The emerging opportunity

The ASEAN emerging economies of Laos, Cambodia and Vietnam are potentially rich seams for companies willing to align their business objectives with public policy goals, GE’s Pornlert Lattanan tells Craig Hoy

Pornlert Lattanan is the president and national executive of GE in Thailand and Laos. From Bangkok, he manages and directs operations in a developed and an emerging market respectively, both of which lie at the heart of a diverse and complex region.

Pornlert says GE is closely monitoring public policy objectives to align its corporate strategy with national policy. “Our strength”, he says, “is that we are diversified”. “So most of the time we are in a position to tailor our strategy and business plan to fit the local market. We are flexible, we hear first from the government and then we develop our strategy. That puts us in a good position – if they don’t want to develop an aviation system, then let’s not talk aviation. If they are interested in healthcare, however, then let’s talk healthcare.”

Pornlert says the wider global GE goal is clear: “We want to be a leading  player in all the markets we enter and do so with the GE system of values. We want to be perceived as a good local player in each market. We share good practices, we do business to help our shareholders and the host country. We want to be a good corporate citizen. The world is more selective; the host country is selective; you are selective about who you invite into your own home, but you also need to be selective about where you go and which markets you enter.”

Pornlert does not overstate the importance of his role, but instead stresses the importance of South East Asia to GE. “We are not critical to this region, but this region is critical to us,” he says. “We are happy with the developments in Laos and Cambodia. They are very different, of course, but they are both successful in their own way. To do business in emerging economies you have to be adaptive to local practices and culture, but watch yourself closely on international norms and rules.”

GE is focused globally on two country types: “resource rich” countries, which have either an advanced infrastructure or significant resources to invest in this; and “emerging economies” which yield high growth from a lower benchmark. Pornlert comments: “Cambodia and Laos will grow by a higher percentage than countries such as Singapore. The lower they are, the faster they grow – the upside potential is greater. ASEAN is multi-speed so in the region our focus will be on fast-paced economies such as Vietnam,  Indonesia,  Laos and Cambodia.”

To this end, however, Pornlert sheds light on the decision-making system within major multinationals. He concedes that in an era where investment decisions cannot be taken lightly that persuading global management to pursue large growth rates in a small market, as opposed to mid-level growth in large markets, can be difficult. “That is one of my challenges,” he says.

Calculating Risk

Pornlert also admits that the ASEAN region requires greater examination and awareness of political risk than his GE colleagues in the West have to contend with. But again he stresses the local dimension. “Transparency is a relative concept. It depends on the criteria you apply. I could say that Laos and Cambodia are also transparent – which they are providing you have information and know how they operate. But if you apply the Western standard then it is easy to say they are not transparent. To be a local player you need to understand the local people and the local practices, and be perceived as a local team member to be included in the loop.”

In a region with diverse political and business powerbases, however, he also suggests that mapping the terrain is crucial. “You have to design your approach locally. Does the property and the wealth belong the state? Is it managed by a certain group? Is it party, state, family? You have to be comfortable navigating these issues and with these distinctions.”

Despite this, Pornlert questions the notion that Western MNCs face more restrictions than local operators in key regional ASEAN markets. “If you look at soccer, Australian rules or American football, I am not sure if there is any such thing as a level playing field. There will be some major teams and some minor teams and each will get support from their home crowd. Most countries in their subconscience will try to support their own side. They will always set certain rules which multinational companies will have to observe.”

This, he says, is a more acute phenomenon in emerging markets. “When you speak to officials in countries such as Laos, they will say ‘you are big, you are well connected, you are well equipped, how can we let you crush our domestic players?’. But, thank goodness, in GE’s field there are almost no domestic players in our business. So this is less of an issue for us.”

However, Pornlert concedes that as a “US company we have to observe US rules” which means that even when in a head-to-head scenario domestic and international companies have to respond to the challenges differently. He concedes that in emerging markets Chinese or Indian companies may be able to short circuit some processes, but he believes that “in the future” a system of global standardisation will be developed. “You have to compete based on one’s strength. You have to win by product, by customer service, by giving peace of mind – we are a very competitive organisation, and we will find a way of offering a superior package. But in the end, as the global village gets smaller still, and as emerging markets catch up, the international rules will be more applicable to everyone.”

Pornlert insists that GE’s wide portfolio gives it a corporate competitive advantage over single or dual sector players. “We are an infrastructure company with a financial services and media portfolio,” he says. “Within the infrastructure side of the business we have different competences – healthcare, energy, oil and gas, transportation and industrial systems. We look at the market and assess which will have a better chance, which will more applicable and then we plan our strategy accordingly. This means working with the government and the public sector to determine their focus.”

Infrastructure, suggests Pornlert, will be the major focus of regional governments for decades to come. “If you want to improve the standard of living, the quality of life, then you need to develop infrastructure, you have no choice. In these countries healthcare is key, then transportation becomes the key… and next, as people want to fly, aviation becomes important… and then, energy becomes the key factor.”

As emerging markets develop, he concedes that there will be a more discerning attitude to inward investment. “When you invest you have to show that there will be benefits for the host country. You have to see what direction the government wants to take the country in, and then shape your strategy accordingly. But when you come down to do real business you have to recognise that the government, through SOEs and directly itself, is often a customer. This can complicate transactions in this region.”

Partnership where it works

Whilst Pornlert is a straight-talking advocate of the GE brand and its values, he is ready to concede that it needs to work with its national trade or industry groups to achieve its wider objectives and to shape the political and regulatory framework in which it operates. “The more partners you have, the more complicated life is,” he says. “But it does not mean that we do not work with our partners. The world has grown so big, and so complicated, that if you want to achieve things, to get things done on time, to do things well, you have to partner with others. We can cover many areas as GE, but we have to reach out, be that with local partners or industry partners.”

And despite his locationalisation mantra, he is insistent that GE sets strict international rules on its staff – “whether you work in Angola, Vietnam, China or the US”. And the firm’s chief says all staff are comprehensively inducted and must abide by the same rules and value system from country to country. “In Thailand you greet with a Wai whereas in Japan you bow. That’s localisation. But it has nothing to do with core values or a company’s operating system.”

Pressing this point, and in conclusion, Pornlert goes back to the message that controlled diversity is both a strength for GE and for the emerging markets of the ASEAN region. “Each economy and each society is different. Being a copycat does not work anymore. You have to find your own way, your own standard, even when localising international standards. There is no place in the world where you can go in and change things to fit your company or working practices, but when you say ‘this is not allowed’, or ‘there will be no bribes’ you have to know corporately that it is definitively not allowed. You have got to say what you mean,” he says.

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