No Sleeping Dragon

Shirley Choi, one of the youngest CEOs in Hong Kong, says that her success hasn’t hinged on issues of gender, age, or tradition. Rather, she says it was diligence, daring, and the ability to deliver results that helped her sidestep stereotypes to become a leading force in China’s ever-growing private sector. 
No Sleeping Dragon

Shirley Choi wants to set the record straight. China doesn’t fit the stereotypes that many people still entertain—and neither does she. As China moves into a new phase of economic and social growth, says Choi, it’s building on its traditionally communist, agrarian roots to become more cosmopolitan, more capitalistic, and more corporate. And as she can well attest, Chinese women are pursuing professional careers and leadership positions in greater numbers.

“When you talk to people in the West, many still think China’s like ‘The World of Suzie Wong,’” says Choi, referring to the 1960 film that portrays its protagonist, Chinese prostitute Suzie Wong, as subservient, passive, and painfully traditional. It’s a portrayal that many in China find pejorative and offensive, and one that still stirs controversy today. “That was more than 30 years ago,” Choi says. “That’s perception, not reality.”

At the age of 35, Choi is an example of China’s new image. Choi has served as CEO of her family’s company, Seapower Manufacturing Hong Kong Limited, since succeeding her father, Tsai Xi Liong, in 2000. A manufacturer of backpacks, camera bags, and other accessories that are sold worldwide, Seapower is headquartered in Hong Kong, with a factory in China; it recently opened a customer service office in San Diego, California, and owns a real estate operation in Indonesia.

Born Siu Lui Choi in Xiamen, China, Choi graduated from the University of San Diego with bachelor’s degrees in finance and music in 1990. She attended Pepperdine University’s Graziadio School of Business and Management in San Diego to earn her MBA in 1992 and later attended the executive program at Stanford University’s Graduate School of Business in California. She worked as a merchant banker with Merrill Lynch before coming to Seapower in 1994 to serve first as a credit manager, and then as the managing director of its financial division, which the company has since sold. As a successful merchant banker, she listed more than 80 companies on the Hong Kong Stock Exchange.

Surprisingly, Choi, who has studied piano since she was four years old, once seemed destined for a career as a concert pianist. But while studying music at USD, she decided also to major in finance so she could “try something different.” That choice, along with her musician’s proficiency with numbers, led her into business.

Choi, however, doesn’t see the move as so large a leap. Both music and business require diligence and discipline, she says, and both require a person to work well individually and as part of a group. “In an orchestral score, you have different parts—piano, oboe, violin, bass, French horn—the same as any organization. But it’s the way the conductor leads them that’s the crux of the story,” proposes Choi. “To succeed, the conductor must know what piece he wants to play and how he wants the music to sound.” Since taking the baton at Seapower, Choi has made innovative changes to improve performance in what once was a functional but stagnant business environment.

China, too, is shaking off age-old conventions, expanding its markets and encouraging private business. As it does so, businesses and business schools are now entering Chinese markets with veritable gold-rush fervor. Choi is eager to see these developments come to fruition, but she also offers some words of advice. To bridge the ideological distance between East and West successfully, she says, Western businesses must first see China as it is today, not as it was 30 years ago. Then, they must understand its history, its culture, and its ambitious plans for the future.

“Margaret Thatcher was able to conduct a civilized conversation with the Parliamentary members. By far, she is the female figure I most admire. She showed how a woman could maintain her poise and make tough decisions, even in a confrontational environment.”

Before you came to Seapower, you were pursuing a successful career as a merchant banker with Merrill Lynch. What made you want to return to the family business?
In 1993, my father asked me if I would work at Seapower. He told me that I would get a much more diverse experience with Seapower than I would if I stayed in finance, where I would only be working with numbers. He said that he would pay me only one-third of what Merrill Lynch was paying me, though! That had to be rectified somewhat, but my father told me it was job satisfaction, not money, that counted.

