Building Asia’s Silicon Valley in Ho Chi Minh City

A recent Channel News Asia piece explains how Vietnam’s start-up scene is successful thanks to its young, educated and savvy people with Ho Chi Minh City being the epicentre of the start-up scene where most of the country’s 3,000 start-ups operate. Ho Chi Minh has even produced one of Southeast Asia’s unicorns – game developer VNG which became the first Vietnamese technology company to hold an IPO in the US in June, and has more than 70 million users from Vietnam, Myanmar, Japan, South Korea and Malaysia on its chat app called Zalo alone.

According to the article, many young Vietnamese are sent overseas to study and return with grand ideas of starting their own companies (Note: an estimated 21,000 Vietnamese students attended American universities last year, the sixth largest number of foreign students in the US).

Young Vietnamese are able to focus on building strong start-ups because they enjoy strong family support as Vietnamese family units typically consist of three generations living in a single house. Without a pension system, children take care of their parents in old age and grandparents provide childcare and support while young parents are out working. This strong family nucleus has been a source of support and safety net for young Vietnamese executives who can devote more time and energy to their businesses.

A strong push by the Vietnamese government has also helped the start-up scene as officials have promised financial support of US$90 million to more than 2,000 local hi-tech start-ups. They have also made plans to set up innovation hubs that provide training programmes, legal consulting and networking activities to connect start-ups with universities and research centres.

In addition and in May 2016, early-stage venture fund 500Startups pledged a further US$10 million to their Vietnam fund plus other venture capital companies like CyberAgent Ventures and SeedCom are also active and investing in new firms.

Nevertheless, talented young Vietnamese are hard to retain in a competitive business environment with most companies saying they face a high staff turnover rate. The turnover cycle usually starts after companies pay an extra month’s pay to employees just before the Lunar New Year or the Tet holiday (usually in late January). With this bonus in their pocket, many employees do not return to work afterwards. In fact, data gathered by recruitment sites show 68% of young local Vietnamese staff reported wanting to quit their jobs then.

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Belt and read: How China is exporting education and influence to Malaysia and other Asean countries

The South China Morning Post has a lengthy article about how Xiamen University Malaysia, a China-backed university that opened last year, is the model for President Xi Jinping’s vision of exporting education in order to marry Beijing’s trade ambitions with Asia’s eager-to-learn millennials. Note that Xiamen University was also founded in 1921 by Tan Kah Kee, a Chinese business tycoon who made his fortune in Southeast Asia.

China’s Ministry of Education has pledged to set up 10 science and research centres in partnering countries by 2022. They will also sponsor 2,500 Chinese students to study abroad each year in the next three years and finance 10,000 foreign students to come to China each year for five years.

In recent years, a government programme has provided foreign universities with generous cash grants to set up Chinese language and cultural courses. Known as the Confucius Institute, it has expanded to 512 university campuses across 130 countries.

In addition, individual Chinese universities have made attempts to promote mutual understanding. Yunnan University of Finance and Economics, which has joined hands with Thailand’s Rangsit University to set up a business school in Bangkok, has helped build a library offering Chinese-language literature in the Thai capital.

In Vientiane, the Laos branch of Soochow University has served as a base for Chinese scholars wishing to gain hands-on experience with their Southeast Asian neighbour. For now, Soochow University Laos branch enrols only two dozen students each year who will learn Chinese in a rented building before heading to Suzhou (the home city of Soochow University in China) for another three years of study. But when the construction of its campus in Vientiane is completed next year, university officials say they will enrol more students and teach them locally.

Zhang Baohui, a professor of international affairs at Lingnan University in Hong Kong, was quoted as saying:

“Exporting education is a way to promote China’s soft power. [The ‘Belt and Road Initiative’] is not just an economic initiative. It reflects China’s quest for broader influence in the world… Over time China will have a bigger outward push by its universities in countries affected by [the Belt and Road].”

