Banyan Tree’s Ho Kwon Ping: “Asia is going to be a primary engine of growth, but that growth can come to a sputtering stop if our business models are not sustainable”

Experts call for Asia-based models

Achara Deboonme,
Annika Bhasavanich
The Nation July 24, 2013 1:00 am

Fresh approach needed for sustainability, added strength in view of long-lasting global uncertainties

Asian companies need to invent their own business models for long-term sustainability, models that address social and environmental costs, highlight brand building, and capitalise on the diversity of Asian culture, said panellists at an international conference. 
New models are a must as Asia has to strengthen its resilience to global uncertainties, which are not likely to end soon as long as most global trade is denominated in US dollars, agreed participants in a panel discussion on “Asia: Sustainable Business Models” at The Nation International Conference last Friday (July 19, 2013).
“Asia is going to be a primary engine of growth, but that growth can come to a sputtering stop if our business models are not sustainable,” said Ho Kwon Ping, executive chairman of Banyan Tree Holdings. Although Asia may be driving the world, it is possible that it may “drive itself off the road and end up in a car crash”, he said. Citing computer giant Dell’s recent potential takeover as a cautionary tale, Ho stated that Asia must make a conscious commitment to sustainable business models to lead the world economy responsibly. 
The 2005 recipient of the London Business School’s entrepreneurship award asserted that Asian executives and business schools must develop an “Asian” business model to replace the dominant “Anglo-Saxon” or “Wall Street” capitalism model focused on risk-taking and short-term growth. 
This model, Ho suggested, would be more balanced, sustainable and “communitarian”, beginning with the small yet significant change of vocabulary from “shareholder” to “stakeholder”, thereby including the interests of employees, customers and the community at large in a company’s primary goals. Paul Hugentobler, a member of the executive committee of Holcim with responsibility for South Asia and Asean, stressed three pillars – profits, society and environment. For sustainability, companies can play a role of development partner to improve education and water quality as well as provide vocational training, health services, and jobs to youth for communities. 
“For manufacturing companies, it’s very critical to develop the environment and society pillars,” he said. 
Yeap Swee Chuan, chairman and chief executive of AAPICO Hitech, said there was not yet a sustainable model but his company strove to invent sustainable products for the global market. Diversification is good but specialisation is better, he said.
Edward K Y Chen, chairman of the advisory council of the Hong Kong Monetary Authority’s research institute, noted that there was a way of building up good business through “rational and sequencing reforms” amid three characteristics of the new economy – digitisation, globalisation and concentration of capital. 
Asian businesses must beware that technological changes happen every second. Amid globalisation, Asia grows as a region under the “Flying Geese” concept – when a growing country helps spur growth in others. 
Asian businesses should also bear in mind that gaps between the haves and have-nots will expand, and this can be addressed by social responsibility – which would help absorb some of the government’s responsibility.
“The comparative advantage is not natural. It must be acquired,” he said. 
Ho suggested another meaningful change to business culture in a restructuring of executive pay packages through defining new performance metrics around associative satisfaction indices rather than only short-term profits. This can start at business schools, to find a new measuring matrix. “We need to re-incentivise people under the new matrix for senior executives.”
Ho also emphasised the importance of building brands rather than contract manufacturing, stating that the latter was in essence unstable. “Having a strong brand is not a heritage but it’s imperative to survive in today’s world.” 
Above all, he declared, adaptability is essential for long-lasting economic strength, stating that in light of changes in the environment and technology, “if we do not constantly reinvent ourselves, we are not sustainable”.
And he acknowledged that Asian businesses were to play a major role in driving the economies in light of the “unsustainable” nature of the government sector.
Saying that the US dollar should not collapse and therefore there will not be a drastic change in US monetary policy, Chen noted that quantitative easing would send risks to ASEAN for five to 10 years. 
He foresees that no other currency – yen, euro or even yuan – will replace the dollar as a reserve currency. China just liberalises the capital account and does not internationalise its currency. For the yuan to replace the dollar, China would need to have a totally transparent policy formation. 
Amid pressures on business, Sorajak Kasemsuvan, president of Thai Airways International, and Oudet Souvannavong, vice president of the Lao National Chamber of Commerce and Industry, still see a chance that ASEANwill continue to prosper, particularly on the back of the ASEAN Economic Community.
Sorajak stressed the need for better connectivity of air, sea and land transport in the region. 
Better connectivity particularly in ASEAN would bring about trade and economic growth for the region. At THAI, market segmentation is the key to serve three categories of passengers – people travelling to Thailand, people seeking connecting flights, and people favouring low-cost travel.
Oudet added that trade would be improved as more is denominated in local currencies, rather than the dollar. 
He sees the chance that this would be extended from countries in the Greater mekong Subregion to India and China.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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