You became the CEO of Seapower at a very young age. The fact that you were going into the family business may have given you some advantage, but as a young woman entering an environment dominated by men, you faced considerable challenges. How would you advise women to help them work successfully under such circumstances?
When men think of women in business, they still often expect a certain kind of female executive: dark suits, short hair, unattractive, and basically very blunt. But when men think of us, they should think of what we can deliver, not of superficial stereotypes. I tell women executives to be themselves, not play to stereotypes. Substance doesn’t come from how you look. It actually boils down to what you can deliver.

For example, I went to school in England in the early 1980s, when Margaret Thatcher was prime minister. I would see her on television speaking in front of the Parliament. It was a fierce-looking situation with all the members sitting there, sometimes using foul language. Margaret Thatcher was able to conduct a civilized conversation with the Parliamentary members. She also de-unionized the state-owned companies in the United Kingdom, a very bold, controversial move at the time. By far, she is the female figure, other than my mother, I most admire. She showed how a woman could maintain her poise and make tough decisions, even in a confrontational environment.

What are the advantages and drawbacks of being such a young CEO?
In the beginning, I had to overcome people’s doubts. They would look at me and say, “Oh, you’re just a girl. What are you doing here?” But actions speak louder than words. Young or old, you have to prove yourself.

Before I became CEO, when I was moving from division to division within Seapower, I noticed that our company hadn’t done any corporate finance work for a while. I said, “Look, I’m not going to sit here and wait for things to happen.” So one Saturday morning, I went to the offices of BOTO International Holding, the world’s largest artificial Christmas tree manufacturer. I walked up to the receptionist and explained that I represented Seapower. I told her that I didn’t have an appointment, but that I had a very sound business proposal for BOTO’s chairman. The receptionist looked at me funny and asked, “Are you sure you don’t have an appointment?” I told her I wasn’t going to be pushy. If he had time to meet with me, fine; if he didn’t, I would just come back later.

But the chairman did meet with me. I made a presentation and, at the end, I told him that we would do an excellent job for his company. He gave us the deal, and we did not disappoint him.

Afterward, I went back to my colleagues and told them I’d landed BOTO. They said, “You’ve got to be joking, Shirley. Did you poison him or something?” Everybody was stunned because they didn’t think I could do the job. I think it all boils down to dedication, hard work, action, and track record. You can talk a lot about your capability, but in the end, you have to deliver it.

What did you learn in business school that you think most prepared you for the role of CEO?
Business school taught me how to build a team, work in small groups, and listen to what other people have in mind. This has been very important in my work with Seapower. When I first became CEO, for example, we had three or four different divisions with about 2,000 employees. I didn’t have the knowledge to run all these divisions, so I went division to division and had small group meetings with top managers so I could listen to what they had to say and understand what their daily operations were like.

Something even more important that I learned in my MBA program was not in the textbooks, but in the interactions among my classmates and professors. This was something I was not accustomed to in China. In Asian schools, you don’t see students raising their hands or asking questions. In Asian society, we are taught to be obedient and passive.

As soon as I went to school in England and the United States, I immediately saw the difference. Everyone is encouraged to speak up if they have a problem. If you see something that can be improved, you raise your hand and say, “Wait a minute, I see something that can be done more efficiently.” I learned in business school that you should never be afraid to speak up when you see a problem.

When I returned from my MBA program, I surprised the brokers in our financial division by asking them how we could execute transactions more efficiently, and what they thought could be improved. They simply were not used to being asked such a question. They were absolutely stunned! They said, “You have to be joking. We’ve been doing this forever. Everything is on track, everything is on the computer. It works fine.”

How did you convince them that your more Western-style business approach would work?
I launched Seapower’s retail brokerage idea. That is, instead of having just one location, we opened satellite stations in different cities, so people didn’t have to travel long distances. We brought ourselves to the customer instead of having the customer have to come to us. Eventually, in about two years’ time, we became one of the top three retail brokerages in Hong Kong.

The point is, no one in the company thought there was any room for improvement. No one had any interest in it. I showed them there is always something that can be improved.

What do you wish you had learned in your formal business education that you didn’t?
In business school, you read a lot of case studies, many of them about “boom and bust” scenarios. You learn why the company went down or how it became a giant. Students learn, “Oh, that’s why IBM stock price dropped so much— Apple was there, and IBM was too big.”