“If the Belt and Road solely depends on China’s economic and financial clout, some countries may have concerns. They fear that China may in the end make them economically dependent. China’s export of education, however, should not trigger similar concerns.”

“The quality of Chinese universities has improved quickly in the last decade. So poorer countries along the Belt and Road should welcome them to establish a presence and train local students. If so, China will prove that the Belt and Road generates win-win outcomes.”

In Malaysia though where British and Australian universities have had an established presence for years, Xiamen University is facing fierce competition. In order to lure in more high-quality students, it granted more than US$1 million in scholarships in 2016 – mostly targeting Malaysian students. The university also has a special grant for Bumiputeras (indigenous Malaysians) and Indians plus has recently expanded the scheme to cover students with high scores from Indonesia.

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Asia has some of the most expensive cities for expats

Mercer’s annual Cost of Living Survey finds African, Asian, and European cities dominating the list of most expensive locations for expats working abroad:

Five of the top 10 cities in this year’s ranking are in Asia with Hong Kong (2) being the most expensive city thanks to its currency being pegged to the US dollar (which drove up the cost of expat accommodations locally). Hong Kong was followed by Tokyo (3), Singapore (5), Seoul (6), and Shanghai (8). Ms. Constantin-Métral, the Principal at Mercer with responsibility for compiling the survey ranking, commented:

“The strengthening of the Japanese yen along with the high costs of expatriate consumer goods and a dynamic housing market pushed Japanese cities up in the ranking. However, the majority of Chinese cities fell in the ranking due to the weakening of the Chinese yuan against the US dollar.”

Meanwhile, Mumbai (57) was India’s most expensive city – climbing twenty-five places in the ranking due to its rapid economic growth, inflation on the goods and services basket and a stable currency against the US Dollar. This most populous city in India is followed by New Delhi (99) and Chennai (135) which rose in the ranking by thirty-one and twenty-three spots, respectively. Bengaluru (166) and Kolkata (184) were the least expensive Indian cities, but they still climbed in the ranking as well.

Elsewhere in Asia, Bangkok (67) rose seven places from last year while Jakarta (88) rose five places and Hanoi (100) rose six places.

Mercer’s annual Cost of Living Survey uses New York as the base city with all cities compared against it while currency movements are measured against the US dollar. The survey includes over 400 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.

 

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Why it’s much harder for expat bankers to land a Hong Kong job

Bloomberg has reported that more and more, even experienced expat bankers are struggling to find and keep jobs in Hong Kong if they don’t speak Mandarin. The same goes for those without a mastery of China’s business culture or connections across the border.

One banking recruiter was quoted by Bloomberg saying that as recently as 2010, expatriates from Britain and the rest of Europe, plus those from the U.S. and Australia, landed 40% of his finance job placements. Today, that figure is just 15%.

At Citigroup, Chinese students will account for the majority of university graduates the firm intends to hire full time in Hong Kong next year while for the past two years, JPMorgan Chase & Co. has hired more than 40% of its full-time graduates and interns for operations in the city from local universities (a number the bank expects to increase as it ramps up business in the region).

Meanwhile, private banks are looking for China-skilled staff in order to capture a slice of the country’s burgeoning wealth. For example: Bank of Singapore Ltd, a unit of Oversea-Chinese Banking Corp, has hired 20 Mandarin-speaking relationship managers in Hong Kong this year.

Most global banks have also tried to bring in Chinese power brokers and many of these professionals are not only bilingual, they are bicultural as they are products of elite Western universities and can move seamlessly between China and the global Wall Street. These power brokers also bring deep connections to China’s leadership and state-owned enterprises.

Nevertheless, divisional and regional leadership roles in Hong Kong tend to still be held mostly by expatriates. But with a new generation of Chinese professionals emerging with language skills, top degrees and good connections now filling the lower ranks, it’s only a matter of time before they start replacing expats in senior leadership roles.

