"The key to success is respect"

Logwin Magazine 01/11 A European in Asia "The key to success is respect" Born in Holland, he studied in Singapore and France and then launched his career in China: Henk Westerhoek is truly international. Since 2009, the 49-year-old is Country Director Central and Northern China at Logwin. He knows that language skills are not sufficient in and of themselves to smooth the road to the Middle Kingdom. Logwin Magazine: Mr Westerhoek, you speak six languages fluently, including two Chinese ones. What characterises a truly international business person in your mind? Henk Westerhoek: Regardless of speaking foreign languages, I think the main issue is to respect and understand other cultures, which allows you to realise and maximise the opportunities to the benefit of the various parties concerned. I have had the opportunity to live in a variety of countries over the years and I have always made it a point to learn the language of these countries. This has brought me closer to the people and through these contacts I got a better understanding of and insight into the culture and the way its people think. Therefore, in my eyes, a real international business person is someone who can transcend borders and cultures. Logwin Magazine: How important is the language in understanding the people and their mentality? Is it possible for someone who can only communicate in English to really come to know a country and its people? Henk Westerhoek: In my mind, language is a tool that can help you understand the culture of the country or region in question deeper, but by itself does not guarantee understanding the essence of a people this has to come through regular contact over an extended period of time. Therefore, yes, speaking the language brings you closer to the people, but does not guarantee an understanding of a people or a country. I have many friends who don t speak Chinese but over the years have acquired a keen understanding of China through their interest in its history, people and country. At the same time I also know people who speak Chinese fluently, but who do not cope with the cultural differences. China is gaining its rightful place among the wealthy nations and has now moved up to be the second largest economy in the world. Considering this has been done over a time span of 25 to 30 years it is truly amazing and deserves a lot of respect. So instead of being fearful of China we should embrace its development and look at the opportunities and benefits that come with it, for us as well. Logwin Magazine: In terms of business, the mentality of the Chinese differs greatly across the country, even more than the difference between Portugal and Norway in Europe. What are the major differences? 1

Henk Westerhoek: China is the size of Europe but with three times its population. This means indeed that there are differences in terms of culture and mentality between the various regions in China. From my experience, the Chinese in the north tend to be more personal in their dealings with foreigners and that the personal connection is often important for conducting business. This can sometimes lead to scenarios where business and friendship are quite interlinked. The Chinese from central China tend to be more businesslike or realistic, to the point where business is business and friendship is friendship, keeping the two apart. This generally leads to a more effective approach to business. People from southern China on the other hand tend to be more flexible in their business dealings than elsewhere in China. This comes from the "Open Door Policy first established here, proximity to Hong Kong and the close association and exchanges with Taiwan. The Chinese tend to say that the northern Chinese love the mother country, while the central and southern Chinese enrich the mother country. This may be an overgeneralization but it can still be used to give a rough indication. Logwin Magazine: What should people thinking about moving from Europe to China take into account in advance? Henk Westerhoek: When moving to China from Europe it is important to keep an open mind and to realise that we are guests in this country and as such have to accept the cultural differences and lifestyles that exist. Over the years I have seen many Europeans come to China who were unable to adapt and expected China and its people to conform to the norms of their home countries, leading to continuous frustration and often a retreat back home. Logwin Magazine: Is there any particular story that you feel highlights and typifies the difference between business negotiations in China and in Europe? Henk Westerhoek: When living in Beijing in 1988 I was asked by an American client to translate during a business discussion with a Chinese company. The man started the discussion in a typical straight American way by saying: Mr Wang I think you are being dishonest with me and if this continues I will stop doing business with you. If I had translated this in a direct way the meeting would have finished with Mr Wang leaving the meeting room, no doubt. So I translated along cultural lines and said: "Mr Smith is content with the cooperation overall, but there is room for improvement. In the end the meeting went well but it was a perfect example how cultural understanding, not only language, plays an integral part in the interaction between different cultures. Logwin Magazine: What impresses you most about your Chinese friends and business partners or is it impossible to give a general answer? Henk Westerhoek: What has always impressed me about the Chinese people is their willingness to learn and to work hard to achieve their goals. In the West you often start business and then become friends, whereas in China often a foundation of trust is established first before business is conducted. 2

