Why Mexicans Don't Drink Molson

by Andrea Mandel-Campbell

  In testing the waters, the bank has relied heavily on a network of Chinese-born, Canadian-trained bankers to read the tea leaves of China’s constantly shifting financial horizon. Roger Heng, BMO’s Beijing-based managing director for China, was born in Guandong province and grew up in Hong Kong before attending boarding school in London, Ontario. He went on to receive an economics degree at the University of Western Ontario and a commerce degree from the University of Windsor. Also in Beijing is Tony Choy, responsible for investment and corporate banking, who was born in Hong Kong and educated in the United States before moving to Canada in 1989 to work for the bank. Their colleague in Shanghai, Lisa Xia, immigrated to Canada in 1999 and worked for BMO in Toronto, returning to her hometown in 2003 as BMO’s representative. Frankie Li, general manager of the bank’s Hong Kong branch, immigrated to Canada in 1988 and worked in commercial banking before being sent back home to head up BMO’s corporate side in 1996. “We have to rely on very competent local nationals to be effective,” explains Yvan Bourdeau, chief executive of BMO Capital Markets. “If you really want to be competitive, you need that.”

  Bourdeau has had more exposure to Asia than most Canadian executives. Having lived in the Far East for fifteen years, with postings in Tokyo, Singapore and Seoul, he has twenty-five years of experience working with China. Yet he acknowledges that he would miss a lot of the nuance critical to deal-making without the support of a Chinese-Canadian team that is fluent in the business cultures of both countries. “I know how to structure a deal. But it’s a different thing to structure it in China,” he explains. “They never say no, but sometimes you don’t know what they are saying.”

  During a recent trip to Shanghai, Bourdeau recalls trying to line up two potential partners for a deal. He could sense resistance from one of the parties, but could not pinpoint the problem. His Shanghai representative, Xia, approached the Chinese during a break in the meetings and learned that they were also negotiating with a third party. “I relied on her very heavily to give me signals as to what actually was being said and where we were heading,” Bourdeau said. “During the breaks she would go and talk to them informally, which is something they would not do with me.”

  With several thousand Chinese Canadians already working for the bank back in Canada, Bourdeau expects that BMO will have no shortage of new recruits as it looks to expand further into China. Recently looking for currency and derivatives traders and market-risk specialists to staff its offices, the bank did a scan of its trading floor for Cantonese and Mandarin speakers and found three employees interested in going back to work in China. “Toronto particularly has a very large pool of Chinese talent that is probably proportionally greater than that of any other city in North America,” says Bourdeau. “We have a great talent pool.”

  The trading floor was also where Peter Beck turned to when he decided to expand his Toronto-based brokerage business, Swift Trade, internationally. An immigrant from Hungary, Beck figured there would be plenty of other new Canadians who would jump at the chance to make good back in their native countries. At the same time it would be an inexpensive way to grow the company. “There’s lots of these expats looking at ways to get back,” says Beck. “For us it was essential to realize that we can market this. It’s easier to get people here, and so much simpler when it comes to setting up the business abroad.”

  Beck designed a licensing package that included all the necessary online trading technology and instructions for starting up an office. To get the word out, he approached some of his foreign-born Toronto traders who went back to their respective communities with the idea. When it came to the Chinese community “it was almost like an avalanche,” says Beck. “China is booming, and everybody is looking at ways to go back and take advantage.” As of February 2006, Swift Trade had seventeen offices in China, with another fifteen set to open up, making it the company’s second-largest operation after Canada. “It’s been excellent,” Beck says. “China has proven to be a great opportunity for us.”

