My desire is to create a platform that will enable efficient partnerships between China and Eurasian countries. The main challenge so far is in the people themselves, in their understanding and thinking. I really want to give entrepreneurs a new, broader vision so that they will know their way around both Western and Eastern markets and life models. The East offers a lot to learn from, including models for development, spirituality, and material achievements. And I sincerely believe that by showing successful cases and partnership models of interaction with China, we will help entrepreneurs create new success stories that will grow the national economy and contribute to the development of the global economy.
I had the pleasure to interview Oleg Remyga. The life experience of Oleg Remyga, an expert in HKUST-SKOLKOVO EMBA for Eurasia programme, has always revolved around the Celestial Empire. In the roles of Head of China Unit in the SKOLKOVO Business School and representative of the business school to China, he develops educational programmes for entrepreneurs seeking to do business in Asia. He draws on both his professional and personal experience in China in his work.
Thank you so much for doing this with us! Can you tell us the story about what brought you to this specific career path?
I grew up in a family of a professional sinologist, so China, a mysterious country with a unique culture, has been a part of my life since early childhood. Even my first (unofficial) name was Chinese. My father was away on a long business trip when I was born, so my parents had to decide on my name over the phone. After talking it over with some Chinese friends, he gave me a “temporary” name — 列亚力, or Leyali. 力, “Li”,means strength, 列“Le” is a character, which sounds similar to the last name Remyga, and 亚“Ya” stands for ”Asia.”Altogether, it can be translated as “the strength of the Remyga family in Asia.” From that very moment,my connection with China began.
The “Chinese” family business has made it clear that the economy of this country is taking a leading role in the world, and the Chinese language is becoming increasingly important for business communication. So when the time came to decide on a future profession, I chose to become an Orientalist scholar, making the financial and banking system in China my primary focus.
Are you working on any new or exciting projects now?
I am the Head of China Unit at the SKOLKOVO Business School. We partner with Chinese business schools, professional business associations, and government corporations and employees, helping them to understand, through professional development, the specifics of the Russian market — potential niches in the industry and the culture — so they can build strategies for doing business in the Russian and Eurasian markets.
The professionalism of Chinese entrepreneurs has grown significantly in recent years. The activities of many companies are going global. They are entering the complex and sometimes incomprehensible markets of Eurasia. Now they are way past the stage when they favoured inertial market penetration, trying to identify profitable industry niches or key customers, essentially at random. Chinese businessmen suffered too many failures with this approach. Now, Chinese business is striving to understand context through education, analytics, platforms, and business contacts (there is even a special term in China for such contacts — 关系, or guanxi). Fundamentally, they are building their activities whilst considering the strategic context. In this respect, the Moscow School of Management SKOLKOVO is their natural guide to the Eurasian market.
Today, business education, in general, is of great interest for the Chinese because, among other things, the government incentivizes companies to enter new markets, and Chinese businesses listen to governmental recommendations very carefully. For example, in 2013 China announced the Belt and Road Initiative, which is designed, among other things, to unite Asia and Europe into a single economic region. It spans more than 70 countries with a total population of 4.4 billion. The initiative has already shifted the Eurasian economy — over the last seven years the region raised approximately $98 billion in investments to implement 168 projects.
Now, in partnership with HKUST Business School in Hong Kong, we are launching a new educational programme — EMBA for Eurasia, which will educate entrepreneurs on how to do business in the countries of the Belt and Road Initiative. Seven countries, including China, the U.S., Kazakhstan, Russia, Armenia, Israel, and Switzerland, will host the educational modules of the programme. Its graduates will receive a double diploma from both SKOLKOVO and HKUST.
None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped you get to where you are? Can you share a story about that?
In my case, there are several people. My parents set a direction for my development. Sergey Dubinin, a very well-recognized name in the financial sector, showed me how finance and economics operate as a whole and helped me understand how to work efficiently in a state bank.
Ruben Vardanyan introduced me to the entrepreneurial universe and a global perspective of business cooperation.
Chen Yuan, the former head of the China Development Bank and my mentor when I studied at Beijing University, helped me understand the processes of the Chinese financial sector.
And, of course, my colleagues at the Moscow School of Management SKOLKOVO. We are constantly learning from each other as the development of human capital, and life-long learning are the school’s key values.
What do you think are the new untapped markets in China that may become the next “big thing”?
I would point to several markets. The first one is education. The 20th century was the century of the development of machines and technology, and now it is time for the development of people, intellect, and talent. And education is the only way to improve these assets. The more intellectual and creative capital is called for by the economy, the more demand there is for education. And I’m not talking about education in the classic, academic sense, but rather about unique and non-standard methods and approaches.
When we talk about new niches, we need to remember that everything in China is done in accordance with state policy, or the “general line of the party.” We can understand the direction of the country if we take a close look at state programmes deployed in the technological sector, such as “Made in China 2025” or “Internet+.” It is clear that the high-tech sector — big data and AI — will grow rapidly as an enormous amount of both private and public resources are being directed to this area. So, new companies similar to Huawei or Lenovo will emerge in this field. Alternatively, think about the e-vehicle market. China is becoming a trendsetter and, to some extent, stealing the role of the pioneer from Elon Musk. A start-up infrastructure is actively developing, making it more practical and offering easy access to investors. Many Silicon Valley entrepreneurs are moving to China to launch their start-ups there — Alibaba, Tencent or Baidu are already at the forefront of this process.