Logwin Magazine: You have been in China since the 1980s, longer than the majority of the youthful Chinese population have even been alive. Focusing on a single aspect, what has changed the most since you arrived? Henk Westerhoek: When I first came to China in 1985, China was still a pretty closed off country with limited international exposure. Salaries were low and the country was just starting to open up to the outside world following the launch of the "Open Door Policy" in 1979 by Deng Xiao Ping. What has impressed me most over the years in China has been the steady, well-planned transformation of the country from a closed off entity to an international player. Investments in infrastructure have been crucial to this development and were made initially in the coastal areas, without affecting the daily routine of the general population too much, which is really amazing. The major change I have noticed over the years is that the self-confidence of the Chinese people has increased tremendously. In the eighties or early nineties the international experience of most Chinese people was limited, nowadays they are very much part of the international scene, both businesswise as well as in terms of tourism. Chinese people in general are proud of the achievements made over the last 20 years, which gives them a level of self-confidence that was unknown even ten years ago. Close to 70 percent of the population are now viewing the future of China in a positive way. Logwin Magazine: China is looking to the West. But now it is increasingly looking westward in its own country, where massive infrastructure projects are underway. What is the impact of this on labour in Shanghai? Henk Westerhoek: Logwin has been present in Sichuan province for a couple of years now. The province is the most populated one in China, with roughly 130 million people. Logwin has its own office in the city of Chongqing, officially the biggest city in the world with 33 million inhabitants. Through various incentives the Chinese government has enticed some of the major producers in various fields to set up shop either in Chongqing or Chengdu. A major focus has been on attracting investment in the automotive and high tech fields and very successfully so; major producers in these fields are now investors in Sichuan, including Ford, Nissan, Intel, Hewlett-Packard & Applied Materials. Without a doubt Logwin is focusing on strengthening its position in this part of China and plans have already been drawn up to invest further in the province by setting up an office in Chengdu as well. This means that we at Logwin can be part of the impressive development currently going on in Sichuan. Logwin Magazine: What changes have there been in international trade volumes? Which forms of transportation will see the brightest future in your mind? Henk Westerhoek: Over the last ten to fifteen years China has been focusing on the production of higher-end and higher value goods, firstly in the coastal areas and recently also in the inland areas. This means that lower value production is moving away from the coastal areas towards inland locations or for example in the case of textile production to third countries such as Vietnam, India and especially Bangladesh to a certain extent. 3

Currently 70-80 million Chinese are deemed to be middle class, which means they have a yearly income of around USD 6,000 7,000. This number is expected to double over the coming five years, giving rise to huge opportunities. The demand for higher-end, imported goods is expected to increase further. In line with this, Logwin has already started to concentrate further on lifestyle, red carpet logistics in order to position itself well in this increasingly interesting market segment. Top end luxury goods producers such as Mont Blanc or Hugo Boss see the Chinese market as THE market to ensure continued growth for these luxury brands in the future. China, in line with its policy of investment in infrastructure and clean industries over the coming years, is importing enormous quantities of new equipment, which means increased opportunities for Logwin in importing. In 2010 alone Logwin in China doubled its import volumes and this strong trend is expected to continue over the coming years. Logwin Magazine: China has just gone through economic development of revolutionary proportions. What stage is the country in now? Henk Westerhoek: In line with Deng Xiao Ping s dictate in the past that "it is glorious to be rich" (fazhan shi ying daoli) and "It does not matter whether a cat is white or black, as long as it catches mice, it is a good cat, the Chinese people began exploiting the new business opportunities in the wake of the "Open Door Policy. This has resulted in a creation of personal wealth not seen in the past. China is now clearly at the crossroads between being a developing nation and a developed nation. This means that the Chinese people no longer blindly accept working for the glory of the motherland, but instead are also already starting to ask for returns for the betterment of their personal lives. This translates into increasing numbers of labour disputes, higher salaries and a shortage of skilled labour, with inland regions now vying with the coastal areas for qualified workers. Therefore, the most crucial issue in my eyes for China is to maintain social stability by ensuring a more even spread of wealth in China and to share the benefits of development, not only among those at the top of society, but also with the common man in the street. Logwin Magazine: Increasing numbers of international companies doing business in China are being bought out by the Chinese. During the economic crisis there were numerous management buyouts. What is your view on these new private Chinese entrepreneurs? Henk Westerhoek: It is clear that over the years, China has caught up quickly in terms of management know-how, partly through international exchanges and joint ventures, but also through the steady return of well-educated overseas Chinese students. Combined with the steady influx of (state) investments and preferential policies, this has led to the creation of some very powerful local organisations, for example Haier a leading producer of high end white goods or Geely, a local car producer which recently acquired Volvo. 30 percent of China s GDP is now linked to private enterprise and this is expected to continue to grow. The growth in importance of the private sector in China offers new business opportunities. While only ten years ago the bulk of our business involved international companies, nowadays close to 40 percent of our turnover is derived from local entities and this is 4

expected to keep increasing. Consequently, in order to grasp these opportunities it is becoming increasingly important to have top local staff in place. Logwin in China has recently upgraded its HR systems to cope with the challenges of finding and keeping top quality staff, something which is necessary to ensure sustained longterm development in China. Logwin Magazine: 65 percent of China's gross domestic product involves Asia. What trends can be seen in your intra-asian business? Henk Westerhoek: It is clear that any major international logistics service provider cannot overlook the entire Asian market. To that effect Logwin in Asia has created specialised intra- Asian teams that focus fully on intra-asian development, meeting and visiting each other on a regular basis. In China Logwin has doubled its intra-asian volumes over the last two years and is looking at intensifying Greater China cooperation. Other emerging markets such as India are becoming more important as well. Logwin Magazine: What do you think makes China so unique in comparison with the other Asian countries? Henk Westerhoek: I can still recall standing on the border between Hong Kong and China at Lowu in the early eighties and seeing China for the first time. Shenzhen across the border had just been nominated to be the testing ground for the "Open Door Policy and was in the midst of being built up. What struck me then and still strikes me is China s sheer size, its positive dynamism and the incredible optimism of the Chinese people to move forward to gain their rightful position in the world again. Logwin Magazine: You yourself are already "half Chinese". The Chinese love sayings. What saying stands out in your mind? Henk Westerhoek: Well, many Chinese sayings can be quoted but the one we apply to Logwin in China is "Ri xin yue yi, ru ri zhong tian which basically means "Strive for improvement on a daily basis to ensure a bright tomorrow! It is clear that in a competitive market we have to be constantly innovative in order to remain an important player. 5