The World Is Bigger Than You

The following is an edited excerpt from the book The Way of The Laowai: The Importance of International Self-Awareness for Businesses by Tyler Johnson.

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Two-thirds of the population of the entire world lives in Asia. That’s nearly 4.5 billion people as of 2018, with over 35 percent of the world’s population living in China or India. In China, there are over a hundred cities with more than a million people in them and at least fifteen cities with over ten million residents. In comparison, the United States has only ten cities larger than a million people and no cities with over ten million people.

The scope of economic growth in China alone is incredible. In 1981, 88 percent of China’s population was below the poverty line. In 2018, it’s less than 2 percent. In less than forty years, over eight hundred million people in China have lifted themselves out of poverty. That’s over two times the total population of the United States. This is a remarkable feat that will probably never be replicated again in our lifetimes.

As you can see, the United States is just a small part of a much larger economic picture. The entire world has an estimated debt of $200 trillion6 (the exact number is hard to pin down due to shadow banking, lack of transparency in many countries, and how “debt” is truly calculated). The United States, despite being the largest economy in the world, possesses anywhere from 10 to 20 percent of that debt, depending on how you calculate. Yes, we are a major player, but we are only one of many, and this highlights the extreme pace of growth across the world.

Over the course of my career, people have asked me many questions about working in Asia, such as “What part of Japan is Hong Kong in?” At first, I was shocked by their ignorance, but over time, I have come to realize that many people have no idea about the scope of the world, much less basic geography.

There are roughly 196 countries in the world, and close to eight billion people. That’s a lot to wrap your brain around. Each of these countries is complex in its own way. They sometimes share similarities, but they each have their own culture and characteristics, their own borders and relationships. In every location you want to do business in, you need a grasp of these particulars. In each place, business needs to be conducted differently.

The world is big and full of opportunities if you can keep your perceptions in check.

A Shift In Perspective

China is made up of thirty-two provinces, or some people say divisions, just like the US has fifty states, but the population is much larger for each province in China. With continued migration to the cities, by around 2030 the largest cities on the coast will exceed fifty million people each. Infrastructure is now being completed to connect some of these megacities into “super cities” of 120 million people or more. The connections between the southern cities of Hong Kong, Shenzhen, and Guangzhou have already been completed.

My initial job in China with Dell was to shadow local leaders and “teach” them how sales management works. This still makes me laugh. I was the one being taught. About halfway through my tenure in China, I led the professional services organization for Asia. This included all IT infrastructure professional service: PC help desks, data center design/management, cloud migration, and business process operations. Simply put, we sold people’s time with some tools to manage their business.

My team had the opportunity to sell one of these large service contracts to a banking-related state-owned enterprise (SOE). We went to them to speak about the best practices for automating their bank transactions and the additional technology we could provide to help with that. After we finished our detailed pitch, the client quickly came back to us and said, “I don’t think you guys understand what we need.”

At that time, I had a pretty big ego and couldn’t fathom the rejection. Why didn’t they understand the unique opportunity to partner with an American company? Did they not see the opportunity my colleagues and I were offering them?

Once they began to explain the number of transactions that they do in their province daily, my jaw dropped. They did more banking transactions in this one province than the entire United States does in one day. They didn’t believe our system could handle that, and I thought they were probably right. We needed to start smaller.

Our pitch ended up failing because we couldn’t support that province’s needs, but my perspective on the world changed in an instant. This was a lesson on the size of the world outside America. I didn’t understand the scope of what I was dealing with because I had never encountered it before.

That pitch sent us into a bit of a panic, but we regrouped, and that anxiety turned into excitement. There was a pervasive feeling of “Oh god, we’re going to need a bigger boat!” This whole enterprise was a lot bigger than we’d anticipated, and we would have to rethink our approach.

The Challenges Of Big Populations

In 2006 I frequently traveled domestically in China for work. Once, I was on my way home to Shanghai when I got stuck at the very crowded Shenzhen airport. There were delays, and the crowd was extremely frustrated. The gate was packed with people, shoulder to shoulder. One guy in particular was causing a stir. Suddenly, a fight broke out, and that passenger took a swing at the female gate agent. People were pulling them apart, and others in the crowd began to get involved separating them. I looked for the exits, but the area was so crowded there was no chance of escape. All I could think was “Where are the police?”

