Trade: Art of Understanding Others
While on a business trip to China in the early 1930s, businessman Albert Quon’s wife and the couple’s 4-year-old granddaughter paid a visit to a busy Shanghai marketplace.
The little girl, recalls importer Quon--who in 1929 founded Los Angeles-based Quon-Quon Inc.--seemed awestruck at the people-packed streets and the incredible bustle. As she tightened her grip on her grandmother’s hand, Quon related, she blurted out: “China is a strange place . . . it’s full of Chinese.”
Quon’s message, repeated time and again by a panel of international trade specialists at a Newport Beach seminar earlier this week, is that businessmen in the United States still too often react like his granddaughter to foreign surroundings, considering them strange rather than realizing that it is they, as foreigners, who are the strangers.
Although the old “ugly American” stereotype is fading, many U.S. business people still are woefully uninformed about customs, cultures, politics and even consumer needs throughout the Pacific Rim, said James Zumberge, president of the University of Southern California and principal speaker at the seminar, sponsored by USC’s Orange County Center.
They often don’t speak the language and can’t or won’t accept that in a China full of Chinese, or an Australia full of Australians, business methods that are well accepted in the United States can be counterproductive, sometimes even offensive.
“Time and time again,” Zumberge said, “we go into an area, complacent and uninformed, and find ourselves outmaneuvered, out-negotiated and out of step.”
At stake is the ability of U.S. businesses, especially those in Southern California, to continue securing a major share of the estimated $140 billion in annual revenue generated by trade in the Pacific Rim. A study by Security Pacific National Bank last year said California businesses captured nearly 30% of the U.S. trade with Asian and Pacific countries.
Huge Stake for Southern California
Zumberge, appointed by Gov. George Deukmejian last year to the California Economic Development Corp., said Southern California businesses have a huge stake in the United States’ trade with Pacific Rim countries--which in 1983 supplied 83% of the Southland’s imports and received 73% of its exports. In Orange County alone, an estimated 1,500 to 2,000 business are directly involved in international trade with Asian and Pacific countries.
But the marketplace is getting increasingly competitive, Zumberge said, and U.S. business stands to see its share of Pacific Rim trade shrink if it does not shed its Western bias and earnestly pursue an understanding of the Eastern and Pacific cultures.
In fact, said Basil Teasey, Australian Consul General in Los Angeles, many businesses in the United States do not even consider southern Pacific countries such as Australia, Indonesia and Malaysia as potential trade partners, largely because they are ignorant of those growing economies.
“My experience of North Americans talking about the Pacific Basin,” he said, “is that you are focusing essentially on Japan and Korea and peripherally on China, period.” Instead, he suggested that the focus shift to the southern Pacific region because “the highest profit potential may be in those countries developing in the next 20 to 30 years because they are starting off with a low economic base.”
In a separate interview this week, Los Angeles banking consultant Edward Carpenter said recent studies conducted by his firm show that, by 1989, deposits in California banks, largely as a result of Pacific Rim trade, are expected to exceed total deposits in New York banks.
“That will mark the first major shift of the world’s financial focus since the Rothschilds made London the world banking center,” Carpenter said, “and will be the first time any state proximate to the Pacific Ocean has had the largest (bank) deposit base in the United States.” Carpenter said he expects Southern California banks to be doing the bulk of the Pacific Rim trade financing in the state.
Growth of South Korea, Australia
And although current rankings for the gross national product of free-market economies place the United States, Japan, West Germany, France and Great Britain in the top five, Carpenter said that, by 1990, South Korea and Australia will have replaced France and Great Britain in the top echelon. In addition, Carpenter said, China and Canada will be in the top 10, and California, if separated from the rest of the United States, would rank seventh, meaning that Pacific Rim countries will occupy seven of the top 10 places in GNP rankings.
But while the Pacific Rim marketplace is huge and continues growing at a rapid pace, foreign markets “aren’t just there for the taking,” Zumberge said. “We can no longer assume that American-made goods and American-based services are so much in demand that all we have to do is send our sales people to the Far East with their sample cases and order books to build a backlog of new customers.”
Zumberge reserved his harshest remarks for U.S. business’ “widespread ignorance of the nations with whom we wish to do business. . . . One cause of our undoing,” Zumberge said, “has been a failure to use the knowledge available to us.”
Calling for creation of a “new trade culture that includes a hunger for information about those with whom we wish to trade,” Zumberge said business and education need to work together to create centers for cultural study and to provide intensive briefings for business people preparing to travel to Pacific Rim countries.
Zumberge pointed to Irvine-based Fluor Corp. as a successful competitor in the Pacific Rim trade battles, largely because of its successful dealings with China.
But Edward Hsia, president of Fluor China, said that despite the company’s successes--it has had 15 projects in China since 1978--Fluor still has difficulty finding people to send there who not only are competent in Fluor’s engineering, construction and natural resources businesses but in understanding and dealing with the Chinese as well.
