September, 2013

Fruits of Thought

Lessons From Hong Kong

The hotel rises from the heart of the central district of Hong Kong, and I can see spectacular views of Victoria Harbor from my suite on the 42nd floor of the Four Seasons Hotel Hong Kong. The hotel is part of the International Financial Center, which contained the tallest building in Hong Kong when it opened in 2003 — but this being Hong Kong, such records don’t last long. Now I stare across the harbor at the International Commerce Center (ICC), the tallest building in Hong Kong and the seventh tallest in the world.

The wealth here is astounding. The ICC is crowned by a Ritz-Carlton, and every other building seems to have a mall with more upscale stores than any in America. The purpose of my visit was to attend Asia Fruit Logistica and the Asia Fruit Congress. The organizers are attempting to build an event such as Fruit Logistica, the giant Berlin event held each year in Europe, in Asia.

I would strongly recommend Americans go to Asia Fruit Logistica, partly because it is a well organized event with quality programming and attendees — but mostly because not too many Americans go. It is, of course, important to attend the mainstay American events, but we see that as the ante necessary to remain competitive. To gain a competitive edge, one has to go beyond what one’s peers are doing by visiting new places and making new contacts. This reason is why we here at Produce Business joined up with the Eastern Produce Council to launch The New York Produce Show and Conference. For many in the industry, the intricacies of distribution in the Northeast are such that they might as well be in Hong Kong.

We had lots of meetings in Hong Kong and, in the past, have delivered many speeches for some of Asia’s leading retailers. As such, we have lots of friends there, and whether it was a dinner or an office meeting, we came away with much optimism. So many people, so many moving into the middle class, import, export, partnerships and direct investment — all of which offer opportunities for those active in the produce trade.

The potential for trade is vast, but the path may be tumultuous, and not a little treacherous. You really need a partner who knows the business, knows the landscape, and has the right connections. You also need to be prepared to invest with a very long-term perspective. When McDonald’s opened in Hong Kong, nobody could cut lettuce to the food safety standards McDonald’s required. Management didn’t see this as a reason to not open, so they flew in product daily from Sydney, Australia. It was financially a loser but part of a long-term strategy to build presence in an important market. As McDonald’s acquired scale, they would teach or entice someone to meet their standards, and they did.

Hong Kong itself is an anomaly, being part of China, but different. The slogan is “One Country, Two Systems,” but tiny Hong Kong, with its British heritage and its Common Law legal system, has the winning system. It is not exactly clear how/if the rest of China can make the adjustment.

In Asia, one realizes the outsize role America plays in the world. All the conversations were about how rising U.S. interest rates would suck money from Asia. Frankly, when the U.S. sneezes, the world still catches a cold.

Still, I found myself conflicted in Hong Kong. On the one hand, I was invigorated, seeing such a youthful society so filled with strivers. I drew vigor from the contacts. Yet I confess I also worried for the fate of the West. I was, of course, dealing with elites. CEOs of supermarket chains, investment bankers and owners of foodservice operations and entrepreneurs of all types, but I know plenty of elites in America and Europe, and I know few as ambitious, hardworking and anxious to self-improve as those I traveled with in Hong Kong.

One analyst went to Oxford and had a successful career at a prestigious investment-banking firm where she works lengthy days. She would stay up late to study for the U.S. certified public accounting exam, simply because it increased her knowledge and one day it might prove useful. How many Americans are signing up for that gig?

Another woman could have studied law in China but decided to travel a different road, learned perfect English, and then went to NYU law school. It wasn’t just those with high-end careers either; a woman who worked for a supermarket in a middle management position explained that she worked each day until 2 a.m. but had trouble finishing all her work. The willingness to work hard, the thirst for self-improvement, it was all both inspiring and chilling.

The produce industry in the U.S. argues for immigration reform on the basis that few Americans are willing to harvest produce. Many take this to mean that Americans are only interested in higher-end jobs. But we don’t know many Americans interested in working 12-hour days and then wanting to study for the CPA exam in their free time.

We don’t know many supermarket employees happy to work until 2 a.m. each morning. In Hong Kong, we met wildly educated and most sophisticated people who are close enough to a world of poverty to want to make sure they stay far from it. Motivation comes from both carrots and sticks, and the sticks in China are such that you definitely do not want to fall backwards socio-economically. The Chinese system has many challenges to overcome, but the ambition and industry of the Chinese will make them very tough to beat.                                           pb