The big mistake Canadian companies make in China

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This is the first in a series of five interviews with entrepreneurs who are attending the third annual Global Summit of Leaders this week at Royal Roads University in Victoria. Peter Nixon, a featured speaker, joins leading CEOs and business owners from eight countries, moderated by school alumnus Dean Lindal.

Mr. Nixon describes himself as an English Montrealer who got his chartered accounting degree and joined Coopers & Lybrand, one of the big firms at the time, before making the decision to gain international experience. "My wife and I decided to go to Geneva first because we spoke French and we loved Europe, and after that we said 'well, let's get some experience in Asia,' so we tried Hong Kong and that was amazing."

A few years after arriving in Hong Kong in 1989, Mr. Nixon founded Potential Ltd., which helps clients facilitate, negotiate and implement change. "I'll work with partners on every engagement. So I've got lots of other consultants that I partner with, there's lots of clients that I partner with. But I'm the sole shareholder."

Question: Why did you and your wife decide to stay in Hong Kong?

Answer: Every time I looked at going back to Canada, and comparing that with the opportunities to stay in Asia, there was more opportunity in Asia than what was apparent for me in Canada, at least in Montreal. … I carried on my career, it was very good with the firm I was with, and then in 1994 I started my own firm with some guys in London that I'd been working with. I was a bit entrepreneurial, I thought I'd give it a try and see how it goes. I figured 'if you can't do it there, you can't do it anywhere.'

And it was great. Every client we spoke to instantly needed help. We were focusing on organizational development for professional firms, but there were very few people providing international best practices in Hong Kong in the early '90s. It was just a green field, great opportunities. That went very well, and the business grew, and I started a family, and as it happens in such cases you've got no time to think of anything else.

It was a roller coaster through the Asian currency crisis and SARS and bird flu and global recession. Despite that, whether you're making money on the way up or losing lots on the way down, it's an amazing roller coaster and an amazing place, culturally, to live. It's like the crossroads of the world. Living in Hong Kong also provided me the chance to work all over the world, so I think I've worked in all the BRIC (Brazil, Russia, India, China) countries now except for Russia and I've got some 60 countries under my belt, so it's been pretty exciting.

Meanwhile the family has done really well, the schools are fantastic in Hong Kong and the two oldest kids are now in university in Canada. My wife has continued her international school career teaching kindergarten and she has enjoyed that. We come back to Canada every summer for several weeks, so we've kept up our Canadian connections. And I've come back a couple of other times a year for business as well.

Question: Do you do a lot of consulting for Canadians who want to do business abroad, or who want to expand their operations abroad?

Answer: The answer is yes, but I don't only do Canadian work because Canadians are small in number, so most of my work is for non-Canadians. I'll offer a special discount to Canadians, and I always welcome Canadians, and I always respond to Canadian requests. For example, I just helped somebody move in, find schools, and figure out where to live.

From a business point of view it's often about negotiating. It seems that people from any country land in greater China without their eyes open as to what can go wrong and how they can lose. They kind of have a little bit more trust than they should. I just share my experience on what can go wrong and how they might avoid the pitfalls.

Those who ask get the help, and those who don't ask make the pitfalls and then they come in and say 'listen, we had these problems, what do you suggest we do?' So some of the Canadian requests come before they make the mistakes but more of them come after.

Question: What would be the No. 1 mistake made by Canadian companies?

Answer: Not being prepared to negotiate everything. Every time there's some form of transaction, if you're not prepared to negotiate everything you're going to surrender a margin, whether you're buying or selling or managing people, everything's negotiable. In our culture in Canada, we're not always used to that. We're used to people doing what they say they'll do.

Question: What is your book Dialogue Gap about, what were you trying to achieve with it, and who is the target audience?

Answer: Over all the years doing negotiation I found that as people came to the table the skill of conversing through deals was dropping. I found that as people became more digitally focused and communicating through e-mails and texts and everything else they became better communicators but worse at dialogue. I coined the term 'Dialogue Gap' to suggest that at a time when the world needs more dialogue we're actually getting worse at it.

And I threw it out there thinking that I might have to teach and argue and defend the point a little bit but a year ago, or 18 months ago, when the book hit the market, the world responded and said, 'absolutely, we agree, what can we do about it?'

So I didn't have to spend any time saying what it was and I had to focus and respond to an overwhelming global response to 'we need help.' Governments, private sector, entrepreneurs, schools, charities, everyone's asking and everybody's saying 'yeah this is a big problem, what can we do about it?' Now I'm at another stage in my business career where I'm trying to figure out how to mobilize the licensing and get people around the world to pick up materials that I've developed and take that into their own markets in their own way.