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China’s booming ‘rent a foreigner’ industry

The South China Morning Post has profiled China’s “rent a foreigner” industry as it’s not uncommon for Chinese companies to hire foreigners, especially white Westerners, to represent them in public relations-type roles. Many Chinese equate Caucasian faces with business success and a global outlook while products made in China, but associated with foreign elements (such as a Western-sounding name or endorsed by a Caucasian model) have been seen as superior.

This perception has made China a lucrative place for foreigners to pick up work on the basis of their appearance and regardless of their skills with companies hiring foreigners for roles such as musicians, athletes, architects, lawyers and many other professionals for their marketing activities.

The “rent a foreigner” practice was explored in Dream Empire, a 73-minute documentary by Denmark-based American director David Borenstein that follows a young rural migrant, Yana, who sets up a foreigner rental agency in Chongqing to help her clients market their products and project an international image.

However, some expatriate professionals who have lived in China for many years resent the practice with one expat (who has been in the country for two decades) being quoted as saying:

“For me, and most other expats who are serious businesspeople in China, these people are an annoying irritant. They damage the reputation of expats in general, and make it harder for me to generate trust and credibility when I’m meeting potential clients and partners. It’s an industry built on a platform of dishonesty and deceit.”

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Study: Chinese companies are more ‘Western’ in picking CEOs than Japanese

The Asian Nikkei Review has noted a recent PwC study of CEO succession among the world’s 2,500 largest publicly traded companies and has found that China and Japan pick new CEOs with very different profiles.

Approximately 14.9% or 372 companies chose a new CEO in 2016 through normal succession, dismissals or mergers. The rate of change at the top of Japanese and Chinese companies, at 15.5% and 15.2%, respectively, was close to the global average; but what differed substantially was in the profile of Chinese versus Japanese CEOs as illustrated in the graphics below:

One of the few similarities between the profiles of new CEOs at Japanese and Chinese companies? The apparent aversion to picking foreigners as all of the CEOs of Chinese companies surveyed were Chinese and the same was true of the Japanese concerns.

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Survey: Employee (dis)engagement in Asia

The Asian Nikkei Review has noted a recent survey by Gallup conducted globally from 2014 through 2016 which found that workers in East Asia are much less engaged in their jobs than their counterparts in the rest of the world. The U.S. pollster had asked workers in a range of industries and jobs 12 questions (including: “Do you know what is expected of you at work?,” “In the last year, have you had opportunities to learn and grow?” etc), then categorized the employees as engaged, not engaged or actively disengaged. Survey results were the following:The article went on to note that in a recent Nikkei Asian Review interview, the chairman and CEO of Gallup had commented that disengaged workers “drive customers out” and even “try to get others miserable.”

As for China, the article quoted a GM of a Japanese human resources consultancy with Chinese clients as saying that Chinese people tend to distrust organizations and this tendency is due to history e.g. as dynasties change, so too do power structures and bureaucracies.

In addition, he said Chinese people tend to trust only those they are very close to. In order to gain Chinese employees’ trust and improve their engagement, he said “employers should clearly establish their company’s mission and vision so that they can emotionally appeal to their employees.”

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Indian CEOs show Silicon Valley can be a “brain deposit” for future repatriation

The Asian Nikkei Review has noted one thing both Microsoft and Google have in common – they are both headed by Indian CEOs in their 40s:

Satya Nadella, the 49-year-old chief executive officer of Microsoft, is from Hyderabad in Southern India. He studied electrical engineering at university and moved to the U.S. in 1988. He earned a master’s degree in computer science and management in the U.S. and joined Microsoft in 1992. After successfully leading Microsoft’s cloud business, he became the company’s third CEO in 2014.

Sundar Pichai, Google’s 44-year-old CEO, is the son of an electrical engineer in the southern Indian city of Chennai. He set foot in the U.S. as a scholarship student at Stanford University in 1993. After working for McKinsey & Co., he joined Google in 2004. He led the development of Chrome, now the world’s most widely used internet browser. He reached the top job in 2015.