  Swift Trade’s strategy echoes that of many successful immigrant entrepreneurs in Canada who have combined a desire to return to their roots with the ability to see opportunities others might miss. Austria-born Frank Stronach established Magna’s European headquarters in Graz, not far from his hometown, while Linamar’s Frank Hasenfratz operates three plants in his native Hungary. Less well known is Alex Schnaider, who oversees a vast empire from the anonymity of suburban Toronto. Born in Russia and having immigrated to Canada via Israel as a teenager, Schnaider capitalized on the break-up of the former Soviet Union, scooping up Ukrainian and Russian steel plants, a Moscow casino and a power grid in Armenia. Now worth an estimated us$1.4 billion, Schnaider emerged from obscurity in recent years to bankroll Toronto’s Trump Tower and buy his very own Formula One racing team. As one magazine article noted, what distinguished the thirtysomething entrepreneur from other Westerners trying to get rich on the collapse of communism was the fact that he spoke Russian. “Language helped me understand the mentality and what was really going on,” Schnaider told Report on Business. “We were able to make decisions that others might not make. Take bigger risks.”115

  For Tim Plumptre, a one-time director of the Brazil–Canada Chamber of Commerce, language and cultural affinity are critical competitive advantages. A long-time banker in Latin America, Plumptre recalls Team Canada missions to the region in which, of 450 participants, perhaps four or five were Hispanic Canadians and fewer than a dozen actually spoke Spanish. In comparison, he says, American missions were chock full of Hispanics who routinely head up the export departments of U.S. firms. “To try to develop business in a foreign country, you are cutting your chances in half by not speaking their language,” says Plumptre. “And I don’t just mean Canadians who took a night class in Spanish. I am talking about Hispanic Canadians — a Mexican Canadian who knows how they do things.”

  Sometimes the combination of Canadian know-how and local finesse is not a function of one person, but a matter of a few individuals combining their skills. When Gary Comerford, a marketing executive with Sun Life Financial, stepped off the plane in India for the first time in 1996, he was overwhelmed. Tapped to spearhead the insurer’s re-entry into India after a forty-three-year absence from the market, Comerford had travelled to the United States and United Kingdom on business, but had never really worked outside of Ontario. India was a whole other world.

  Which is why teaming up with Vijay Singh brought him such “incredible reassurance.” While Comerford knew Sun Life like the back of his hand, Singh not only had international experience working with IBM in Singapore, but was born and raised in Delhi before immigrating to Canada in 1978. Singh became Sun Life’s country manager, stick-handling government relations and red tape, and in 2001 headed up its newly launched life insurance joint venture, Birla Sun Life. “He was my security blanket. There was a comfort, caused by his knowledge and expertise that he’d been there and done that before and knew the culture,” explains Comerford, now vice-president of international operations and general manager for India. “I would bring my Canadian jolly-good-fellow attitude, and he was far more skeptical and critical, and that was absolutely required.”

  Although Singh is quick to point out that cultural affinity is only one tool in the international business arsenal, he admits it did come in handy when getting to the point in India’s sometimes eager-to-please business culture. “I don’t hesitate, in talking to people, to point out bluntly what I think I need to tell them. My colleagues, who are white Irish Catholics, have to be careful not to rub the wrong way,” says Singh. “I speak the language and look like them, and if I behave properly I get entry into their minds much more easily. I’m accepted as one of them, and that’s a huge benefit. The other guys have to earn it.”

  Still, like any tool, if not handled carefully the culture card can cut both ways and cause more harm than good. While it’s almost expected that Westerners will commit cultural faux pas, if a Chinese Canadian makes a mist
ake, it’s considered “unforgivable,” says Carla Kearns, who runs a Mandarin school in Toronto. Similarly, some Chinese may prefer to deal with Westerners because it affords them a certain amount of face or status, rather than using an intermediary from Hong Kong, for example, who may be looked upon with some suspicion. In the case of India, many locals are resentful of a returning diaspora that is parachuted into the country by large multinationals and given cushy expat packages. “There is a real sense of pride in India these days,” says Comerford. “They feel they’ve stayed, they’re educated and they’re as smart and can do as good a job. So you’ve got to be careful how you handle it.”

