case like what the ST editorial would lead you to believe.