Question: You were recently invited to speak in Iran. Who invited you, and what did you learn from the experience?

Answer: The organizer is an entrepreneur who invites international speakers to Iran to address the country's top 1,000 business leaders. He's doing it for profit motive but he's also doing it to bring international best practices into his country in the hopes of opening up the country 35 years after the (1979) Revolution. Americans can't get in but there were six of us on this tour: two Canadians, two Brits and two Kiwis. We each spoke for an hour on day one, and an hour on day two, and around that they have a lot of networking and VIP stuff.

I had been invited four or five years ago when the election was on and (candidate Mir-Hossein) Mousavi was gaining ground and violence broke out and they shot that lovely girl called Neda. It was a different group who had invited me at that point and they called and said 'sorry Mr. Nixon, you can't come this time.'

I had already been interested, and I'm always interested in visiting new places. When this latest invitation came I was still interested, but I checked it out and spoke to the consulate in Hong Kong, and I spoke to speakers who had been there before to make sure it was safe. Everybody was saying 'fantastic.' I checked out Lonely Planet they said it's a favourite destination of frequent travellers, so I said 'let's go for it.' And it was great.

What I didn't quite expect was a little twist at the end when a senior adviser to the Ayatollah asked me for advice on negotiating with the U.S. That was pretty cool.

Question: So you say you think there will be opportunities for Canadians once the Iranian government 'opens up.' Are you expecting that to happen, and what will those opportunities be?

Answer: In our conversations we pointed out that the president shouldn't be trashing Israel. Two days after the conference the Ayatollah came out and said nuclear war was immoral. Then they had their election and President (Hassan) Rohani came to power saying he wants to open up to the world. I think they're positioning to reopen to the rest of the world.

They still have an issue with America but I think that will work itself through. Once that does, it's a country of 70 million people, with lots of opportunity for Canadian organizations to move in and help them pick up where they left off 35 years ago. There's a lot of know-how, there's not a lot of wealth because of the currency embargoes, but there's a real tradition though the whole history of the Persian empire of trading with the rest of the world.

They're also very interestingly positioned with that part of the world. So they'll trade east and west, and then they're quite different from the Arab world. The big risk, of course, is the Sunni-Shia split, and the problems that continue with Pakistan, Afghanistan and the Arab world. But like any market outside Canada, there's risk, and so you just have to assess the risk and assess the reward. There's also a huge Iranian community in Canada and they're the perfect link back to the culture and the language and the way of doing business.

Question: You have a content licensing deal with the Chinese government. How did that happen? What was its interest in your work?

Answer: Wiley owns authors, so they have content and as the biggest business book publisher in the world they're trying to sell their content in foreign languages. They approached the Ministry of Posts and Telecommunications with a number of titles and China expressed interest. When they called and said they had a deal, I said, 'maybe before we pop the champagne we better assess why they've done this, and one assumption might be that they don't want dialogue. I talk about Tibet in my book and they might be buying it to get it off the market.'

But I checked it out and it is going ahead, they are translating, and the publisher is keen to get to different parts of China once it's out and we'll do some good marketing of the book. It's interesting because Chinese companies are moving all over the world and they have to learn how to dialogue more effectively to get the best economic outcome for their companies and their country. And the government is doing all it can to support its businesses.

On a global scale, Canada is kind of split provincially, and even if Team Canada can step up against all these big nations, which are working pretty cohesively, even if we put all our eggs in the same basket, we're still challenged because we're so small compared with these big countries. Like the BRICs.

On the other hand we are very effective and we know how to do it and we've got some track record in doing it well. My goal in getting China or anybody else to work with my material is, as both sides come to the table, if we have more effective dialogue we'll have a more effective outcome.

Question: You've identified Brazil as a place with a lot of opportunities for Canadians. What are the key areas?

Answer: I think Brazil has a big population with smaller know-how. I see them a bit where I saw China 20 years ago, where the government wants it to go. They need help in all aspects: how do you do it, how do you run it, how do the companies actually do it, what about infrastructure, going to market, getting minerals to port? All of those issues that Canada knows and does well, Brazil needs help with.

Of course there are challenges. The government has bureaucracy issues and there are some cultural and language hurdles, but they're pretty easy to overcome. I found the people absolutely willing, and I think that's showing their desire to step up and become global leaders. And when that happens, the red carpet is there for businesses to give it a go. After that it just depends on how successful you are at doing business.

Peter Nixon is headquartered in Hong Kong, he is an international speaker, consultant, trainer, and board adviser, and he is the author of Dialogue Gap and Negotiation: Mastering Business in Asia.

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