A different case can be seen in the premium goods niche. It is still untapped yet developing more and more as China becomes a wealthier country. The numbers clearly indicate this trend — the average cost of labour in China is now $758, which already exceeds that of Russia. Therefore, the Chinese are increasingly demanding higher quality goods, such as clothes, consumer electronics, home goods, and food. The same context applies to the environment. The Chinese are already shifting from an extensive growth model to an intensive growth model, which prioritizes quality over quantity. Any industry or products associated with the reduction of environmental hazards and the promotion of sustainable practices are relevant now.
What challenges do these new markets face? How would you address them?
The challenges are not unique to these industries. It is more about the need for international entrepreneurs to take into account the characteristics of the Chinese market as a whole.
Can you share the biggest challenges of doing business in China and how you overcame them?
First of all, the competition in China is extensive — any interesting idea will be immediately copied in an attempt to fill a promising niche, meaning you have to continually adapt and change. Chinese companies usually focus on more than one product or market. One business might own a manufacturing facility, a bank, anda hotel chain. This intense amount of competition encourages you to have diverse businesses to increase your chances of success. Your competitors are very likely to outperform you in a certain niche due to higher efficiency, and then diversification will help the company grow. This is the main challenge.
But if an idea survives in the Chinese market, it scales very quickly. In China, manufacturers have access to a huge domestic market of 1.3 billion and the shortest path to an IPO after reaching the market with your product or technology. If you look at the list of the world’s largest corporations in the Fortune Global 500, Walmart, from America, tops the list, followed by companies from China.
The second factor that is very important in China is understanding the customer. The Chinese are different because they have different cultural norms. China is a completely different civilization. It takes expert training to understand how to make a proper customer offer in this market. There are many nuances that are critical for Chinese companies but totally irrelevant for Western ones. Let’s say you have a presentation prepared for negotiating with representatives from Germany or England — you can’t just simply translate it into Chinese. Visual representations mean nothing to the Chinese. This cultural, emotional, and intellectual transition is very difficult for those who want to do business here as it is directly related to a shift in stereotypes. People usually think of China as “filthy,” “poor,” “cheap,” or “always deceiving.” Many are shocked to learn that entrepreneurs from Silicon Valley are coming over here. In order to succeed in this market, you need to understand and, most importantly, take on the characteristics of the country and the mentality.
The legal aspect is the third challenge. The majority of Russian businessmen use English law in conducting international activities, but accessing mainland China requires the use of a totally different legal system, unlike that in the West. For example, the Chinese law lacks some codified law-making acts (such as civil or tax code), so experimental law making is used.
However, there is a friendly mediator — Hong Kong, where English law is used. But the use of this mediation brings additional transaction costs. While such costs may be insignificant for large companies, small and medium businesses often find this mechanism too expensive.
We keep hearing about the “Trade War.” What are your thoughts about it? Given the unknowns, how do you plan to pivot?
The sanctions are here to stay, and China has no illusions about this. For example, the founder and owner of Alibaba Group, Jack Ma, believes the U.S. sanctions policy will last for at least 20 years. These processes have to be taken into consideration in long-term planning. On the other hand, sanctions (or needs that arise due to these restrictions) create new business opportunities. America prohibiting the supply of certain agricultural products to China creates potential opportunities for many businesses from other countries, like Russia for example. The American sanctions policy is one of the reasons for Russia currently being the largest supplier of wheat to China.
In general, the American sanctions are not so bad for China because the country possesses a huge domestic market. For instance, Shandong, which is not the largest province, has a regional domestic product of $1 trillion with a population of 110 million. There is great potential in the areas of investment, production, and technological development. The restrictions imposed on China by the U.S. will only stimulate the domestic economy, and import substitution will flourish.
Can you please give us your favourite “Life Lesson” quote? Can you share how that was relevant to you in your life?
I love two Chinese sayings. One of them is well known to all who learn Chinese, and it goes like this: “nothing is impossible if you have the will.” I always use it to guide me when starting new projects. If you invest as much as possible into the process, everything will work out.
And the second one, though it might sound trite, says “there are no insurmountable challenges in the world.” If you’re alive, any issue, any challenge can be overcome.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
I hope what we do at SKOLKOVO Business School contributes to such movements. My desire is to create a platform that will enable efficient partnerships between China and Eurasian countries. The main challenge so far is in the people themselves, in their understanding and thinking. I really want to give entrepreneurs a new, broader vision so that they will know their way around both Western and Eastern markets and life models. The East offers a lot to learn from, including models for development, spirituality, and material achievements. And I sincerely believe that by showing successful cases and partnership models of interaction with China, we will help entrepreneurs create new success stories that will grow the national economy and contribute to the development of the global economy.