In reality, there’s not always such a clear answer. Something unexpected often happens that’s not in your game plan. In business school, I didn’t quite learn this reality. We learn about emergency plans, but not about reacting to that something beyond your imagination that catches you off-guard. Now I’m getting a bit better at it, because of on-the-job experience. But if you haven’t experienced it, then you don’t know how to handle it. There’s no prior case to refer to, so it’s difficult.

Business schools often have programs dedicated to family-owned businesses. In your experience, what is the biggest challenge of running a family business effectively?
Well, if you’re a merchant banker, buying and selling companies, what’s the first thing you do when you want to cut costs? You cut jobs. That’s the fastest way to see results. But if you look at a typical family-run company, there’s a great deal of personal emotion involved in it. When you try to make a rational decision, it may be difficult to act. For example, if a factory is not running well and you think it should be closed down, or if the company needs to reduce its costs and you think people should be let go, you might fail to make that decision and have to face the consequences.

I remember when one of Seapower’s divisions wasn’t running too well and I suggested to the board that we should close it down immediately. But unfortunately they decided to keep it open too long. That was a very painful experience, because eventually we had to close down that division anyway and let go all of the people working there. By that time, we had cut our losses too late, and we lost a lot of money. It’s something that could have—and should have—been avoided.

Another problem with a family-run business occurs if you want to expand your company and use an outside managing director or consultant or CEO. Internal control is very important in Asian culture. However, the best talent doesn’t necessarily come from within. We have to be able to let go of our egos and control. It’s very difficult, but it’s very important. As I’ve told my staff, “I don’t plan to work forever. I’m looking for people who are more competent than I am to take over when I leave.”

“Even though it’s still called the Communist Party, it’s not about communism. It’s about making money. It’s about capitalism.”

It seems ironic for you to say that, since you’re only 35! Most CEOs don’t think of finding their successors until they’re much older.
Well, I have other goals for myself. For example, Seapower donates about 30 percent of our net income to support different orphanages and schools. In the future, I would like to be in charge of utilizing part of the company profits to help charities. It’s fulfilling and rewarding to be able to do something for other people.

Now, I can’t be a hypocrite—I can’t say I don’t want to make money for the company. But I do believe very much in corporate social responsibility. I believe that for every dollar a company makes, part of that dollar should go to support a good cause. That’s something very important to me.

How do you think the business culture has changed most in China?
When I first became CEO, I initially found it very difficult to deal with my colleagues in mainland China, where the situation is worse than in Hong Kong. You might attend a meeting for two, three, five hours, and afterward you still didn’t know what the subject was! That was very annoying. After this happened a few times, I became smarter. I would tell my colleagues that, if we were to meet, they would have one hour and one hour only to tell me exactly what they wanted. And that worked quite well.

Today I think China has become much more efficient. It has not come as far as Hong Kong, but it’s actually improved quite a bit. Nowadays if I send my mainland Chinese colleagues an e-mail saying, “I need you to do one, two, three, four,” they reply to me point for point. They don’t write me an essay.

In the past, many viewed the Chinese government as an obstacle to free enterprise. What role do you think the government will play now that China’s markets are opening up?
Many people think of Chinese culture in terms of communism, but the Chinese culture has evolved from a pure, communistic society to what I would call a semi-socialistic and capitalistic society. Even though it’s still called the Communist Party, it’s not about communism. It’s about making money. It’s about capitalism.

In the communist system, you have a lot of people going to work because they were assigned to do that work. They continue to do that work even if their company is losing money. But in the early 1990s, the then premier Zhu Rongii wanted to privatize. Rongii laid out a new plan for state-owned enterprises that said, “If you can’t maintain your own P&L, you should be closed.” As a result, many factories were closed, which forced workers into the private sector.

China went through a lot of pain and controversy in the early 1990s. Then, it went through the Asian financial crisis in 1997, when many different currencies—the Thailand bhat, the Indonesian rupee—got attacked by speculators. It was a painful experience, but everybody learned invaluable lessons from it.