  Jealousy is a significant factor, acknowledges Michael Schaffer, a general manager with sgs, an inspection and testing services company. The firm’s Toronto office, which counts nine nationalities among its thirty-member staff, routinely exploits its multicultural mix in securing sales and service contracts from Mexico to China. But while Schaffer copies the company’s Polish employee on anything related to Poland, even if he isn’t involved in a particular project, the company is more cautious when it comes to the South African engineers. “In South Africa, whites who leave are seen as traitors,” he explains. “So there is a fine line separating when you can use ethnic or cultural affinity and when you shouldn’t.”

  Milton Parissis, president of Parissis Partners in Toronto, recalls the case of a Canadian military supply company that was trying to sell fire extinguishers to a German firm. The Canadians thought they were being smart by sending a German employee to make the sale. They didn’t realize he was from the folksy southern state of Bavaria whereas the company was based in the northern trading hub of Hamburg. To the German eye, says Parissis, it was like sending a peasant to call on the captains of a rather hierarchical industrial complex. “He didn’t have the sophistication, the history and, as a consequence, he didn’t have stature. The Germans felt insulted,” says Parissis. “You gotta understand who you are dealing with.”

  And that is the crux of the matter. Turning multiculturalism into a competitive advantage involves more than simply matching up compatible skin colours and language skills. Canadian companies also must do their part to deepen their awareness and grasp the subtleties that define and distinguish each country and community. In the same way that someone from Arkansas would have little instinct for doing business in Newfoundland, an ethnic East Indian born in Kenya wouldn’t know much about conducting himself in Calcutta. To the Canadian eye, Peruvians and Ecuadorians are virtually indistinguishable, but to these nationalities there is an ocean of difference that has triggered wars and continues to stoke simmering animosities.

  In order to make those distinctions, companies first need to resist the temptation to use multiculturalism as a “crutch” when doing business in abstruse foreign markets, advises Margaret Cornish, executive director of the Canada China Business Council. It’s often far too easy, she says, for a company to palm off all its China business on its Chinese Canadian employee without ever bothering to understand the market. As a result, the market knowledge and information gleaned by its Chinese Canadian hire may never be absorbed throughout the organization, and the company runs the risk of never integrating its foreign business into the corporate structure. The foreign subsidiary remains an orphan, and when business goes bad is easily axed — along with all the contacts and market intelligence it has built up. It’s better to get a handle on the market and then pick the right person or partner, says Cornish.

  At the same time, when it comes to working with ethnic Chinese immigrants, Canadians must first understand that there are significant differences between businesspeople from Taiwan, Hong Kong entrepreneurs and professionals born in mainland China. Not only the product of different waves of immigration, they represent different social strata, skill sets and motivations. Some, like the University of Alberta’s Edy Wong, see more obstacles than opportunities in aligning the business interests of these groups with mainstream Canadian companies. Many Chinese prefer to work for themselves, whereas those who are willing to work for someone else may not understand Canadian culture, he says. Similarly, mainland Chinese who grew up under communism may not have the same entrepreneurial instincts as people from Hong Kong. “It would be wrong to assume all Chinese Canadians have knowledge of the Chinese market,” cautions Kenny Zhang, a senior researcher at the Asia Pacific Foundation of Canada. “Not all have a willingness to promote trade, and not all have the business skills.”

  Having said that, a lot more would be accomplished, say those in the community, if companies were better able to recognize the skills and resources that immigrants bring to the table. A university graduate from mainland China may not speak perfect English, but her Mandarin would be impeccable and her father might be a high-level bureaucrat in the Chinese health ministry. “For a Canadian pharmaceutical company looking for a licence to sell in China, this woman has influence,” explains Ken Kwan, a Vancouver businessman who worked for fifteen years in China representing U.S. multinational Honeywell. “Companies have got to be patient and understand their background.”