Silicon Valley is a multiethnic society where nearly 40% of the 3 million or so people who live there are foreign-born. Although Indians trail behind Mexicans and Chinese by sheer number, the former are by far the dominant group among startup founders and employees of IT companies in the area. The article went on to point out:

Their increasing presence at the top of the American IT industry owes to a rich pool of talent at home with the ability to think logically — nurtured through India’s strength in math and science educations — and English language skills.

In a speech two years ago, addressed to 18,000 Indian expatriates filling a stadium in Silicon Valley, Prime Minister Narendra Modi said he considers them as more of a “brain deposit” than a brain drain, as some in India make them out to be. As those people eventually return home, he said, they will contribute to the development of India.

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Survey: Expat women increasingly unhappy about the Hong Kong lifestyle

The South China Morning Post has reported that in a female expat satisfaction survey by expatriate networking website InterNations, Hong Kong has become significantly less popular (falling from 12th to 29th place in the rankings) with expat women in the past year because in part due to grueling work hours.

Hong Kong ranked a dismal 53rd out of 191 countries or jurisdictions in the work-life balance category, with only 5% of expat women saying they were completely satisfied in this area, compared with an average of 17% worldwide. Hong Kong does have the longest working hours in the world, with employees typically clocking more than 50 hours per week (according to a 2016 survey by Swiss investment bank UBS).

Another negative factor was the city’s high cost of living, with 72% of expat women polled suggesting Hong Kong was too expensive. However, one American expat who owns a global public relations business and who lives in Sai Kung with her family, said the survey results did not reflect her own positive experience of living in Hong Kong. She commented:

“I love Hong Kong. If you’re happy to live in some of the more traditional ‘gritty’ neighbourhoods, and really experience the local flavour of eating in casual restaurants, it’s not so expensive. But many expats won’t live that lifestyle.”

Nevertheless, a spokeswoman for InterNations told the SCMP that most expat women surveyed in Hong Kong are increasingly unhappy with their lifestyle. Meanwhile, the president of the American Women’s Association in Hong Kong said the survey results were “not a surprise;” but she thought they could be partly explained by increasing numbers of “trailing [expat] spouses” who face financial pressure to find employment too.

However, the SCMP also noted that the InterNations survey findings contrast with a HSBC bank survey of 10,000 expat women last year. That survey found that expat women considered Hong Kong to be the best place in the world to advance their careers.

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The end of the golden era for expats in China?

According to the South China Morning Post, some expats say that rising living costs, a move towards hiring locals and new visa rules in particular are making life on the mainland harder for foreigners. For example: There has been an increasingly negative attitude from the Chinese government towards expats and foreign workers with the string of visa changes over the past few years (along with government posters earlier this year warning locals against falling in love with strangers from overseas).

With the latest working-visa change that came into force this month for foreigners in selected provinces and will see expats given an A, B or C rating depending on work experience, language abilities and education, one expat (who has been in China for nine years) observed:

“As a foreigner who has been here for a long time and is quite well-established, these changes tend to have much less impact. By being well established here, one is accustomed to the Chinese ways and better able to be malleable and find a way around the changes, legal or otherwise.”

A China-Britain Business Council director was also quoted as saying that the visa moves were about clamping down on low-skilled employment and making sure foreigners coming to the country could make a contribution: “They’re just part of a natural process that China’s going through of concentrating – perhaps more explicitly than before – on attracting high-quality international talent in relevant industries.”

Finally, another expat who had first come to China 18 years ago, observed:

“Back in 1997 it was like the Wild West. It was like that bar in Star Wars – everyone was a freak of some sort. You had such extreme characters. Everyone there was either looking for something or running from something, or had a damn good reason for being in Beijing in those days. Now there are hordes of young foreigners getting off the plane every day.”

He added that since the economy had slowed, companies were not throwing “silly money at China and hoping it comes right later” as “they were blinded and seduced by the size of the economy… I think now it’s a lot more rational.” Nevertheless, he is still seeing plenty of young foreigners turning up as excited as he was as a fresh university graduate back in 1997 when he first arrived in China.

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