After what seemed like an eternity, but was probably a few minutes, guards appeared. Instead of going after the rowdy passenger, they took the ticket agent away. The customer who had instigated the brawl got back in line and boarded his plane.

I was astounded. In America, a passenger who attacked a gate agent like that would have been arrested. Instead, he was just allowed to go on his way. It seemed crazy to me, but in China, it’s just crowd control. Security got there late. The guy who’d started the fight had the crowd on his side. The guards had to pacify the crowd or risk starting a riot they would be unable to control. So they took the path of least resistance to defuse the conflict.

China has a long history of walking the balance between controlling the population and preventing uprisings. There are just so many people that there is no way to control all of them. My experience at the airport really illustrated how important it is for the government to keep things in line using methods other than force. This includes strictly controlling the media and flow of information to the people. The sheer amount of people in China makes it difficult to keep everyone happy. Managing and maintaining control can be difficult, and communication and information are critical.

On-The-Ground Experience

India and China are both huge markets that companies are very eager to tap into. On occasion, I would be in India when Dell executives from the US or Europe came to try to understand the business environment there a little better. This was code for telling us what to do, because they obviously knew best. I once drove from the airport to the office in Bangalore with one of these executives. We had to go through a series of tollbooths along the way. The executive couldn’t understand why there were still people manually taking tickets in each booth when the process could be so easily automated. He wanted to know why we weren’t jumping at this enormous opportunity to sell our technology.

What the exec didn’t understand were the economic realities of life in India. Each of these tollbooth operators only made around one US dollar a day. Why would the city invest millions of dollars on a solution they didn’t need when they could pay ten guys to collect tolls for nearly nothing?

When he realized the situation, you could practically see a light bulb go off above his head. He finally got how complicated the local environment could be. After that, the Dell home office stopped insisting we push that particular service and started looking for other ways to break into the market.

You can’t manage from afar without understanding the dynamics at play on the ground. Sometimes you really need to be there, in that foreign place, to see for yourself. These moments of deep understanding are extremely helpful because they allow you to pivot and develop unique products and services that best suit the market you are trying to break into.

Major Takeaways

The world is only as big as you make it. Be curious and open-minded so that you can take advantage of the many opportunities out there.

An Expansive Market

The sheer size of the markets in the East means that there is a nearly endless wealth of opportunity. The implications for businesses are huge.

In China, you don’t have to go after the whole market; you can find niches within which you can be extremely successful. Just 1 percent of market share in China is a huge number.

Solutions Tailored To Specifics

In developed markets, businesses are trying to fit into a market where the average spend is much higher. It might be more challenging to sell a $5,000 computer in Asia, where average incomes are lower, so there needs to be room for adaptation and adjustment to local markets.

Developed markets tend to have ingrained practices when it comes to products and services. In Asia, there is a lot more room for variation and improvisation. In these emerging markets, you can test services more easily as you tailor solutions to the people you are selling to. Yes, it’s a more competitive market. This is good. Follow the money.

Keep An Eye On Increasing Prosperity

In order to put a measurement on the future potential of the Chinese customer base, our company tracked per capita income in China compared to the rest of the world. Developed countries tend to spend a lot because they make a lot. The US per capita income is roughly $58,000 USD, compared to China’s $8,000. That seems very small, but consider this: in 1990, China’s per capita income was around $350. At this rate, by 2025 it could be $18,000.

With this rapid growth in wealth comes rapid spending. Back in 2005, I remember trying to imagine what China would look like in ten years. Today the Chinese are opening more bank accounts and buying more cars than ever. There are more Porsches, Ferraris, and Bentleys on the road there than you’ll ever see in the US. There are only three ways for Chinese nationals to spend money legally: buy local stocks, buy real estate, or spend their money locally.

As companies look to grow in certain areas, they should follow the money. An increase in prosperity for consumers is going to translate into massive spending increases. It’s simple logic that the more people make, the more they are going to spend. This opens a wealth of opportunities. The average person in China saves somewhere around 50 percent of their income, compared to the US citizen’s 1 percent average savings. Now, imagine how much money would flood the market if that 50 percent savings went down to 25 percent.

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To keep reading, pick up your copy of The Way of The Laowai: The Importance of International Self-Awareness for Businesses by Tyler Johnson.