  More to the point, it comes down to both sides adjusting their expectations about how business can and should be done, explains David Fung. The Vancouver entrepreneur attributes much of the disconnect between the Canadian mainstream and the Chinese community to “a fundamental difference in business outlook.” While many Canadians tend to operate on the basis of black-and-white ideas of right and wrong, the business ethics of recent Chinese immigrants, still preoccupied with matters of survival, may come in many shades of grey. As a result, mainstream white Canadians are often distrustful of those Chinese who seem willing to do just about anything to get ahead. The new immigrants, in turn, are ghettoized, confined to doing business solely with their own community.

  To break the deadlock, says Fung, each side needs to make an effort to understand where the other is coming from. “In China, despite everything, only 250 million people have emerged out of poverty. There are still one billion in poverty. We must understand the background in which they were raised and what they’ve come through,” he explains. “When survival is important, your values change. Some business ethics may come second. Is it right or wrong? Well, it depends on how you were raised.”

  Until now, Canadians have been quick to assume that it’s the Chinese immigrants who must change. At the same time, many immigrants continue to employ business practices that clearly don’t fly in Canada. “They have to understand that if they behave in a certain way which may be fine in their own community, it may not be acceptable in the Canadian community. They will never make it,” says Fung. “On the Canadian side, we need to understand that we are not going to change the way a Taiwanese has been brought up.”

  Fung believes, however, that between these two disparate realities lies common ground and an overlapping set of values. He suggests structuring a joint venture in a way for the Chinese partner to earn so much money that there’s no incentive to endanger the partnership and both sides can come out on top. “We cannot change people’s values. That is a futile exercise. But we need to understand their values and then try to create what I usually call a square hole for a square peg,” he says. “Currently we are not using the ethnic-Asian minority because they are square pegs that do not fit into our round holes. And right now we say: if you don’t fit, we don’t play. It’s a tremendous waste of resources.”

  NOTCANADA .COM

  For most of its fifty-year history, Viceroy Homes, a family-run company operating out of Port Hope, Ontario, built its traditional wood-frame homes almost exclusively for the Canadian market. Then in the early 1990s, the Japanese, looking for more earthquake-resistant, energy-efficient housing, began scoping out Canadian homebuilders. “They wanted to see the factories,” recalls Chris Lindal, Viceroy’s executive vice-president. “They would come by the busload; it was quite something.” While others treated the Japanese influx like a bit of a bonus on top of their regular business, Viceroy mad
e a deliberate decision to stake its future on the new market. With some 60 per cent of its sales coming from across the Pacific, Viceroy is now North America’s largest exporter of house packages to Japan.

  How did Viceroy do it? “We took the view that Japanese customers might be farther away, but they are every bit as concerned about issues and details and service as the guy next door is,” explains Lindal. “So you give them the same level of service.” Lindal immediately began taking Japanese lessons, and one of the first people he hired was his language instructor, to translate all the company’s material into Japanese. A decade later there are at least fifteen Japanese speakers working for the company, the majority Japanese-born Canadian citizens or permanent residents. A few are even Chinese nationals who have worked in Japan and are trilingual to boot. “Some have serious degrees from a Chinese university who went on to Japan to get an architectural degree and work for five or ten years in a Japanese architecture firm or housing company,” says Lindal. “That’s a rock-solid resumé. We see that and we want to talk to that person for sure.”

  But while Viceroy ships its homes halfway around the world, it didn’t have to venture far to hire its multinational workforce — just down Highway 401 to Toronto. That’s also where it found Andrea Bermudez, a trilingual Colombian-born architect with post-diploma degrees from two French architecture schools. Bermudez, who immigrated to Canada in 1999, is charged with opening up new markets for Viceroy in Europe and Latin America. She even handles its Quebec business. But though she loves her job, when her friends back in Colombia ask her about immigrating to Canada, Bermudez tells them not to bother. “Unless they have perfect English and certain contacts they should not come,” she says. “Not because they won’t succeed, but because of the immigration process.”