Today, the Chinese government has a five-year plan, and one of its goals is to raise the ratio of middle-class people. The ratio is still quite low right now, something like 10 to 15 percent of the population. The party also wants to raise the productivity and individual income of farmers. China has about 1.3 billion people, and about 90 percent of the Chinese population is still in the farmland. Even so, business can look at the 10 percent of the population who live in the urban areas—that’s still 130 million people. That’s a lot of room for growth.

In the past ten years, we’ve seen tremendous progress. I’m not saying everything is perfect—there are still plenty of things to be improved. But apparently Rongii’s strategy worked quite well.

Because of China’ s growing presence in the global economy, it has become one ofthe most important new markets in the world. What do you think is most important to teach business students about this emerging market?
Business schools should let students know that China is not a sleeping dragon—it’s a very active dragon at the moment. It’s a major manufacturing bay for the world. Today, China is full of energy. Visitors who come to Shanghai or Beijing can see that China has become very cosmopolitan.

Since China entered the World Trade Organization two and a half years ago, many industries have become positioned for growth. For instance, the insurance industry and the entertainment industry will be opened up in the next 18 months. In the automotive industry, BMW and Mercedes Benz are talking about building plants in China. And in the financial industry, some banks are teaming up to issue a credit card, an unheard-of item in China until recently.

So, there’s a great deal of opportunity there. China still has red tape in its system, but it has changed. Students need to know that.

Outsourcing of IT and manufacturing jobs overseas has become an area of concern, especially in the U.S. Many workers worry about losing their jobs or job prospects to workers in markets like China. Do you think their fears are warranted, or do you think outsourcing will ultimately be a good thing for global markets?
That’s a million-dollar question! But I think it will ultimately be a good thing. I recently read an article in The Wall Street Journal by Alan Greenspan in which he discussed what would happen as China’s manufacturing base grows and more companies move to China. He reasoned that because countries like China have a low cost base, they can export goods at a relatively inexpensive price. Chinese exports account for 65 percent to 70 percent of textiles in the world. If you walk into a WalMart or Costco, more than 50 percent of the product you see was made in China. You can imagine what would happen to the U.S. economy in terms of inflation without that low cost structure. Greenspan noted that as manufacturing moves overseas, America should focus on the service-driven and value-added industries. I completely agree with him.

Some say, “Leaders aren’t born, they’re made”; others say, “Leaders aren’t made, they’re born.” Which one do you think is most true? Do you think you’re a born leader?
I would say I am a leader by training. Personally, I do not believe people are born leaders. I think you have to become a leader through experience.

Leadership is not just about leading other people. It’s about understanding the strengths and weaknesses of your team members. It’s about developing a sense of empathy, listening carefully to what people are trying to tell you. In my position, I listen to different sorts of information, gossip, and jokes from my team members every day. I’m like an information hub. Everybody tells me everything.

Leadership is also about knowing how to digest this information and how to rationalize it in the decision-making process. This is so important. You can’t use only one source of information. You have to be that “information hub.” You have to listen to information from many different sources and make the right decisions from what you learn.

Finally, leadership is about vision and how you plan to position the company—not just in the next few months, but in the next one year, five years, or ten years.

In your first decade in the business world, you’ve already become a CEO, a goal many people spend most of their careers pursuing. What do you think are your most important contributions—to Seapower and to business—that you have yet to make?
Well, people often laugh at me, but one of my goals is to bring a Chinese company to international standing. If you look at globally recognized companies, you don’t see any Chinese companies. In fact, I don’t think an American or a Briton could name a single Chinese-owned company.

I’d never thought about that before. I can name several Japanese and Korean companies, but not a single global Chinese company.
You can’t, because there aren’t any! But then, our leader didn’t start visiting other countries until the last three or four years. Even in the mid-1990s, you didn’t hear in the news that the Chinese premier was visiting the United States or Latin America. And today, as I mentioned, 50 percent of the products you see in WalMart are probably made in China—but no one knows the companies that manufacture them!

What would you like to see happen to Seapower in the future?
When people talk about Seapower, I want them to know this company is owned by a Chinese family and offers a different product. I’d like the company to achieve international recognition—to have a report on CNBC someday, just saying that our stock is doing well.