THE MAGAZINE

Doing Business in Asia

By Peter Piazza

A series of devastating explosions ripped through the tropical paradise of Bali late last year, leaving more than two dozen people dead and more than 100 injured, most of them foreign tourists. At least three bombs went off in the incident, all in crowded markets and near sites where Westerners gather, including the Four Seasons Resort. The bombing, believed to have been carried out by a group sympathetic to al Qaeda, was just one in a series of attacks in Indonesia that have left hundreds dead and injured in the past five years.

Indonesia is not the only country in the region where terrorist attacks are a risk. There have been no fewer than 1,700 terrorist incidents in India, Pakistan, and the disputed region of Kashmir in the past six years, leading to nearly 3,000 fatalities and more than 6,000 injuries.

Security managers know that “there has always been a tendency for bad things to stir up quickly” in some parts of Asia, says Art Brown, senior vice president with Control Risks Group. That message is not lost on multinationals, like Marriott International. “[A]s we become more and more of a global company, we recognize how much more that puts you at risk for being targeted by terrorists,” says Chad Callaghan, CPP, vice president of enterprise loss prevention at Marriott. “That is a very big challenge for us,” he says.

Terrorism is just one of the issues confronting companies that want to do business in Asia. Managers of those companies must understand the unique cultures and the differing risk environments that exist in this vast region if their ventures are to succeed.

Cultural Considerations
When I stepped off the plane in Seoul, South Korea, on my first trip to Asia many years ago, I was stunned by the chaotic scene that greeted me. Soldiers marched three abreast through the terminal with machine guns on their shoulders. Masses of people swarmed the facility. A Western friend who had been living there smiled at the surprise on my face. “Now you know why it takes 17 hours to get here,” he said. “It’s truly the other side of the world.”

That sense of surprise greeted me many other times, in my travels to Thailand, Malaysia, Laos, China, and Japan, as well as a brief trip across the Burmese border. In some cases, it was the heavy and threatening presence of the military; in others it was a feeling that there was madness, but no method, in dealing with government bureaucracies. Often that tableau of overwhelming chaos was shrugged off by the locals as no big deal.

Each country has its own cultural imperatives, so I learned to keep two lessons in mind when working abroad: Be prepared for anything, and don’t expect it to be just like home.

The same lessons hold for security professionals who may be called on to help their companies conduct business in Asia. Anyone charged with protecting personnel, information, and facilities in Asian countries must first understand local customs, culture, and business issues. Only then can they put the risks and possible countermeasures into the context needed.

Doing Business
While you need to do your homework before working in Asia, no amount of study will make it possible or advisable for you or your company to go it alone. Doing business in Asia in most cases requires a local partner with expertise and knowledge of how business gets done.

In Southeast Asia, local partners—especially lawyers—are essential, says John Muller, a Bangkok, Thailand-based security expert and consultant with MPA Security Systems who set up a private security company in Cambodia more than a decade ago.

M. Anwar Khan, security manager of the Pakistan Tobacco Company (a part of British American Tobacco), says that in his country, a partner can help a newcomer get through the laborious procedures for obtaining business licenses.

In other countries, it’s not just a good idea; it’s the law, says Muller. “The government in Laos, for example, “will not grant majority-share ownership to foreign security firms.”

Due diligence. It’s essential that these local and prospective business partners be carefully vetted. Unfortunately, that’s not always done. “Too many companies make the mistake of not investing in doing this important homework,” Muller says. “If you ‘get into bed’ with the wrong partner from the start, it is costly and can damage your reputation.”

Brown says that Western businesspeople often hire local partners in ways they would never dream of doing elsewhere. “Unfortunately, what usually happens is that the [local] partner is a brokered introduction or someone they literally run into in the business lounge at the Hong Kong airport.”

Potential partners should go through a long and intensive vetting process, Brown says. “Your due diligence is going to be four or five times greater” than it would be for a line worker “and will involve talking to some of his former employers, competitors, both your own client base and your own sales staff to see what they know about this guy.”

The goal is not simply to determine whether there is any criminal background, “but what are the reputational concerns, strengths and weaknesses, that he brings to the job,” Brown explains.

Something else to check is how long this partner stays with particular companies. “A lot of these guys are now becoming a very hot commodity,” Brown says, “and they are switching jobs on the average of 14 or 18 months, so loyalty to the multinational corporation is probably not the first thing on their mind.”

The vetting process for line workers is also important, says Johan Selle, watch operations manager with business-intelligence firm iJET. These workers gain intimate knowledge of your company’s proprietary information and operations in some cases, but they could be working for your competitor tomorrow, he warns.

Anjali Bhattacharjee, a regional analyst with iJET, adds that many Western companies outsource their business-processing units to India, putting financial information on American and British consumers at risk. “In northern India a couple of months ago, two people were convicted of selling bank information,” she says, adding that the number of perpetrators who don’t get caught—and the number of businesses that try to keep this kind of incident quiet—is likely very high.

Hotlines. Many local workers are happy to be employed with a large multinational company and take pride in it, says Brown. These honest employees are the first line of defense against a corrupt manager or employee. But workers need a way to communicate problems or suspicions to the company without risking their positions.

Brown recommends setting up a hotline that will enable local workers in, say, China to report a problem anonymously to a native Chinese speaker without having to dial an overseas telephone number. Workers must be assured that this hotline information does not come back to the corrupt manager; Brown says he’s seen this happen with poorly set-up hotlines, resulting in retribution.

Security staffing. Regional managers of multinational companies operating in Asia say that they face a host of problems in finding and keeping local security staffs. Part of the problem is that better jobs are plentiful at new factories that offer better hours plus “better pay, air-conditioned environments, free transport to and from home, subsidized lunches at the company canteen, and other benefits,” Muller says.

The problem of finding security staff is getting so bad in the region, Muller says, that some hotels and businesses “have gone to direct hiring of guards…because the guarding companies cannot deliver sufficient manpower.” He says this could lead to a host of problems, including a lack of standardized training and increased costs from high turnover and continual recruitment.

Electronic security. The growing need for security, and the scarcity of willing or qualified personnel, has led to increased interest in automated security systems in Asia. “The sector which will enjoy an increase is likely to be that of electronic security with the implementation of global access control, CCTV, and alarm systems by multinational companies,” says Jessie Ng, regional communications manager of Group 4 Securicor plc in Hong Kong. Muller agrees.

He estimates that there has already been a 30 percent increase in the use of electronic security systems in Thailand alone in the past three years.

Augustus “Ace” Esmeralda, CPP, PSP, a hotel security professional in the Philippines, has seen the same change in his country. Esmeralda notes that there has been a “significant increase on investment spending on intrusion alarms and CCTV systems” for organizations in the Philippines.

A.K. Moorthy, CPP, a Singapore-based senior security consultant with Cisco, says that he saw greater implementation of physical security devices across the region after the 2002 Bali bombing.

“There was a surge of interest in turnstiles at lobbies, electronic access control systems, x-ray machines at entrance portals for package screening, ID badges, undercarriage inspection systems,” and so on. He adds that many building owners embarked on extensive retrofit projects to allay fears from “tenants who perceived themselves as being at risk of terrorist attacks. The alternative was to risk an exodus of their tenants to other premises that were perceived to be more secure.”

Comments

 

The Magazine — Past Issues

 




Beyond Print

SM Online

See all the latest links and resources that supplement the current issue of Security Management magazine.